Public Utility Transfers and Water Charges Bill

HC Deb 21 October 1987 vol 120 cc766-829

Order for Second Reading read.

6 pm

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

I beg to move, That the Bill be now read a Second time.

Mr. Speaker

I have selected the manuscript amendment in the names of the leader of the Liberal party and others. Copies are available in the Vote Office.

Mr. Ridley

The Bill has two distinct purposes. The first clause confers an express power on the water authorities in England and Wales to prepare for the restructuring and privatisation which we propose for them; it also confers a similar power on the electricity supply industry in England, Wales and Scotland to prepare for privatisation. Later clauses deal with water metering.

Privatisation has been a central element of our success in redefining the proper role of Government. So successful has it been that we are awaiting the imminent conversion of the Labour party. At the Labour party conference the hon. Member for Dagenham (Mr. Gould) described share ownership as just one instrument in order to hand real power to working people". What an admission after decades when the truth of the failure of nationalisation was staring them in the face. We have disengaged ourselves from a range of activities in which the involvement of Government is more harmful than helpful. With the sale of BAA in the summer of this year, we have privatised 16 major companies. The best people to manage these businesses are the managers themselves, not Ministers. We have given them the commercial freedom they need, with access to private sector capital. We have transferred about one third of the 1979 state sector and about 650,000 jobs into the private sector. We have also seen the level of share ownership among the population increase by a factor of three.

The success of privatisation is witnessed by the millions who hold shares in the privatised companies and by the millions more who, in June this year, returned us to office. In our manifesto, we promised to continue this policy by privatisation of the water and electricity supply industries. The Bill is the first step towards keeping that promise. We do not expect to introduce the main legislation for either privatisation during the current Session, but enactment of the Bill will give both industries a firm basis on which they can prepare themselves fully for the future that we propose for them.

Mr. David Winnick (Walsall, North)

After the events of last week, does not even the Secretary of State realise that it would be crazy to break up and privatise the electricity industry? Surely last week demonstrated once again how basic electricity is to the nation's life. Therefore, even this Government should reconsider their proposal.

Mr. Ridley

After the events of last month, when the Labour party began to come to terms with the 20th century, I should have thought that the hon Member for Walsall, North (Mr. Winnick) would not be so unwise as to risk disfavour with his new leadership by causing any suggestion to arise that he was not in favour of privatisation.

Mr. John Prescott (Kingston upon Hull, East)

Get on with the Bill.

Mr. Ridley

The hon Member for Walsall, North interrupted me. I will not give way to him again—or to the hon Member for Kingston upon Hull, East (Mr. Prescott).

The water authorities have a complex range of functions. To the public, the authorities are suppliers of water and disposers of sewage. These two essential utility services constitute about 90 per cent. of their business—and they are large businesses. Altogether, they employ about 50,000 people, have capital expenditure of about £1 billion per annum, and turnover of over £2 billion. The authorities were constituted on their present lines in 1974 when the 10 authorities were amalgamated from more than 1,500 predecessor bodies. They have made considerable strides in improving operating efficiency and financial performance. For example, although staff numbers grew during the previous Labour Government, since 1979 they have fallen by about 20 per cent.

Although investment under Labour fell by 30 per cent., since 1980–81 we have increased investment in volume terms by over 35 per cent. There has been massive investment in the sewerage system and in sewage treatment which together account for approximately half of capital expenditure by water authorities. Investment in cleaning up rivers and beaches is 15 per cent. up since 1980. Capital expenditure next year, not all of which can be described as "investment", will allow each water authority to renew and replace assets at a sensible rate and to improve the performance and quality of services as the public and their statutory obligations require.

In 1974 hardly any capital expenditure was financed from internal sources, but in this financial year almost all capital expenditure is being financed internally. That has greatly strengthened the financial position of the authorities. Following privatisation, it will be for the directors of the pies themselves to decide how capital expenditure should be financed. When they have to raise additional funds, the pies will have to compete on the capital markets for the best and most favourable terms and conditions that they can get. That will be a spur to improving performance, as well as a relief for the taxpayers.

The water authorities are now ready for transfer into the private sector. No doubt Labour Members will argue, as the hon. Member for Walsall, North did, that water services are inherently matters for public sector responsibility and control, despite their near conversion on the road to Brighton. They will say, as did the hon. Member for Walsall, North, that it is impossible to privatise something that is so essential to public health. I agree that water is essential to public health. So are sewerage and sewage treatment and disposal. So, indeed, are many other things—not least the food that we eat. What matters is not who owns and runs the provision of essential goods and services, but whether the regulatory framework adequately protects the public. We have statutory food standards which regulate the quality of food produced by the private sector. We have building regulations which lay down minimum standards for new homes.

Drinking water must also comply with statutory requirements which are binding on the private sector water companies as much as on the public sector water authorities. There has been a long and distinguished tradition of private provision of water services. The statutory water companies supply about one quarter of the population in England and Wales. There are also numerous overseas examples of private sector bodies providing high quality water services to the public. The final answer to the hon. Member for Walsall, North is that one quarter of water has already been privatised and he has never complained about it.

I recognise that the provision of water services is a natural monopoly. That is why we intend to impose on the utility companies, which will be successors to the water authorities, a number of controls on both the economic and the environmental aspects of their activities. These will include a control over the prices they charge to the public. There will be a Director General of Water Services to make sure that they comply with these conditions of appointment and to protect customers from the dangers of monopoly abuse. The director general will be able to make comparisons between the pies and to use the example of the most efficient as his yardstick for what is achievable.

I must add some words about the control of the environmental aspects of the activities of water authorities; the protection of river systems — the management and conservation of water resources. pollution control, fisheries, navigation, land drainage and flood defence, recreation and conservation. Our White Paper published in February 1986 proposed to leave these functions—except for land drainage and flood defence—with the privatised water authorities, subject to a number of detailed controls. After further consideration, and having listened carefully to the arguments, I came to the conclusion that these functions are essentially a public responsibility. I could not accept the principle that one private body should determine what another can take out of a river or put into it or how much it should be charged for so doing. Such decisions are inseparable from decisions about the management of the river regime, and must be consistent with it.

The business of protecting the environment and the conservation of rivers, and of ensuring that all the disparate interests, including those of the utilities, are protected, is essentially a public sector regulatory function. Therefore, we propose to set up a National Rivers Authority. We published a policy and consultation paper in July describing how we envisage it would operate. Our revised proposals have been welcomed by most of those responding to the July paper, particularly by those are are concerned about conservation. There has been a feeling, shared by the Select Committee on the Environment in the last Parliament, that with or without privatisation we should consider some independent regulation of water authorities in order to maintain the progress in cleaning up pollution in our rivers. The National Rivers Authority will do just that.

Sir Eldon Griffiths (Bury St. Edmunds)

While I would have preferred my right hon. Friend to go ahead on the lines of his original thoughts about this matter and not create a new quango such as the NRA, I recognise the philosophy that has led him to that decision. While there may well be a case for the public sector to retain the monitoring, supervision and regulation of the plcs, does he need to create a new executive body to interfere, to spend and to intervene in the hydrological cycle and the integrated water basin management which are at the heart of the 1973 Act?

Mr. Ridley

My hon. Friend's ambition is that the regulation of the environmental aspects of the water industry, which is what we are talking about, should be kept to a minimum in terms of size, cost and interference. Equally, I am sure he will agree that such a regulatory body should have the powers and the ability to discharge those functions that are properly for the public sector. Indeed, they are properly for me to account for to this House. Without sufficient powers I would not be able to do that. That which we seek is, I think, the same as that which is sought by most water authorities—to get the precise boundaries of the National Rivers Authority exactly right to perform those functions.

Sir Hugh Rossi (Hornsey and Wood Green)

I am grateful to my right hon. Friend for his reference to the last report of the Select Committee on the Environment. Perhaps in his statement he has read into that report a little more than appears there. The Committee took the strong view that there was a case whereby the duty of policing pollution might be taken away from the water authorities because they are dischargers into water courses of matter that, perhaps, requires policing. That is one proposition and it could well be argued that a national water authority with a proper inspectorate could do that work far more impartially and could be seen to be impartial by industrialists who are often asked by water authorities to do things that the authorities themselves are not doing. That is quite different from saying that we should get rid of a policy of an integrated river basin management. If my right hon. Friend is saying that the National Rivers Authority would take over that function, he may find that the Select Committee will not agree with him.

Mr. Ridley

I agree with my hon. Friend on one aspect of the public regulatory function — the control of pollution. He will agree that there are other aspects that have to be regulated, including such matters as navigation, land drainage, angling and conservation. I ask my hon. Friends to await the proposals that we shall put forward as a result of the consultation. That consultation has been very full and very helpful. A large number of helpful responses have been made and there has been a large degree of support for our proposals. The difficulty is to find the exactly correct dividing line between the plcs and the NRA. If when they know what it is my hon. Friends think that we have got that wrong, they will have an opportunity to say so. I am acutely conscious of the concern and that is why we are taking so much trouble to find the right answer.

Sir John Farr (Harborough)

Can my right hon. Friend tell the House whether this Bill actually brings into being the National Rivers Authority, because it does not have a clause setting up the NRA and it is not mentioned in the Bill, except in the explanatory memorandum? The sooner the NRA is set up, the better, but I should he grateful if my right hon. Friend would tell me whether it is set up by the Bill today or if it will be set up at another time?

Mr. Ridley

It is not in the Bill and we are not setting it up today. My hon. Friend is quite right to take me to task for talking about it when it is not in the Bill. On the other hand, I suspect that many of my hon. Friends have come to the House today to talk about it and I would have disappointed them if I had not mentioned it.

Mr. Ian Gow (Eastbourne)

I listened carefully to what my right hon. Friend said about the new National Rivers Authority. He told us that the new authority would be responsible for the licensing of the abstraction of water from rivers. As my right hon. Friend knows, at the present time the 10 water authorities give licences to abstract water from rivers. Why is it that in future, simply because the ownership of the water authorities has changed, they will no longer be able to do that which is essential for the carrying out of their functions, namely, themselves to decide whether to give licences for the abstraction of water?

Mr. Ridley

I must ask my hon. Friend to await our detailed proposals. The abstraction of water, like discharges into rivers, affects the whole river cycle and we have to find the exact balance so that the National Rivers Authority can regulate total flow in a river without removing the operational freedom of the water undertakers in the area.

Mr. Dafydd Wigley (Caernarfon)

The right hon. Gentleman told us that he is responsible to the House for functions undertaken by water authorities in relation to land drainage and rivers. It is not just he who is responsible to the House for such matters, but also the Secretary of State for Wales. He will be aware of representations that he has received from the farming unions in Wales and from a host of other bodies, saying that there should be some continuation of river supervision and land drainage supervision in Wales, with those responsible answerable to the Welsh Office. Will that be part of his proposals?

Mr. Ridley

The point I made was that it is the Government, and it does not matter which Secretary of State, who are responsible to the House for the standards that water undertakers are required to provide. Those are standards of water and river cleanliness and the cleanliness of beaches. The hon. Gentleman is always asking questions about these matters and if we are to achieve those standards we must have a body capable of monitoring and enforcing the standards that the House lays down. I am sure that my right hon. Friend the Secretary of State for Wales will take note of what the hon. Gentleman said about the Welsh water authority.

The successful reallocation of water authorities' current responsibilities to a National Rivers Authority and to 10 water services plcs can take place only after the ground has been prepared within the water authorities. That process must begin soon, and as soon as this Bill has received Royal Assent we shall be working with the water authorities to ensure that they make full use of the powers provided in it to take positive steps to pave the way for a smooth and rapid restructuring.

In our manifesto we also said that, following the success of gas privatisation, we would bring forward proposals for privatising the electricity supply industry, subject to proper regulation. Electricity is a large and important business with a turnover in England, Wales and Scotland of nearly £12 billion. Its privatisation will provide the industry with the opportunity to develop commercially and to be truly accountable both to its customers and to its shareholders. Electricity privatisation will be a major undertaking. All the existing statutes governing the industry will have to be thoroughly reviewed. Decisions on the future structure of the privatised industry have yet to be taken, and we are at present engaged in a wide-ranging review of the options. Much preliminary work needs to be done both within Government and in the industry itself. This Bill will ensure that the industry can participate fully in that process.

Our proposals will be put before the House as soon as we have completed our studies of the issues involved. Our aim is to ensure that the privatised industry will be in a position to supply electricity in as reliable, competitive and economic a way as possible, and that the industry's record on safety, which is second to none, is maintained. Electricity is vital to every sector of our economy and every consumer will benefit from an efficient electricity industry freed from the constraints of public sector control and interference.

Mr. Prescott

I note that the Secretary of State emphasises the efficiency of the industry. Will he announce whether prices will increase as soon as the industry is privatised or in the run-up to privatisation?

Mr. Ridley

I am interested to hear the hon. Gentleman already raising difficulties about the Labour party's attitude to the privatisation of the industry. Is the Opposition Front Bench now split? Are some Opposition Front Bench spokesmen in favour of privatisation while the hon. Member for Kingston upon Hull, East is not? I cannot think why else he asked the question unless he was trying to raise objections to privatisation. I cannot possibly answer the hon. Gentleman's question. My hon. Friend the Parliamentary Under-Secretary of State for Energy will answer the question when he replies later.

I now want to consider water metering. Clauses 2 to 7 and schedules 1 to 3 are almost entirely concerned with providing a special regime for trials in relation to compulsory water metering. They also clarify and update the existing law on metering. The possible extension of water metering to domestic consumers has been debated at great length both within the industry and outside for many years. In the last century, the local water undertakers in Malvern in the constituency of my hon. Friend the Under-Secretary of State for Energy, the hon. Member for Worcestershire, South (Mr. Spicer), decided that all properties in their area should be metered. Since then there have been numerous committees looking into the feasibility of more widespread metering. In 1985, a joint water industry-DOE study recommended that the Government and the water industry begin to work on the presumption that an extension of water metering might be worth while from an economic point of view in that it should reduce demand and the need for future investment on expensive infrastructure. It also suggested that the water undertakers be asked to propose a number of controlled comprehensive trials and recommended a number of changes to legislation. These were to clarify undertakers' powers to carry out trials and to facilitate water metering generally. Most of these recommendations have been incorporated in this Bill.

Since the group reported we have announced that domestic rateable values are to be abolished at the latest by 1994. This brings added urgency to look for other means of charging for water, of which metering is the most obvious, but not by any means the only option. Other suggestions include a flat rate charge and ones based upon floor space, household size and even on the number of taps and water appliances in a household. The water authorities are currently considering the possibilities. Ultimately it will be for each water authority to decide how it wishes to charge. However, whatever method is chosen will have to comply with the principles set out in section 30 of the Water Act 1973, repeated in the Bill, that charges must have regard to costs and not unduly discriminate against any classes of person. The water authorities do not at present favour a charge per head.

Although, as I have said, metering is the most obvious method of charging, we do not propose to go to widespread domestic metering at once. It would present a number of technical and logistic problems which need to be properly assessed to enable water undertakers to take a judgment on whether widespread metering is worth while and, if so, how best to introduce it with the minimum inconvenience to customers.

Metering is not new. In the non-domestic sector metering is widespread. Roughly 30 per cent. of water supply in England and Wales is now metered. Since 1981 a scheme has been available whereby domestic consumers can opt to pay for the installation of a meter. Fewer than 100,000 customers out of over 18.5 million in England and Wales have taken up the offer.

This is not the time to go into the manifest inequities in the present rating system, but it is unsound as a basis of charging for domestic water supply, just as it is for the provision of local services. The complaints from single people living next door to a family consisting of three or four people that they pay exactly the same in rates equally apply to water rates. The prospect of more widespread metering will be welcomed by such people. However, those people who use significant amounts of water or are simply wasteful with it—for example, excessive garden watering and simply not bothering to repair leaks—will probably, and rightly, end up paying more. This must be right.

The water industry recently announced the sites that the industry would like to include in the trials. This will enable the industry to get on with the all-important task of consulting the people likely to be affected, well in advance of my formal consideration of each scheme, required under clause 4.

Clause 2 confers charging powers on statutory water companies similar to those of water authorities under section 30 of the Water Act 1973. The power will be additional to, rather than a replacement for, their existing charging powers which are mostly in local Acts. It will make it easier for them to participate in the metering trials and also to introduce other alternative charging systems which may be required once domestic rateable values are abolished.

Clause 3 re-enacts certain provisions of section 30 of the Water Act 1973 which regulate water authority charges. It extends these provisions to water companies. Under these provisions water undertakers will be able to adopt any charging system that they consider appropriate. This freedom is, however, limited by two important constraints. First, undertakers must, in fixing their charges. have regard to the cost of providing their services. Secondly, their charges must not show undue preference to, or discriminate against, any class of consumer. I must stress that this limitation of undertakers to fix their charges is carried over from section 30 of the 1973 Act. There is nothing new and these very important limitations will apply if universal metering is ever introduced. It is, however, necessary to have a special regime for charges made in connection with metering trails because no matter how carefully a water undertaker wishing to carry out a trial selects a trial area, those customers taking part could claim that they are being discriminated against compared to the rest of that authority's customers who are not subject to the trial. Some customers may even argue that they are being discriminated against because they are not being given the opportunity to take part in the trial. Furthermore, because of the experimental nature of some of the tariffs, it may not be possible for undertakers to ensure that they accurately reflect costs. Most importantly, I want to be sure that the interests of the customers likely to take part in the trials are properly taken into account. The special regime which is to be adopted for the trials is spelt out in clause 4. Clause 4 also requires each water authority or company wishing to carry out a trial to submit proposals to me, or, in the case of Wales, to the Secretary of State for Wales.

Clause 5 and schedule 1 contain provisions dealing with powers of entry; meter installation costs; offences of tampering with meters; information about meter readings required by undertakers; where water and sewerage services are provided by different undertakers; and arbitration in cases of disputes. The remainder of the Bill is largely of a technical nature and deals with consequential amendments, repeals and definitions.

Paragraph 5 of schedule 1 makes it clear that where a water undertaker's customers are compulsorily metered, the water undertaker, not the customer, will be required to meet the cost of installing the meter and any associated equipment.

Thus the Bill serves two distinct purposes. It paves the way for the changes that we propose for two of this country's major industries. We do not expect to introduce the principal legislation embodying these changes during the current Session, but with the powers in this Bill the water and electricity supply industries will be able to play their full part as we take our proposals forward. The metering provisions will make it possible for water undertakers to test whether the metering of domestic water supplies might serve as a suitable alternative method to the present system of charging that has grown out of the industry's past, but does not seem to fit with its future. I commend the Bill to the House.

6.29 pm

Dr. John Cunningham (Copeland)

The House is asked to approve a Bill to prepare the way for the privatisation of the water and electricity supply industries. The Opposition are disappointed that we are not to hear from the Secretary of State for Energy today. Our suspicion is that he cannot afford another comment such as that which was made by Mr. Edward Pearce following his speech at the Tory party conference, who described it as one of "mind-erasing irrelevance."

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) will be dealing with most aspects of the Bill concerning the electricity industry, but many of the fundamental arguments against the Bill apply equally well to both water and electricity supply. We are being asked to agree to the selling off of more national assets at a discount.

The Bill is an enabling measure that is reminiscent of the notorious paving Bill that was introduced to rig the statute book before the main legislation to abolish the English metropolitan councils was enacted by Parliament. Now, as then, the House is asked to approve paving legislation, including important new central powers to Ministers, before the Government's real intentions and detailed proposals are known.

We in the Labour party are opposed to the proposal to sell off the nation's electricity and water industries to private control and perhaps major foreign influence, not least because we cannot accept any argument in favour of private monopoly control of two fundamental resources such as water and electricity which are vital to the social and economic health and well-being of the British people. [AN HON. MEMBER: "What about food?"] No matter how the Government twist and turn, and no matter how Ministers such as the Secretary of State perform their tortuous mental callisthenics, no one can avoid the conclusion that it is the Government's intention deliberately to create widespread private monopoly powers in two critical areas of the lives of every man, woman and child in our country. An hon. Member asked from a sedentary position, "What about food?" There is competition in the provision of food and there is not, cannot be and will not be any competition in the provision of water and electricity.

Mr. Gow

So that the tens of thousands of workers in the water and electricity supply industries who will be buying shares when denationalisation takes place may understand precisely the position of the Labour party, will the hon. Gentleman confirm that it is the Labour party's policy to renationalise that which is denationalised and which is the subject of the Bill?

Dr. Cunningham

I shall deal with that issue later in my speech. I promise the hon. Gentleman that I will give a straightforward answer to the question when I come to the part of my speech that deals with it.

Private monopoly is the inevitable outcome of the dogmatic track on which the Tory party has rushed to buy a one-way ticket. The British people are to be the victims of two more private monopolies with even more power and importance and even less competition than the disgracefully mismanaged British Telecom. With their howls of outrage still fresh in the minds of the British people and the Tory party camp followers in the media, Conservative Members are now obviously intent on voting this evening for more huge doses of the same thing. What price the interests of consumers now that the election is over?

We in the Labour party believe that these essential services should be public and in public ownership and control. The Prime Minister said: The water authorities are natural monopolies … and we need to be particularly careful when considering replacing a public monopoly by a private one."—[Official Report, 31 January 1985; Vol. 72, c. 292.] There we have it. There is a recognition that only private monopolies can and will result.

I warn Tory Members not to be misled by their leader, who talked recently of "irreversible shifts of power". Nothing is irreversible in a democracy and a Labour Government would not hesitate to eliminate private monopolies to ensure that vital and fundamental services were controlled and managed in the best national interests, balancing the powers among consumers, employees, Ministers and Parliament. That is the best way to ensure that national interests are developed and that consumers have a real voice, real powers and effective protection against natural monopolies.

Mr. John Maples (Lewisham, West)

The hon. Gentleman has made it clear that he is opposed fundamentally to the privatisation of public water authorities. Will he say whether he thinks that the 28 private water companies should be nationalised?

Dr. Cunningham

No. I think that that is a rather redundant question. The reality is that the 28 private water undertakings act as agents for the regional water authorities. In no sense are they truly private sector companies.

Mr. Ridley

I thank the hon. Gentleman for the extremely carefully drafted passage that he read to us. I hope that it had previously been agreed with all wings of his party. He said—I took down his words—that he was in favour of these monopolies being controlled and managed by the public sector. Is he in favour of them being owned by the public sector?

Dr. Cunningham

Yes. I have already said that, and I say it again categorically.

The Government's proposals are a mess and it is clear that they are born of expediency and dogma. They owe nothing to strengthening the position of water and electricity consumers. They are not aimed at improving the quality of drinking water, sewage treatment or environmental protection. If the House does not accept that, I shall quote from a letter from the Secretary of State dated 18 May 1987. It is addressed to Mr. Gordon Jones, the then chairman of the Water Authorities Association, and it sets out the Government's intentions and policies. It reads: I recognised that our revised proposals represent a significant departure from the principle of integrated river basin management which was instituted on the reorganisation of the water industry in 1974 and which was endorsed by last year's Government White Paper. The letter continues: and as a Government committed to extending share ownership and narrowing the public sector, we have been led to conclude that these aims must have priority. In other words, the aims of Tory dogma about narrowing the public sector and share ownership are to override judgment on the most efficient management of the water industry. That is why the Bill is before us. It has nothing to do with improving services or the position of the consumer.

In a scathing editorial the Financial Times describes the Government as lurching precipitately from one extreme to the other. It describes the proposals as informed less by any firm principles than by short-term political expediency and the persuasive talents of special interest groups with privileged access to ministerial ears. To whom has the Secretary of State been listening? It seems that he has not been listening to the National Consumer Council and certainly riot to the chairmen of the regional water authorities, appointed to a man—not a woman among them — to support privatisation. It transpires that the Secretary of State has been most influenced by the National Farmers Union and that well known bastion of protection for ordinary people, the Country Landowners Association. It turns out that the right hon. Gentleman has been listening to big brother—Viscount Ridley, his elder brother, an office holder in the Country Landowners Association.

The best illustration of this political headstand is the comparison of today's proposals and the speech of the Secretary of State with the speech made to the House just over a year ago by the then Minister of State, Department of the Environment with responsibility for water policy, the hon. Member for Oxford, West and Abingdon (Mr. Patten), who is now Minister of State, Home Office. On 23 June 1986 the Minister said: Water services plcs will inherit all the statutory duties—and I stress this—which currently rest upon the water authorities. Further on in the same speech, the Minister said: 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. He concluded by saying, on behalf of the Government: That is why it is so important to maintain the concept of integrated river basin management."—[Official Report, 23 June 1986; Vol. 100, c. 40–44.] We are bound to ask what has changed since that speech was made by that Conservative Minister to the House 12 months ago. The change is, of course, that the Tory party has been warned off by its influential landowning and farming friends. Certainly it has taken no advice from the chairmen of the water authorities, who are almost entirely and implacably opposed to the proposals.

The water privatisation proposals were overwhelmingly condemned last year. Opposition was almost universal. Now, however, without any effective consultation or debate, a new approach is presented which has even alienated the regional water authority managers appointed by the Government to support and see through the privatisation. It is not surprising that they are alienated, because they were not consulted either.

The Government are clearly determined to sell off the assets at any price, whatever the cost to consumers, the environment or those employed in the industry. In Britain, uniquely in Europe, 99 per cent. of all households are connected to a public water supply, and 94 per cent. are connected to the public sewerage system. The Government intend to sell at a knockdown price the 10 regional water authorities in England and Wales controlling those services when assets valued at at least £27 billion will be sold for perhaps a quarter of that sum.

Mr. Ridley

I must not allow the hon. Gentleman to traduce the water authority chairmen. Mr. Gordon Jones, chairman of the Water Authorities Association, said on 13 October: … there is a strong measure of agreement among all 10 water authorities how they see the future … we all agree in principle that such a regulatory body (as the NRA) is needed. We all agree that, with some development of the Government's proposals, it will be possible to produce an effective regulatory body and manageable and viable PLCs.

Dr. Cunningham

The reality is that, when we have talked to individual chairmen of water authorities, only one has expressed support for the Government's proposals in total. We can argue about the matter, but I suggest that hon. Members telephone them all tomorrow and ask them individually whether they support the division of the industry and the ending of the concept of river basin management.

Mr. Ridley

The hon. Gentleman does not seem to know his stuff. I have here the responses from Severn-Trent Water, Southern Water, South-West Water, the Water Companies Association and the Institution of Water and Environmental Management. The hon. Gentleman is quite wrong. He must come up to date.

Dr. Cunningham

Representatives of the regional water authorities made the journey to Brighton for the Labour party conference and invited my hon. Friends and me to meet them for dinner so that they could tell us of their opposition to the Government's proposals. We did not have to ask them; they came voluntarily and told us, and the chairman of the Southern Water Authority was one of those present. Any serious examination of the Government's case demonstrates that, in terms of consumer interest, water management, environmental protection or better management of the industry, it is hopelessly flawed. The real reasons for the proposals are political.

For reasons of irrelevant Tory dogma, the public sector must be reduced. Income to the Chancellor must be maintained by regular sales of the family silver. Share ownership must be increased because it is a good thing. No one is surprised that people like buying shares at a discount. What could be more natural than people who are offered a bargain, as they are in all sorts of ways, wanting to take it up? However, that does not mean that the process will in itself be to the advantage of the industry concerned, and it is a hopelessly shallow argument to suggest that it will.

The proposed change of ownership cannot result in consumer choice, and everyone knows it. There will be no choice. The proposed sell-off will not expose the water or electricity industries to the forces of the market. There will be no market. The proposed removal of public monopoly will not result in competition. There will be no competition. The British people will not be customers of private monopolies; they will be locked-in consumers. Being a customer implies choice. The people will have no choice. No one will have two water meters or two electricity meters or two tariffs to choose between, as the Secretary of State for Energy has honestly and candidly made clear. People will not have a choice.

The Secretary of State for Energy (Mr. Cecil Parkinson)

May I clear up the first point? The hon. Member for Kingston upon Hull, East (Mr. Prescott) does not seem to realise that this Bill does not privatise electricity authorities, and he will therefore make a speech of staggering irrelevance when he rises to speak at about 9 o'clock.

As for the point made by the hon. Member for Copeland (Dr. Cunningham), I said that distribution was a natural monopoly, and that therefore we must have regulation and customer rights. I also said that 80 per cent. of the costs of electricity come from generation, and that there is plenty of scope for competition—and there will be competition.

Dr. Cunningham

I think that that intervention was ill-advised. The Secretary of State for Energy seems to be laying the blame on, or advancing some criticism of, my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). The right hon. Gentleman knows that we were advised that he would be replying to the debate, and that that is why my hon. Friend is on the Opposition Front Bench. The change is either because the right hon. Gentleman is being gagged, or because he has bottled out—to use today's common parlance.

Arguments about conservation are bogus, and the Secretary of State for the Environment trotted out another old canard this evening. Any domestic consumer can have a water meter installed now and pay by volume consumed. The oft-quoted but never identified small user who complains, so often paraded as unfairly treated, has a ready remedy available now at a relatively small cost for meter connection. Why do not water authorities campaign and advertise effectively on that now? The reality is that they want compulsory meters and unit charging for water for everyone, and they want it legislated for.

Mr. John Redwood (Wokingham)

Will the hon. Gentleman confirm or deny that it is now Labour party policy to welcome competition in the large utilities, be they private or public? Is it now agreed that competition improves the service to the customer?

Dr. Cunningham

The hon. Gentleman cannot have been listening. There will be — there can be — no competition. That is the reality. Only dogma is preventing Conservative Members from recognising and accepting the plain facts of life.

The Department's joint study on metering which was published in August 1985, and to which the Secretary of State referred, points out: Although the option of a metered supply has been available to all domestic consumers since 1981 only about one customer in 1,000 has opted to do so. That is hardly enough evidence to support the Secretary of State's cry from the heart about the poor, unfairly-treated single person paying too much for water. There is not much evidence in his own departmental study to support that rather thin argument, is there?

The reality is that about 18,000 domestic customers of statutory water companies also have metered supplies. In all, 74,000 out of 18.6 million households have metered supplies. It is also clear that additional investment cannot lead to an increased market share for water authorities. Investors can receive a return only through increased charges, or reduced expenditure, or both. That is why the Government's position, and that of their appointed industry managers, rests absolutely on the need to measure water, to quantify consumption and to increase the charges for it.

The Secretary of State clearly shares the view that we must have a price for the baby's bath or for the pensioner's tomb and that the gardener must pay more to grow his chrysanthemums or tomatoes. The Secretary of State even thought aloud about the prospect of a taps tax. That is the stupidity that this dogmatic Government are apparently willing to consider in an effort to legislate in this area. All the fundamental and wonderful advantages of living in a society where a plentiful supply of good, clean water is readily and cheaply available will be jeopardised by this Government.

What other purpose is served by an enforced move to unit pricing for water? At present, the average household spends just less than 1 per cent. of its expenditure on water services. Long may it remain so. The policies that have led to that have been of incalculable value to the health and well-being of the British people. It is and will remain Labour policy to ensure that everyone can have as much water as is required at the lowest possible cost.

In people's homes, water is used overwhelmingly for reasons of health and hygiene: washing, bathing, toilet flushing, clothes washing and other domestic purposes. The Secretary of State argues that outdoor uses of water account for only 3 per cent. of domestic consumption. If the need to conserve water is the real priority—and the overall national demand has barely changed since 1982—attention should be given to a quite different area: to increasing investment in the often antiquated distribution system. Overall, 40 per cent. of our water is consumed in our homes, 30 per cent. in non-domestic uses, and a staggering 30 per cent. just leaks away into the ground. Major investment is required to reduce that wholly unsatisfactory state of affairs. It is totally unacceptable to the Opposition that the Government should sneak off along the road of rationing water by price, when the system itself is so inefficient.

Water is relatively cheap to collect, but it is increasingly expensive to treat, purify and distribute. Given the nature of our climate, there should never be any water shortages in Britain, and any coherent, progressive Government policy should aim at creating a national water grid—not at fragmenting the industry, as privatisation will do.

Technology now exists more accurately and quickly to locate mains bursts, using leak noise correlation. The mains and sewerage system, much of which was laid down a century ago, is in urgent need of replacement and repair. Private monopolies are the least likely bodies to expand and sustain the level of capital investment that is required.

Select Committees of both Houses of Parliament, the Confederation of British Industry, the Trades Union Congress, the National Economic Development Office and many other industrial and professional bodies have drawn attention to the urgent need for increased investment in these areas. The Consumers Association has also drawn attention to these problems. It estimates that additional expenditure of at least £40 million a year is required just to keep the system going. The "Which?" report stresses that the Government's financial controls on the industry have made the situation worse and have resulted in an inferior service. It says that many of the country's 150,000 miles of sewers are in danger of collapse.

Ministers appear to be unconcerned that preparations for the sell-off and flotation will divert management time and huge financial resources away from those problems. Tory Members of Parliament appear to be unconcerned that the need to pay for metering and to pay dividends will take massive capital investment out of the industry and that what should be used to repair mains and sewers will be used in other ways. We are crying out for more investment so that our beaches can be clean and the quality of our bathing and drinking water improved.

Water metering and dividends to shareholders will do nothing to improve the quality of services to consumers. Tories appear to be unconcerned about the continuing decline in river water quality, which led to over 900 km of rivers in England and Wales deteriorating in quality between 1980 and 1985. Any Government who describe the raw sewage flooding of people's homes as an "economic externality" are not too concerned with public health and the service to the estimated 60,000 homes thus affected every year.

Nor is there any apparent concern among Conservative Members about the fact that 10.8 million people in Britain receive drinking water of a quality below that which is required by European Community standards. The present Government issue waivers from the standards required in the Community directive and seem to be content to go on doing so.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)

That is not true.

Dr. Cunningham

The hon. Gentleman says that that is not true. I have here the Department's answer to the parliamentary questions, and I am referring to Department of the Environment figures. If it is not true, as he says, the hon. Gentleman had better talk to his right hon. Friend the Secretary of State about the falsification of parliamentary answers.

After eight years in government, the Secretary of State has conveniently discovered problems about water quality. Why, we ask ourselves, did he brief the press about his sudden recognition of this issue? We wonder whether it had anything to do with the fact that on 10 June 1987 the European Commission decided to start infringement procedures under article 169 of the treaty against the United Kingdom Government. It did so in 22 cases. In 16 cases it decided to send a formal letter and in a number of other cases it decided to pursue the issue. That is the real reason why, after eight years of doing nothing about it, the Secretary of State has suddenly decided that water quality is an urgent priority. This country will be humiliated by action taken in the courts by the European Community.

I welcome the Secretary of State's proposal that there should be a National Rivers Authority. It is a very important proposal that deserves serious consideration and examination. The proposal fractures the whole concept of river basin management, so praised by Ministers just 12 months ago. A National Rivers Authority will deal with a wide range of crucial issues, not just regulatory powers on discharges and pollution. It will be responsible for water resource planning, abstraction, water quality, land drainage, flood protection, fisheries, conservation, recreation, navigation, research and sea defences. [Interruption.] I am sorry that the Secretary of State is so appallingly ignorant and ill-mannered that he does not want to listen to criticisms of his speech and his proposals. For a member of the Cabinet, his behaviour is beneath contempt.

The proposal for a National Rivers Authority is aimed at making the water authorities more attractive for the sell-off by removing from them the costs and responsibilities for non-profit expenditure. The public purse, presumably within the PSBR—here another one of the arguments for privatisation is blown away because the authority will remain within the PSBR—will still have to foot the bill, leaving the private monopolies to charge for water and sewage disposal as they think fit.

The Government document makes it clear that a nationalised rivers authority will seek maximum possible recovery of costs, with all that that implies for sport, recreation and leisure activities. Effectively, what the Government are proposing is that the taxpayer and water sports people will subsidise privatised water monopolies.

The Secretary of State has tried to disguise all these points today by saying that all these functions and duties can be effectively discharged nationwide by a handful of people and at little cost. On that basis a National Rivers Authority would be incompetent and unable to do an effective job.

Even the Government's own Inspector of Air, Water and Wastes at the newly formed pollution inspectorate is said to be bitterly opposed to Government policy and is quoted in the press as saying that a National Rivers Authority will undo the basic principles on which the inspectorate was created so recently by the Government.

We know that over the past few years Conservative policy has been to increase deliberately water charges above the rate of inflation. Since 1979 the retail price index has gone up by 87 per cent., while average domestic water bills have risen by 134 per cent., according, in case the Under-Secretary of State has any doubt, to Department of the Environment figures.

The Government ensured that the water authorities increased prices by deliberately reducing their borrowing powers and external financing limits. In effect, the Government have been taxing today's water consumers. In 1987–88 three authorities — Severn-Trent, Thames and Southern—have negative external financing limits. Their consumers are effectively being taxed by the Government on their water supplies.

Mr. Roy Watts described this policy thus: It seems as if we shall once again be asked to substantially increase our repayment of long term debt in the coming year … We shall be entirely debt-free within three years, which amounts to a very poor deal for today's customers. The National Consumer Council has recently expressed concern about the increase in the number of homes having their water supply cut off because of financial difficulties with bills. Do we, as a civilised nation, want to pursue policies that are bound to increase that problem? We in the Labour party are in no doubt that we do not wish to do so. We want to know where Tory Members stand on this issue.

Privatisation will do nothing to restore the public's right to a say in how water services are run. Already the voice of consumers and local authorities has been stifled in preparation for the sell-off. Authorities meet in secret and the public interest is denied.

A further result of deliberate Government policy has been that semi-accountable authority memberships were dissolved to be replaced by much smaller executive boards appointed directly by the Secretary of State for the Environment. That move brought the new breed of business managers into the industry. Nine out of 10 of the new boards immediately elected to meet in secret.

No public service is as basic and universal as water supply. None is as fundamental to our very existence. Irreconcilable conflicts remain between the public health and well-being, the interests of shareholders and market forces. It was those conflicts and the crucial national issues of water purity, public health, coherent policies for pollution control and sewage disposal, strategic investment and security of water supplies that originally caused water to become a public utility and monopoly. We cannot accept that matters of individual and environmental health should become the plaything of the stock exchange. There remain overriding reasons for retaining our water industry in public ownership and control, and that is why we shall oppose this Bill tonight.

Several Hon. Members

rose——

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. I need hardly remind hon. Members that we have had a late start to this debate. I know that many hon. Members wish to speak, so I appeal to all hon. Members for brevity to help each other out.

7.7 pm

Mr. Malcolm Bruce (Gordon)

I beg to move, as a manuscript amendment to the motion, to leave out from "That" to the end of the Question and to add instead thereof: this House declines to give a Second Reading to a Bill which links two essential utilities which are quite different in their organisation and, whilst increasing their powers in advance of privatisation, fails to guarantee that the private monopolies ultimately to be created will be sufficiently regulated to ensure that they are fully responsive to consumer needs, and which makes inadequate provision for promoting effective competition in electricity generation and transmission. The Bill links two public utilities that provide vital public services that operate in quite different ways. It is typical of those that have been introduced by the Secretary of State in that it seeks sweeping powers, as specified in the first clause, to do anything of an ill-defined nature. The Bill is riddled with loopholes.

The issue before the House is not simply one of privatisation. We must recognise that privatisation has already gone so far that it cannot be quickly reversed. With the Government's majority and a full Parliament ahead, a future Government face the reality of all the major utilities in this country being run as private monopolies. Dealing with the consequences of that will inevitably be a task for a future Government who are concerned, as this Government are not, with reconciling the need for public service with the natural desires of shareholders to exploit their monopolies for maximum profit.

Some opponents of the Government may be smiling at the stock market roller coaster that we have all witnessed this week, with all its implications for future privatisation. I am not one of those who are smiling, for two reasons. First, I support the sale of the remaining BP shares and, secondly, and more important, the Government have offloaded all the shares on to guarantors. That means that a great deal of City cash will be tied up digesting that flotation; it will not be available for investment in other sectors to create wealth and jobs. That aspect of privatisation is constantly overlooked, especially by the Government. The billions of pounds that are involved are taken out of circulation. On a bull market this may be for only a short time, but on a long bear market it may be for very much longer, and that is something that the Government may have to contemplate.

The process of delivering essential utilities in the future by means of the powerful private monopolies that have been created by the Tories will increasingly come under scrutiny. In the past few months we have seen evidence of the down side of privatisation.

The way in which electricity currently operates cannot be defended. It uses its statutory requirement to keep the lights on as an excuse for wasteful investment and inefficiency. Despite the Department of Energy's aim of a 20 per cent. energy saving during National Energy Efficiency Year, electricity consumption increased. None of the targets for the electricity industry set by the Department of Energy has been achieved. The industry's response to rising demand has not been to promote energy conservation and efficiency but to build massive new power stations of questionable economic efficiency which are incompatible with the development of combined heat and power as the most efficient form of power generation. I do not defend the present structure and organisation of the electricity industry.

Industrial energy users will testify to the lack of any real competition in energy. The privatised gas industry bases its prices on the price of oil. I am told by industrialists in my constituency that whenever a tanker is torpedoed or shelled in the Gulf the phone rings and British Gas says, "You've heard the news, haven't you? We are increasing your tariff." There is no reference to the cost of producing gas or to the fact that if an industrialist was not using gas he would often be using coal, not oil.

We must not allow the Central Electricity Generating Board to hog-tie the Government the way that British Gas did. The Government should consider breaking up the electricity industry if they are to privatise it. This might be done in a number of ways. It could be broken up into generation, distribution and marketing or into regional corporations, possibly integrated on the model of the Scottish boards. However it is done, it is obvious that a substantial core monopoly will remain which will not be regulated effectively by competition or the operation of the market.

The industry must be strongly and effectively regulated by an agency with teeth — teeth to intervene on and control prices and to require that greater attention be paid to energy efficiency and choice. After four years more of this Government so many utilities will be in the private sector that it might be appropriate to draw the agencies together so that they can pool resources and learn from experience.

I spent time in the United States last year finding out how public utilities operate there. I was impressed by the way that public utilities commissions operate. Without exception, amazement was expressed, by Republicans as well as Democrats, that the British Government should privatise utilities as central monopolies without real competition or adequate regulation. I remain convinced that we shall have to put that right. We also need some kind of anti-trust powers so that monopolies can be examined and be broken up to enforce competition. Because of the Government's record and the sweeping terms of the Bill, we need more detail of Government thinking before the House can be expected to support the Bill.

An open-minded approach to the privatisation of electricity might yield useful answers to the problems that British Gas and British Telecom are now manifesting. We should improve the operation and accountability by the electricity industry, but water must be viewed in a different light. The case for privatising water has not been made by the Government on anything but ideological grounds. The requirements for centralisation are greater than ever.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Does my hon. Friend agree that the pledge by the Government during the election campaign and ministerial statements since did not address this question? The opportunity was not taken to argue the case in detail and that is disgraceful.

Mr. Bruce

The situation is worse than that because the Government gave the impression that they accepted the case against the privatisation of water, but now that the election is out of the way they have decided to introduce a measure on which they would have been defeated.

My party led the original opposition to water privatisation proposals and had considerable support in the House. The proposals were eventually withdrawn. We are dealing with an ideological argument which does not stand up to close examination. We believe that there is no serious case for consideration.

The proposal involves the possible introduction of metering — which has not been required before — for which there is no demand, which is not developed and which is likely to prove costly. Such an investment would be better used to upgrade our sewerage systems.

Sir Eldon Griffiths

I helped to put the 1973 Act through the House when metering was debated at length. I was supported by the hon. Gentleman's party. Does he now wish to deny people the choice of metering?

Mr. Bruce

No. I am not suggesting that we should deny people the choice of metering but that the imposition of metering is not needed and there is no demand for it. There is merit in metering but it should not be imposed.

Mr. Allan Roberts (Bootle)

The Government propose to deny choice. They want to introduce compulsory metering. The legislation introduces compulsory metering in 10 pilot areas, which have been named. If the Government believe that the schemes justify metering it will be applied throughout the country, and freedom of choice will again be destroyed by this Government.

Mr. Bruce

The metering issue has not been adequately resolved. The Bill states that water authorities will be able to impose whatever charge they think fit. It is not clear who will pay or whether the money could be better invested.

A National Rivers Authority has been proposed by the Minister as a sop to the environment lobby. If the Government insist on privatising the water industry such an authority is necessary. Whatever the increasing incidence of pollution, there is a need for a strong standards body, especially if we are to replace publicly accountable organisations with commercial corporations. The central reorganisation, in advance of privatisation, presents technical difficulties. The new system would have to be organisationally uniform and the existing private authorities would be swept away.

The Bill confines itself to England and Wales. In Scotland water authorities were reorganised with local authorities in 1974. The system there is deemed to work reasonably well. The problems of inadequate and polluted water supplies in rural areas—a big problem in Scotland — are being tackled, but rather slowly because of Government constraints on local authorities. Would private companies be interested in dealing with those problems? Would a privatised electricity industry be interested in taking on the social responsibilities of the North of Scotland hydro electric board for bringing power to the remote farms and glens? I know that the Government have not yet proposed privatisation of water in Scotland. There are valid reasons against such a move, and those reasons also apply to many parts of England and Wales.

The real tragedy of the privatisation exercises to date is that substantial sums have been diverted that would otherwise have been injected into the economy in the form of investment. However, the Government have dressed up the privatisation sales to attract customers. Until this week, the Government have misled many people into believing that share owning was a no-lose, no-risk venture. It is not surprising that so many people took up shares. However, it will be interesting to see how many people take up the offer of BP shares next week, given the more declining market.

A major innovation required for the effective privatisation of water is metering. The House must know who will pay the cost of installing meters. It is estimated that that operation will cost £100 per household. That represents substantially more than £1 billion. I believe that we have enough experience of the way in which the Government go about privatisation to guess who will pay—the taxpayer. If the Government get away with it the taxpayer will pay for the cost of the installation in advance of privatisation. In those circumstances, the shareholder will pick up a bargain as all the costs will be expended at the taxpayer's expense and across the board. It will represent a bonus to the private shareholder.

I believe that metering discriminates against those who need water most. That is not an argument against metering as such but it is a consideration against the imposition of metering right across the board. The people who would be most affected would be those with young families. I seriously suggest that if people start to think about the amount of water they use as a significant cost it will have health implications. It will discourage people, especially those on low incomes, from using water for essential purposes.

The gathering, delivering and treating of water is fairly expensive, but water in this country is freely available. Indeed, in the past 48 hours it has been more freely available than many people would wish. In an island where there is a general abundance of water, will the introduction of widespread metering lead to people being cut off for non-payment as has been the case with gas and electricity? They may be cut off from the supply of something that is vital to human survival.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

rose——

Mr. Bruce

I appreciate that I have been on my feet for a significant time, but there are a number of points that I wish to raise and I believe that I am moving an important amendment.

I suggest to the Minister that if the 13-year bull market is about to be replaced by a long-standing bear market or a stagnant market the inducements that the Government will require for further privatisations will mean that all taxpayers and users of public services will have to pay even more towards ensuring worthwhile premiums for shareholders. Those inducements represent sums that, frankly and disgracefully, the Government would not contemplate investing in research, industrial development, infrastructure, education, health and welfare, all of which are crying out for funds, but which the Government tell us are unavailable. However, those sums are available for massaging the accounts of proposed privatised industries in advance of flotation. That is a disgraceful misappropriation of public funds.

I believe that the proposals in this scrappy and inadequate Bill have been drafted in a typical fashion by the Secretary of State. He has asked for widespread powers without specifying in advance what he proposes to do and he is asking for a carte blanche from the House. We know from experience that what the Government are talking about is not the promotion of competition, accountability and the nice spirit of free enterprise. It is about creating another tranche of vital monopolies, inadequately regulated and not exposed to proper competition.

The Government's record on attacking monopoly and promoting competition is a national disgrace. That record betrays everything that the Conservative party once stood for. As the Conservatives will not fight monopoly and will not promote competition, I am glad to advise the House that my party most certainly will, and I urge the House to support our amendment.

7.24 pm

Sir Eldon Griffiths (Bury St. Edmunds)

I will accede to your wish, Madam Deputy Speaker, that speakers should be brief so that as many people as possible can speak.

I declare an interest in this matter as the Minister responsible at the time for carrying the Water Act 1973 on to the statute book. At that time I became, I freely admit it, intensely interested in the water industry. It is a complex industry and a vital one. The Bill that the House is considering today is therefore of great importance. It is no more than a paving measure, but it is a necessary one for the privatisation that I hope to see on the statute book this Parliament.

There are three issues I wish to raise. First I raise that of water metering. The power for water meters to be provided was included in the 1973 Act against the opposition of the Labour party, but with the support of the then Liberal party. I could not make out from the speech of the hon. Member for Gordon (Mr. Bruce) whether he was for it or against it, but it is clear from the speech from the Labour Front Bench that the Labour party will continue to be opposed to the metering of water in this country.

Mr. Allan Roberts

The Labour party is not opposed to the metering of water in this country. We are in favour of people being able to choose whether they pay through the rating system, as at the moment, or by having a meter installed. What we are against is the compulsory imposition of water meters and the destruction of freedom of choice that is proposed in this legislation.

Sir Eldon Griffiths

The hon. Gentleman has succeeded in totally confusing the House. Everything that was said by his colleague on the Front Bench suggested that the Labour party was opposed to metering. Indeed, it registered that opposition in the Division Lobby in 1973 when metering was first proposed.

Mr. Roberts

We are opposed to compulsory water metering. We are not opposed to people having choice. That is what my hon. Friend the Member for Copeland (Dr. Cunningham) said and that is what I repeat.

Sir Eldon Griffiths

Unfortunately, the hon. Member for Bootle (Mr. Roberts) was not here when his party voted against metering in principle. Indeed, at the time the Labour party suggested that it was a tax on cleanliness.

I hope that metering will proceed. However, it is a complicated matter. Metering is complicated because, as yet, we have no foolproof meters. I have examined a whole series of possible meters. Some work, some do not. As yet, we have not got a satisfactory meter. Then there is the difficult problem of retrofitting meters in multi-occupation dwellings. That is exceedingly difficult in large cities. There is the problem of the cost of the survey before meters can be installed. People do not like paying for the cost of a survey. There is also the cost of installation. So far, that cost has been far too high.

The water authorities have dismally failed to market the advantages of metering to their consumers. Indeed, until a few years ago water authorities, for the most part, were rather hostile to metering based on the technical problems that I have described. One of the reasons why there has been such a small take-up of meters in this country is simply because water authorities have not promoted and marketed the advantages to consumers. I hope that metering will be introduced.

I also wish to deal with the National Rivers Authority. I must say to my right hon. Friend the Secretary of State that I do not like it. I wish that he had stayed with his original proposals. Of course, I accept what my right hon. Friend has said about his change of heart and I do not dissent from that. However, I am bound to say that there is a wide impression that my right hon. Friend was got at. I would have preferred that my right hon. Friend had stayed with his original proposals.

If the 1973 Act has been a success—I believe it has—it is for two reasons. First, because the water cycle is managed as a whole. For the first time we were able to handle the clean water and the dirty water together. Ever since, the hydrological cycle—I do not like the term, but it is the appropriate one—has been managed as a whole and that is the central reason for the success of our water authorities. Secondly, the success of the 1973 Act lies in the principle of integrated water basin management. This too has been central to the work of the authorities.

I fear that the NRA will damage both those concepts. It will intervene at the very least in the principle of the water cycle being managed as a whole and it could have implications for the multi-functional operations of our water authorities across river basins.

I wish that my right hon. Friend the Secretary of State had not brought forward the proposal. However, we must wait for his paper and no doubt when it is produced we shall discover the exact details and parameters of the new authority. But I should like to leave this simple thought with him. Let him keep his new rivers authority, if he must have it, as a monitoring and supervising body and perhaps as a regulating body, but not as an executive body. Let it stay out of operations. Let it not create a large bureaucracy with executive functions. If that happens, it will create all sorts of demarcation disputes with the plcs. It will cost far more than necessary. It will confuse the central features of our water industry. Therefore, let the new body supervise and monitor. Let it not be an operational and executive body.

As and when privatisation comes about, for which the Bill opens the door, two further issues on water will need to be tackled, too. First, our water authorities still carry a great deal of debt. Thanks to improving management and improving economies, much of that debt has been met, but a great deal remains. Some is the ancient, historic debt that the authorities inherited from their local authority predecessors. Some of it is Public Works Loan Board debt, which is probably the largest single amount. A third portion is borrowed from the European Investment Bank. Those three types of debt will need to be dealt with. It will be important to those invited to buy shares in the new plcs to know how that debt is to be handled.

This of course will be a problem for the House. I should not be in favour of simply writing off the debt because ultimately that would be unfair to the taxpayer. It would be right, I think, to get rid of the historic debt inherited from the old local authorities at the time of the Water Act 1973. But it would also be right to insist that the new private companies shall carry the full burden of the debt that has been borrowed from Europe and, indeed, from the Public Works Loan Board.

Secondly, we shall need to deal with the pensions of the water authorities' staff.

Neither of those points is germane to the Bill before us but as we are paving the way, I have taken the liberty of mentioning them to my right hon. Friend because they will have to be dealt with.

I have no doubt that privatisation is not only right but will be popular. It will ensure that we have a better, not a worse, water industry. But it is essential that in proceeding towards privatisation we do not destroy the basic pillars on which the 1973 Act was constructed—that is, multi-function management of the entire water cycle and authorities that are based on a total river basin management system.

7.35 pm

Mr. David Hinchliffe (Wakefield)

This is the first opportunity that I have had to make a contribution on the Floor of the House. I hope, Madam Deputy Speaker, that you will allow me to preface my remarks on today's business with a brief reference to one or two wider issues relating to my constituency.

As some hon. Members may be aware, I had an unfortunate start to my period in the House in that I developed chicken pox during the weekend following the Queen's Speech and was confined to my home for the subsequent three weeks. I was fortunate in being able to call upon my predecessor, Walter Harrison, to cover my surgeries and assist with constituency work during my illness. The local paper in Wakefield reported his comments that his retirement had been "a little shorter than expected", but he was happy to help out.

I have mentioned that one incident because it is typical of the help that Walter has given me since my selection as his successor, during the general election campaign and since my election to Parliament. It is a pleasure to he able to pay tribute to a man who is so widely respected on both sides of the House.

While Walter will be remembered for his undoubted skills in the Whips' Office, he was also very much a constituency Member. Wakefield was his home and he gave much to his constituency during the 23 years that he represented it. I know that Walter would be the first to admit that he could have achieved little in politics without the excellent support of his wife Enid. Unfortunately, in recent years, as some hon. Members may be aware, she has not enjoyed the best of health and I am sure that the whole House will wish to join me in expressing the hope that she has better fortunes in future and that they can both enjoy the long and happy retirement that they so richly deserve.

I have a hard act to follow. One of Walter's major regrets on his retirement concerned the enormous increase in unemployment in Wakefield in recent years. Nearly 5,000 people are officially unemployed in the constituency. The real figure is much higher and would include, for example, men below 60 who have been instructed not to sign on but still receive unemployment benefit. Like many areas in the north, Wakefield has been hit by the rundown of its basic industries and the knock-on effect in other types of employment. Since 1979 six coal mines have been shut in the constituency and many others providing employment for Wakefield people in adjoining constituencies have also been closed. Since the present Government came to power, some 10,000 mining jobs have been lost in the Wakefield district and precious little has been done at national level to create new prospects for those leaving school and coming on to the employment market.

In the past few days we have had in Wakefield the appalling news, which was referred to by my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay), that British Coal proposes to close Woolley colliery in my constituency, along with the nearby Redbrook pit in the Barnsley area. The total of job losses will be over 1,300 if British Coal carries through its present proposals. I can promise it and the Government that their plans will meet with the strongest opposition from the communities in the Wakefield and Barnsley areas that are directly affected, from the trades union movement and from hon. Members whose constituencies are involved.

What seems to me to be so irrational about the present Government policy is that the profitability of an individual pit is judged in complete isolation from the wider implications of a pit closure on other local industries, the local service sector and employment prospects. Figures are given detailing the cost of keeping a so-called loss-making pit open, but we never see the real figures of a closure in cash terms. It has been estimated by the local authority in my area that the annual public cost of keeping someone unemployed in Wakefield is £8,300. The average annual wage is only £300 more than that figure and it would make more sense to invest public money in job creation than in job destruction.

To turn now to the Bill, having mentioned Walter Harrison, I should like to mention another predecessor. Mr. Thomas K. Sanderson, who was Tory Member of Parliament for Wakefield in 1876 when water supplies were taken into public ownership. He summed up the quality of private water in Wakefield at the time as being "pretty near equal to sewage". His comments were evidence of the political consensus over a century ago on the need for water to be taken into public ownership. It is worth noting that it cost the people of Wakefield £164,904 for the privilege of owning their own water as well as paying off the debts and court costs of the previous owners. The costs had to be met as part of the battle against cholera and other diseases that were prevalent at the time.

It is also interesting to note that the philosophy behind the proposed legislation that we are discussing today was rejected even by political cavemen of the Tory Right in Victorian times, yet the present Government are rummaging around in the dustbin of history to turn the clock back on yet another issue.

Like most other hon. Members, I have received vast amounts of correspondence from individuals and organisations that are opposed to the Government's proposals for the water industry. It is interesting that much of the opposition comes from the private business sector, which normally might be expected to favour such a strategy. Within the past week or so I have received two letters about this matter which are worthy of mention. The Kirklees and Wakefield chamber of commerce and industry wrote to me on 8 October stating that Government thinking on water privatisation appears "somewhat nebulous". In its view, water, of all the essential services, needs to be properly handled but unfortunately the proposals lack clarity and would do little to encourage an efficient and responsible service". The Confederation of British Wool Textiles wrote to me on 12 October and said: as a matter of principle we do not believe that any public utility, providing services so fundamental and where customers have no choice in using its services should be allowed to pass into private hands. While there is now some doubt as to whether those organisations have written to the correct Member of Parliament, according to a letter I have received from the Department of the Environment, my constituents have been selected, without their consent, my consent or that of the local district council or health authority, to act as guinea pigs in a pilot scheme designed to pave the way for the wholesale introduction of domestic water meters and water privatisation. They are to be conscripted into a scheme designed to get the Government out of the unholy mess they are in regarding post poll tax water charges. It is a scheme to satisfy those backers of the Tory party who are lusting after the huge profits to be made out of the fact that people cannot avoid using such a basic essential as water.

If it is true that Wakefield is to be included in those trials, I resent strongly the fact that my constituency is being pushed into the front line of a policy that will bring a financal penalty on personal sanitation and hygiene. Low-income families—there are many of them in my constituency—will find themselves having to cut down on flushing the toilet and washing themselves and their children on a regular basis in order to save money. The implications of that for the health of the nation must be obvious, even to the Government.

Without doubt, the proposals to sell off these public utilities and to meter the domestic use of water are evidence of the fact that the Government have stooped to new depths in their attempts to raise further revenue for tax cuts. The events of the past few days have illustrated beyond doubt the possible implications of throwing vital services such as water and electricity to the mercy of stock markets. I hope, even at this late stage, that the Government will recognise the extent of public opposition to this issue, see sense and withdraw the proposals.

7.41 pm

Sir Giles Shaw (Pudsey)

I congratulate the hon. Member for Wakefield (Mr. Hinchliffe) on his maiden speech. It was delivered with the punch and pugilism we have come to expect from the Member who sits for Wakefield and, knowing as we do the illustrious way in which his predecessor operated in the House, I cannot help but feel that he has made a worthy start to his career here. I have to take good note of the fact that his marginal seat improved somewhat at the election so it may be right that we should offer him good fortune in the times ahead.

I should begin by declaring an interest in that I am a consultant to a company which numbers among its clients the Water Authorities Association. However, my interest in the water industry precedes that. Like my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths), I have had two years ministerial involvement with the water industry.

The comments that have been made about the proposals for privatisation both within the industry and outside are somewhat sensitive to the proposals the Government have now put before the House. This is a paving measure, but it is perfectly right that we should look at this measure as if it begins to encapsulate the proposals in the Green Paper currently under discussion. If I understand it correctly, in clause 1(6) there is provision for the existence of a body which has not yet been created. It sounds as if it will be the National Rivers Authority. It states: References in this section to a body corporate shall include references to a body corporate which has not been established or formed but which may be established or formed in pursuance of a proposal of the Secretary of State. I suspect that that is the legal definition for the forthcoming National Rivers Authority.

I should like to make two observations which I hope that my right hon. Friend the Secretary of State will take seriously. If we are to proceed down the route of privatisation, which I believe firmly that we should, it will be in the Government's interest to ensure that privatisation is well received within the industry, is properly explained and understood and, above all, properly sold within the regions in which it will operate. This is about the only proposition I can think of that is a truly regional prospect for privatisation. The 10 water authorities, stemming as they did from the Water Act 1973, have well established themselves. They have created a substantial record of improvement in water supply, quality and amenity and, as far as I am concerned, have provided an increased and better service and met most of the demands laid upon them whether for improved flood control and prevention, improved supply and quality or genuinely fresh access to many of their important public amenities.

We must not consider privatisation as a measure seeking to remove an industry that has failed. Far from it. We are considering privatisation as a further step along a natural way to improve the quality of water supply in this country. The water industry is a major technical industry. It is high in capital assets, relatively low in manpower, high in technology, has many of the aspects of high-tech industry, and we must treat it as such. Its biggest single restraint in recent years has undoubtedly been the restraint of capital and, as hon. Members have already observed, it is the restraint of being part of the PSBR or the national loans fund that has prevented many of the major schemes from moving faster or as fast as the authorities would have wished. Therefore, if the water authorities are to become public limited companies, as I trust they will, we must look to them to be able to raise capital, manage their assets efficiently and be able to produce an adequate return for shareholders and investors.

My hon. Friends have rightly drawn attention to the fact that the idea of a National Rivers Authority is not only a reversal of a previous proposal but it would appear to be different from the concept of the river basin management around which the 1973 Act was framed. I believe that that is reconcilable and I hope that when my right hon. Friend the Secretary of State looks in more detail at the responses to his Green Paper he will consider how far the National Rivers Authority can be rooted in the regions it will supervise. It should be a regionally based authority, not a national authority. The control of the water catchment within its region should be its major contribution. I note that it is to be charged with resource planning. If there is to be a dichotomy between operational planning and resource planning, one is in for trouble. Therefore, it is vital that, if my right hon. Friend proceeds with the National Rivers Authority, he should make it sensitive to operators as well as planning for the overriding controls for pollution, abstraction and discharging. That would be a perfectly sensible thing to do.

If the public limited companies are to be established correctly they need real clarity of distinction between the role of the rivers authority in their region and the role of the privatised plc. I trust that my right hon. Friend will use the time available to him to lay out clearly the role of the rivers authority and, I hope, to persuade the water authorities that they can accept a National Rivers Authority, not as an interference with operational management but as a contribution to maintaining the regional catchment, dealing with the conservation, amenity and pollution control aspects and allowing the plc to manage the resource properly from the start to the finish.

If my right hon. Friend the Secretary of State wished to centralise the National Rivers Authority and make it large in staff he would be creating a vehicle through which a Labour Government, should they ever be returned, would find it extremely easy to return the water industry to public ownership. That is what the Labour party wants to do. The hon. Member for Copeland (Dr. Cunningham) set that out as his objective. Therefore, it is vital that the National Rivers Authority should not be a vehicle that can be a quick bypass to public ownership of the water industry again. I am sure that my hon. Friend the Member for Bury St. Edmunds would agree that we cannot afford to have the water industry uprooted time and again as it seeks to fulfil its prime duty, the supply of water to the country. It is a duty it has discharged admirably over the past 14 years and I trust that it will discharge that duty in the private sector not only with extreme care, quality and efficiency but with profit.

7.50 pm

Mr. Dafydd Wigley (Caernarfon)

I wish to add my congratulations to the hon. Member for Wakefield (Mr. Hinchliffe) on his maiden speech. Coming to this place takes us all in different ways, but this is the first time that I have heard of chicken pox breaking out, and I offer my sympathy on that. We all had great respect for his predecessor, Walter Harrison. Members on these Benches could write a book about our relationship with him when he was in the Labour Whips' office, but that must wait until another time.

I wish to respond to the hon. Gentleman's comments about the need for strong regional logic in the proposed changes. That theme has run through many of the representations that I have received from Wales. I recognise that similar arguments apply to Yorkshire and elsewhere. We appear to be facing the impending privatisation of two of our most important fundamental industries—water and electricity. On behalf of the joint Plaid Cymru and Scottish National party parliamentary group, I wish to put firmly on the record that we are fundamentally opposed to the privatisation of the water industry in Wales—this Bill does not apply to Scotland — and the electricity industry in both Wales and Scotland. We shall continue to hold that fundamental position as the greater detail of the legislation comes before us in later stages.

As hon. Members have said, the Bill is a bit of a mess because it refers to bodies that have not come into existence, such as the National Rivers Authority. In the memorandum, it is referred to tangentially, but is not named in the body of the Bill, and nowhere is it defined. That is very unsatisfactory. Does "National" mean an English national authority? Will there also be a Welsh rivers authority? Will there be a British national authority, in the way that the House usually uses that term, or will we have a new nation called England and Wales? At the very least, the term is unsatisfactory, but even more so is the lack of clarity about the Government's intentions, whatever terminology is used.

We are strongly opposed to the concept of a centralised rivers authority, and that point has also been made in representations about the Bill. The Welsh water authority, in its reaction to the proposals, stated: In Wales there are political and organisational considerations which will need to be met by a further degree of regional devolution, whatever structure is established for the English regions … The special sensitivity of water-related issues in Wales is acknowledged in the current arrangements … The six functions which it is proposed to transfer to the NRA have a very high public profile in Wales. The NRA will be responsible for the most visible and attractive features of the water environment in Wales, i.e. rivers, estuaries and coastal waters, as well as for some of the most controversial functions such as pollution control and land drainage. These cannot be run from England. In referring to the need for clear policies, it stated: but the sensitive and sensible implementation of those policies within Wales must be tackled by a semi-autonomous body which retains close links with the Welsh Office and with the other Government Departments which take lead responsibility for discrete functional areas of NRA business. It is important that that reponse is written into the record because that body has been responsible for water in Wales since the implementation of the 1973 Act.

There have also been representations from farmers unions. The Farmers Union of Wales said: Wales should have its own water supervisory body responsible to the Secretary of State for Wales … a separate Welsh National Rivers Authority responsible for the area covered by the Welsh Water Authority should be established and be made responsible to the Secretary of State for Wales. All water catchment, storage and the regulatory assets should also come under the WNRA. That is an important consideration because of the distinct geography of Wales. Indeed, we have seen the effects of floods during recent days. Land drainage and other such aspects are integrally related to agriculture in Wales, which of course comes under the Welsh Office.

I was, therefore, pleased when I received a reply, dated 23 September, to an inquiry that I sent to the Secretary of State for Wales, stating: You are concerned that the proposals do not provide for a separate Rivers Authority for Wales. Let me therefore begin in stating that I personally have not totally ruled out this possibility". I hope that that is the Government's current position and that the options are open and will be given full consideration.

As the Welsh water authority suggested, water is a highly emotive subject in Wales. We have to think only of the drowning of the Tryweryn valley 30 years ago to provide water resources for Liverpool, which caused enormous tensions. One of the good things that came out of it was the creation of the Welsh water authority, so that we had a body and a forum that was able to develop a strategic approach to water resources in a way that respected the wishes of local communities. If there is a centralised rivers authority without sensitivity to that dimension in Wales, the great danger is that once again will emerge the tensions and the exasperation that we suffered because of the Tryweryn drowning in the 1950s and early 1960s and, to a lesser extent, with the Clywedog reservoir in the late 1960s. That needs to be avoided and must be thought about at this stage — it is no use regretting it later.

There is a close link between the control of water resources and agriculture, environmental policy, sport and tourism in Wales—all of which come under the Welsh Office. Wales has problems in upgrading its sewerage operations and there is a vexed question about the standard of beaches in Wales in view of the comments from the EEC about them, both of which underline the need for a coherent approach to public policy in that area. If one body takes away the powers over rivers and water storage from the Welsh Office, it will be difficult to achieve a coherent approach. Therefore, tonight I am looking for an assurance that the Government still have an open mind on setting up a separate Welsh national rivers authority in line with the comments in the Secretary of State's letter.

I come now to the privatisation of water distribution, and in passing note that the experiment with metering will not take place in Wales. Of course, there is some metering in Wales and there is scope for further metering. However, as other hon. Members have said, it should be voluntary rather than compulsory. There are great fears for public health policy if charges are made on the basis of usage. Poor families have the greatest need for water, and such a policy might encourage them not to use the water that they need.

The level of water charges in Wales has been a matter of consternation for many years. There are various reasons, some related to geography and some to history, for the level of charges being high. If the privatisation of the Welsh water industry is to be of any interest to any commercial concern, if an asset base of £1,600 million is to give a return sufficient to justify private investment, there will have to be either an enormous increase in the charge for water or a write-off of an enormous part of the asset base of the existing historic debt. A case can be made for writing off that debt — as was made by the hon. Member for Bury St. Edmunds (Sir E. Griffiths)—but that could be done now. If that historic debt were written off now, the level of water charges in Wales could come down to below the average in England and Wales. Therefore, if we are happy to go down that road, let us do so immediately. Let us write off the historic debt and have reasonable water charges in Wales. What is not acceptable is that those historic debts should be written off, at public expense, to enable people to make private profit out of water. Certainly it is not acceptable that the level of charges for water in Wales should be even higher than they are now simply to fund private profits out of this most essential of provisions.

Mr. Richard Livsey (Brecon and Radnor)

Will the Minister give us an assurance that, should water be privatised, water charges——

Madam Deputy Speaker

Order. The hon. Gentleman is intervening in the speech of the hon. Member for Caernarfon (Mr. Wigley).

Mr. Livsey

I apologise, Madam Deputy Speaker. Does the hon. Gentleman agree that water charges in Wales should be equalised with those in England and that, should water be privatised, we should extract promises to that effect from Ministers?

Mr. Wigley

I am grateful to the hon. Gentleman for addressing me as the Minister. I have not quite taken over that role yet, and I am not sure whether, with this hot potato, I would wish to.

It will certainly be unacceptable to have the worst of both worlds. Either we have a structure that does away with historic debts and allows us to work on a reasonable commercial basis, without the millstone that leads to the present high charges, or we should have an even charging system. The worst of both would leave us with high charges and no ability to do anything about it.

I want an assurance from the Government that the powers given by the Bill in relation to the privatisation of water distribution may be used by the Welsh water authority to investigate the possibility of having in Wales a variation on the concept of a purely private company, which is being considered in regions of England—the possibility of having a national consumer co-operative in Wales. The matter has been considered by members of the Welsh water authority and has some attractions, given the interest that has been expressed in such bodies in Wales. It might bring some of the benefits which the Government are seeking from independent, free-standing commercial bodies, with answerability to all the people of Wales who, as consumers, would be members of that co-operative.

Is it possible to investigate going down the road that has been taken in Scotland? No changes will be made to the water structure in Scotland, and I should be interested to know whether the Government have closed their mind completely to the possibility, given the different historic and geographic position, of municipal water supply in Wales. I realise that that goes beyond this Bill, which relates purely to privatisation, but I would like to think that the option has not been closed completely.

Electricity has a major significance in Wales and Scotland. It is significant in Wales because of the production of electricity from coal, hydro-electricity, nuclear power stations—of which there are two in my county — pump storage schemes and the possibility of the Severn and other barrages. It is an important dimension of our economic and employment policies, as well as our energy distribution. The CEGB has a very good record of efficiency. That came home to us last week, when there was such a crisis when electricity was lost for a few hours. It showed how much we take electricity for granted. Unfortunately, in Wales, we lose electricity supply more frequently and perhaps we value it more as a result, but there is a good track record in the production and distribution of electricity. I cannot see how the privatisation of electricity will make anything more than a nonsense of a coherent energy policy. The mind boggles at the thought of going to the extreme—nothing in the Bill would prevent it — of privatising nuclear power stations. What will be the cost of decommissioning power stations? More importantly, what are the implications for the safety of employees and the communities in which those stations are located?

Those questions have not been answered and were riot aired in the general election campaign. The Government do not have a mandate to privatise such basic industries, and if the people were asked in a referendum I am sure that they would reject the idea. There is scope for small-scale alternative local production of electricity, but that is different from the privatisation of the backbone of electricity production and distribution. The House should consider it deeply before going down that road. As the Bill prepares the way for that road, the SNP and Plaid Cymru will vote against it.

8.4 pm

Mr. Charles Morrison (Devizes)

As time is short, I shall limit myself to a few thoughts on the future structure for the electricity industry and for water. There is a distinction between the two subjects.

My right hon. Friend the Secretary of State for Energy has a range of possibilities to consider, but I am glad that he has already given an assurance that the electricity industry will not be sold as a monolithic corporation. That is a good starting point, but he has gone further and said that there is no natural monopoly in generation and no justification for monopolistic practices in transmission. That may be so, but if Central Electricity Generating plc — as I imagine it will be called — is not to have a monopoly, there must be safeguards. If it does not, its incentive to make the hugely expensive and long-term investment, with a slow return, in nuclear power stations, which I believe are necessary, and to a lesser extent in other power stations, will be seriously affected. In this context also I take note of the comments of the hon. Member for Caernarfon (Mr. Wigley) about the cost of decommissioning nuclear power stations.

If area electricity plcs, succeeding area boards, are to be allowed to generate at least part of their energy requirements—I do not know whether they will, but it has been suggested that they might—and if therefore they are allowed to become producer retailers, in equity Central Electricity Generating plc should also be allowed to become a producer retailer. In general, it might not wish to be so, but for some large customers it might.

It is worth remembering that the present structure of electricity boards stems from 1948. It would be a miracle if the structure that was established in 1948 was the best structure for 1987. Thus, I thought that there was a case for restructuring electricity supply before privatisation, but on second thoughts the existing structure and boards are well known and it may be wise to privatise them on their present basis and thereafter leave it to the public limited companies and the market to devise new structures when or if necessary.

The Secretary of State properly emphasised the importance of customer rights. Therefore, I presume that he intends to keep, in some form, the area electricity consultative councils. But I doubt whether it is necessary to retain the national Electricity Consumers Council. The combination of the area councils and the market should ensure a good service at competitive prices without extra intervention. In one sense, competition already exists. The area boards and the Electricity Council publish annually a huge range of comparative performance indicators, as does the CEGB. Those indicators have been a salutary check for each board, and there is no doubt that boards take careful note of the performance of other boards.

Traditionally, the Conservative party has conserved what is best while reforming where appropriate and necessary. There is no doubt that the best aspect of water is the integrated river basin system. It is the envy of and the pattern and blueprint for many other countries and it should be retained. That means that the Government's first thoughts on privatisation in their White Paper were better than their second thoughts. I understand why the Government changed their mind. They were bowing to the concerns expressed about the responsibility for regulatory and river management functions being held by public limited companies.

It is refreshing to note that the Government are prepared to take note of what people say about White Papers and other consultative papers. However, now we are faced with the proposal that plcs should be responsible for the water supply, sewerage and sewage disposal, making up 90 per cent. of existing water authority business; but the remaining 10 per cent., as well as the river management and regulatory functions, should remain in the public sector under the proposed National Rivers Authority. In other words, the river basin management system is to be disintegrated.

I fully accept the concern of the National Farmers Union and the Country Landowners Association. I am a member of both bodies, although on this occasion I happen to disagree to a considerable extent with some of their concerns. However, my right hon. Friend the Secretary of State for the Environment said in his speech today that it is not ownership that matters, but the regulatory system. So the argument should be about where the dividing line between public and plc responsibility should lie. I am glad to see my hon. Friend the Member for Lewisham, East (Mr. Moynihan) nodding his head in agreement. The Government have opted for what appears to be a simple division, but it is destructive of the river basin management system that some of us believe is of great importance. Thus, in my view, the plcs could be given more responsibilities and statutory duties, and a small N RA could be established with certain regulatory powers to be used if the plcs did not live up to their statutory duties.

My hon. Friend the Member for Pudsey (Sir G. Shaw) has made the interesting suggestion that there should be regional, rather than national, river authorities. Obviously, there is a great deal to be said for that. It would be in line with the reaction of the National Anglers Council, of which I have the honour to be president. We should never forget how important the fishermen are. If that idea was pursued, if the plcs were given more functions than is currently proposed and if they were shadowed in a regulatory manner by regional river authorities, almost all the existing operational and managerial functions would remain together.

In this context, we should not forget the existence of Her Majesty's inspectorate of pollution, which already has responsibility for pollution. That being so, why is it necessary to duplicate its functions, as I understand is being proposed, in the powers of the National Rivers Authority?

The sketch that I have outlined would lead to the retention of more of the best that we have in the world of water. There would be a number of small regulatory river authorities—smaller than what is currently proposed-and therefore a much less expensive system of quangos, and a better service for the whole community.

8.13 pm

Ms. Joan Walley (Stoke-on-Trent, North)

I shall confine my remarks to the water industry. The Secretary of State was right when he anticipated that the opposition from our side would be stated in terms of safety and public health, and those are the issues about which I wish to speak.

We have already seen how nervous the Government are about the proposals they have come up with. They have every right to be nervous, as we have just heard from the contribution made by the hon. Member for Devizes (Mr. Morrison). Certainly, when I look around at the large number of organisations, at national and local level, which are concerned to oppose the proposals, and when I hear of people, not least Members of the House of Lords, who similarly oppose them, I believe that the Government have every right to be nervous about them.

It has been said that it was Labour's intention to reverse the proposals, and that was why we wanted some degree of regional control. We do not want to reverse the proposals—we want to stop them getting on the statute book in the first place. We want to safeguard every aspect of health.

I do not believe that the proposals for the privatisation of the water industry will be popular. They will certainly not be popular when members of the public understand that they will no longer be able to take a safe and healthy water supply for granted. Women will also begin to realise what the proposals mean when the large charges for water become evident. I am not suggesting for a moment that water is now up to the standards that it should be. It is ironic that when the Government's proposals for the privatisation of the industry were first mooted we were told that one of the reasons for privatisation was to remove all spending from the public sector borrowing requirement and to put it into private hands so that, suddenly, all the improvements that some of us had wanted for a long time could be achieved. I well remember the time when I was a councillor and wanted more improvements in sewage pipes, as well as in all kinds of different areas. The money for that type of improvement should have been available. However, during the past seven years, under this Government, those improvements and that money have not been made available, and, what is more, they will not be made available as a result of these proposals.

There is no doubt that the water in one in four households is not up to the standard that it should be. As soon as the public realise that, they will oppose privatisation, not because they have economic reasons for wanting to invest in the water industry but because they are afraid of landing up in the European courts. That is why they will not want to buy shares in the industry, when they are finally floated.

We shall do all that we can to alert the public to what is in store. That may mean swimming in the sea in Brighton to show everyone that the sea there is safe, because of the investment that has been made in that area in relocating the sewers and in the current research that is being carried out by the excellent members of the Labour-controlled borough of Brighton. I represent a constituency in the Severn-Trent area and, contrary to what we heard earlier, I maintain that the chairman—John Bellak—of Severn-Trent was the only one to welcome wholeheartedly the Government's proposals. I want to alert everyone to the fact that Severn-Trent will probably be the first water authority to be sold off. That is why hon. Members representing constituencies in the west midlands will be having regular meetings with all sorts of consumer and environmental groups and trade unions in that area. We can build up their support. We should be telling people that the Government arc paving the way towards water privatisation that will amount to privatisation without compensation of the whole water industry. I have visited every utility that provides the water for my constituency. I have visited the reservoirs, the pumping stations and the bore holes, and I know exactly how much money was spent by the water companies, by the Potteries water board and by the authorities on purchasing and making those investments. It is criminal that that amount of investment of public money should now be sold off to private individuals who have no concern for public health. All they think about is the narrow aspect of their own profits.

We should also be aware that some water authorities, including Severn-Trent, have already spent considerable sums on preparing the ground for privatisation. Whether or not that expenditure was legal, it will presumably be made legal when the Bill goes through. It is ironic that local authorities, particularly Labour authorities, are not being allowed to publicise their work, yet vast sums are being spent to prepare for privatisation.

I get angry when I hear of how the charging of the Severn-Trent water authority is being geared up. We could have had enormous additional investment over the past four years, but that has not been made because the authority has been repaying debts so that it will be profitable for people to buy shares when the industry is privatised. We have been paying the price of the lack of investment in recent years.

As for the proposal to introduce water meters, I remember a firm not far from Westminster that was not prepared to pay for the water that was necessary to clean the wheels of its heavy lorries; the water cost too much.

As soon as water meters become compulsory, families throughout the country will use less water—not because they are mean, but because they will not be able to afford to use the amount of water that is necessary to bath children, operate washing machines and provide other basic essential services.

Changes in water charges over the past three years have made many people think that they are paying too much for water. When there is compulsory metering and the expenditure of the National Rivers Authority is charged to the consumer, few people will be able to afford to pay for the amount of water that is necessary in a civilised society.

We are told that meters are necessary to safeguard cur water supply, but there are about 2.75 million households in the Severn-Trent area and if it costs £150 to put a meter in each home, the total cost will be £417 million—about half of the entire capital works programme of the Severn-Trent authority for the next five years on mains, sewers, leakage, environmental work and river quality. I do not see how such expenditure can he justified when more crucial investment is needed and has not gone ahead.

Some Labour colleagues and I visited the open days recently organised by the Severn-Trent authority — a good public relations exercise in anticipation of privatisation—and I saw that £4 million is needed for my constituency alone, but I was told that only £1.5 million of the work is likely to go ahead. That gives us some idea of the cost in public health terms that we shall have to pay in the coming months.

We shall do whatever we can to harness all the opposition to the Bill. We shall work with trade unions, consumer groups and environmental groups. In the next 18 months, we shall get the message across loud and clear. The campaign has already started.

8.23 pm

Sir John Farr (Harborough)

I welcome the Bill and particularly the establishment of the National Rivers Authority. I see from the long title that the Bill is an embracing measure and I hope that it will be amended to include privatisation of the national weather centre. I am sure that Ministers would look favourably on such amendments.

The National Rivers Authority is in the Bill and it is not in the Bill. As the Secretary of State said, it is mentioned in the explanatory memorandum, but there is no provision for its establishment. Many Conservative Members welcome the idea of a national authority because it would be a big improvement on the existing set-up which is not altogether satisfactory. I am glad that the Government have listened to public opinion and many of us would like the NRA to be set up as soon as possible.

I do not feel that the regional water authorities have failed us. Generally, they have done as good a job in difficult circumstances as they have been able to do, but there is no doubt that, especially in recent years, the failure of some authorities to maintain pollution-free rivers and, in particular, pollution-free coasts has caused serious problems.

The NRA will be responsible for supervising and monitoring rivers, the water supply and river estuaries. I am pleased to see that its duties will extend to what the recent Green Paper called "coastal waters generally". I think that many people agree with me that the condition of some of our coastal waters is an utter disgrace. Successive Governments have tolerated for too long the disgraceful condition of our beaches and coastal waters; I do not mean the estuarial waters.

The regional authorities are culprits, because they are disposing of raw sewage around our coastline, adjacent to beaches, which I will not name, although there are hundreds of them throughout the country. Our pollution record is the worst in Europe and one of the worst in the world. Transferring administration of the discharge of sewage from the regional water authorities to the NRA, in association with the new pollution executive, could only improve matters.

I welcome the Government's intention to introduce water meters. They have been talking about it for a long time. My right hon. Friend the Secretary of State referred to the little old lady who pays as much for her water supply as do the three or four people living in the house next door. I have always advised such little old ladies to get a meter, but I know that it can be a costly project.

Mr. Allan Roberts

If we have compulsory metering, who will pay for the old lady's meter?

Sir John Farr

A scheme involving some form of subsidy or something of that nature should be considered. No doubt that will be considered in Committee. Many old ladies feel that the cost of a private meter, which can be up to £100, is not worth paying.

My final point relates to anglers and water politics. My hon. Friend the Member for Devizes (Mr. Morrison) said that he is associated with an anglers' association. I had a letter today from the Leicestershire Angling Federation. One of the reasons why I welcome the shift from the regional water authorities to the National Rivers Authority and the privatisation of the distribution of water to houses is that in recent years regional water authorities have fallen down in preventing river pollution. In its letter the Leicestershire Angling Federation says that in the Severn-Trent area from 1981–82 to 1985–86 the number of pollution incidents has almost doubled, but that during the same period the number of prosecutions has been minimal. The number of incidents has doubled from 2,401 in 1981–82 to 4,500 in 1985–86. I hope that with the setting up of a National Rivers Authority there will be a change in the quality of river water. I give a qualified welcome to the Bill.

8.31 pm

Mr. Tom Pendry (Stalybridge and Hyde)

I wish to direct my remarks specifically to the problems that the Bill poses for the water industry. At the outset I have to declare my interest. First, I chair the National Union of Public Employees group of hon. Members and many hundreds of NUPE members will be affected by water privatisation. Secondly, I represent a constituency in the north-west and many hundreds of thousands of north-westerners will certainly be adversely affected by this legislation. I recognise, of course, that one does not have to be a member of NUPE or live in the north-west to oppose this legislation.

One of the most obvious objections has already been stated a number of times. It is the proposed introduction of water metering. Why is it necessary to have compulsory trials in 10 or 11 areas when we know from the Yorkshire water authority experiment that the nett effect of metering is an enormous initial outlay of cost and alarming increases in the cost to families? That experiment showed that a family of two adults and two children — most hon. Members have many such families in their constituencies—would have to pay up to two and a half times what they currently pay should metering become operative.

We know that the National Consumer Council has already said that it is concerned about the effect of metering on low-income families who for genuine reasons cannot easily economise on water. Many low income families in my constituency have enough headaches without having to pay extra for necessities like washing and drinking water, to say nothing of the water used in flushing toilets and the like. These are not families who waste water by washing their second or third car or who hose down their gardens. They would love to have those opportunities.

This legislation will hit the inner city areas, in which we know the Government are supposed to be interested. Only yesterday we heard about the possibility of the Government introducing a second poll tax for all adult water users until meters are introduced. Such nonsense from the Government is due to the fact that they have not thought through their proposals. They are producing mess after mess, and it is no wonder that those of us who admire the paintings of the Secretary of State for the Environment would like him to stick to that and keep his artistic mind off essential issues like water supply and rates reform. I say that with some feeling because I have bought two of his paintings and they hang on my wall. [Interruption.] I got them cheap.

My union is naturally concerned about the number of job losses that privatisation of the water industry will bring about. Indeed, the Government have clearly said that there will be redundancies. The common services between authorities, such as legal services and laboratories, will be the first to go. It is clear that the new water companies will try to reduce costs in order to hit profit targets. The Anglian water authority has already estimated that there will be up to 20 per cent. job losses in sewerage alone. Before the Secretary of State or anyone else on the Government Front Bench argues that this is an overstaffed industry, I would refer once more to the Severn-Trent water authority which has lost 2,000 jobs since 1980. Since then it has brought in temporary staff to cover the jobs that were initially shed. This goes to show that this is no way to run a crucial industry.

Local authorities will also lose staff. In my area of Tameside 99 per cent. of all sewer repairs are undertaken by that authority and it is estimated that up to 23,000 jobs in local authorities could be at risk because of this proposed legislation. This week one of my constituents who works in the water industry wrote to me on this issue. He said: If water authorities shift as they are planning so to do from the current practice of preventive maintenance to breakdown maintenance it may show a paper profit in the short term but standards will fall and consumer dissatisfaction will begin to manifest itself. On top of this it will mean an increase in injuries at work.

When the Minister replies to the debate I should like him to give an undertaking on safety standards. That matter has already been referred to by one of my members. As the Minister knows, the water authority forum has been in existence since 1983 and has brought both employers and unions together to discuss health and safety issues. Will the Minister state clearly that this forum and its previous good work will not be swept aside with the passing of this legislation?

Many people in the north-west and indeed throughout the country feel deeply about these issues. I know that my local authority has a massive debt as a result of necessary investment in sewers and mains. Many are crumbling, but that is hardly surprising because some of them were built as long ago as 1840. Whatever massaged figures the Government come up with, the truth is that the real balance sheet deficit in the north-west alone is close to £1 billion. In order to make privatisation more attractive, we have seen a cut of 40 per cent. this year in sewer replacements in the north-west. This is asset-stripping at its worst. It is underground and unseen, but is immensely dangerous to public health.

I now turn to an issue close to my heart, the threat posed to recreational and sporting pursuits by this legislation. A wide range of sporting and recreational groups will suffer. Those who sail or fish or watch birds or ramble and many other sporting groups will pay dearly if this Bill is passed. Already one Thames angler has won a court case over the state of the water in this area, and corners are certainly being cut. In my region the water authority has a continuous recreational capital programme. The pursuits range from walking to Vale House in Langdale to many other recreational schemes in my constituency. The Government will face concerted opposition from the recreation lobby.

In answer to my parliamentary question earlier this year the Minister with responsibility for sport said that over 2 million people use the water environment for recreation each year. That is an understatement. There are 3.4 million anglers in Britain and if they are taken together with all the other groups a formidable lobby will be ranged against this Bill. The hon. Member for Lewisham, East (Mr. Moynihan) must regret the day he agreed to take on a sports portfolio with water attached to it. This legislation cuts across his sporting brief and will do immense damage in the area that he is trying to promote while wearing his other hat. The fine start that he has made on sport is threatened by this Bill.

I have highlighted a number of issues and of course there are many other things that I would like to say. As one hon. Member said, we are beginning the fight today to ensure that the Bill does not see the light of day.

8.38 pm

Mr. Martin M. Brandon-Bravo (Nottingham, South)

This enabling Bill is the first stage of the denationalisation of much of our water and electricity supply industries. On that account its broad principles are to be welcomed. It was said earlier in the debate that the authorities have not welcomed it. It is perfectly true that the authorities have not used the word "welcome". However, it should he firmly placed on the record that the water association's public briefing clearly states: the authorities support the intentions of the Bill. I would have thought that that was clear enough.

I welcome this as I have welcomed other denationalisation plans. The Bill enables this place to fulfil its proper function as guardian of the public interest. I believe that that function is best performed when Parliament in general and the Government in particular are not judge and jury as well as sometimes the accused or when they seek to exercise powers to deal with the conduct of major industries which this place and, regrettably, most hon. Members are patently unqualified to discharge.

Midland JAWS — the joint union action against denationalisation — complained that privatisation is against the interests of consumers and employees. I cannot see how either consumers or employees can benefit any longer from the old worn-out, nationalised, industrial in-house concept of "what is good for us comes first and the customer or taxpayer picks up the difference."

The joint union group has published a booklet which complains that the Government propose cash limits. That is precisely what we are seeking finally to eradicate. In the past there has been Government interference in the long-term corporate plans of what ought to be commercial supply organisations. Hopefully, we will correct that in the future Bill. The joint group also complained about the setting of financial targets and performance aims. I know of no successful undertaking that could continue or survive without such a corporate strategy, and that concept is typical of the old style unions within the nationalised industry sector which still believe that industries can run without such a framework.

The union grouping in that pamphlet also complains about the lack of investment and sets out a chart to prove its case. Unintentionally it demonstrates that the biggest culprit in the lack of investment plan was the previous Labour Government who first wanted money for other things, which meant that the water industry received less, and then ran out of cash altogether. Indeed, Health Service investment went down the pan as well.

The House should read the booklet produced by the joint union group. It clearly shows that during the lifetime of the previous Labour Government the Severn-Trent water authority invested less in cash terms in the period to 1979 when the Labour Government were in power. My colleagues on both sides of the House will be aware of the level of inflation during that period and that lack of investment is therefore even more stark.

Clause 3 deals with charging. Amongst other things the clause states that it should have regard to the cost of performing those services … that the new authorities will have to carry out. I believe that the Secretary of State used the phrase "to have regard" and claimed that that came from an earlier Bill. That is a nice phrase which sounds quite clear. However, if the House in the exercise of its duties in the public interest in future lays down higher water quality standards in a whole range of areas controlled by the water companies, it cannot duck the responsibility of ensuring how the costs that we impose can he passed on. It would be dishonest of us to try to imagine that we can have higher water standards and investment and then duck the issue of how that can be provided. I therefore hope that when the main privatisation Bill comes before the House we will carefully consider the phrase to have regard to the cost and ensure that the new companies can deal with that matter.

Clause 5 deals with a point that has been raised several times today, the possibility of the installation of meters. During today's debate and particularly during the comments made by the hon. Member for Gordon (Mr. Bruce) representing the alliance — if that is the right phrase to use these days—I was puzzled by the fact that no one is facing the issue that no party today wants to continue with the old rateable values. The Labour party is split between capital values, local income tax and all the various options that have been discussed for the future of raising money for local government. All of the changes demand that the water industry has a mechanism for charging for the services that it provides. It would be dishonest for us to dismiss the possibility of water metering, as one Opposition Member did in Nottingham recently, on the ground that it is a tax on bath water. I hope that the debate on this issue can reach a slightly higher level than that.

Earlier reference was made to metering in blocks of flats. In my constituency joint supply is a great problem. I hope that when we tackle the problem of meters we will also tackle the problem of dealing with the enormous costs of removing joint supply which causes no end of trouble. As we are moving in that direction, even if we cannot enforce it in law, I hope very much that we at least advise and provide guidance to the present water authorities and builders to install meters in all new property. We are building well in excess of 200,000 houses a year and that figure does not take into account the enormous industrial and commercial developments. It would be sensible if meters were installed from the start.

I am also concerned about the problem of reading meters and the right of entry referred to in schedule 1. I am extremely worried because in schedule 1(5)(b) entry is referred to where the householder is not present yet that is not directly linked with paragraph 2 of schedule 1 where entry can only be exercised following the execution of a warrant.

It is no secret that the criminal classes in this country are becoming ever more sophisticated, and the vast majority of people are concerned about the problem of right of entry. If we are moving towards the installation of meters — we have the technology to enable remote reading to take place, but in practical terms that is a long way off — I hope that strong advice is given that the meters are positioned outside properties so that right of entry will not be a problem.

The union grouping to which I have referred, which is opposing privatisation, complains of the corrosive effect of the Government policies on levels of capital spending. That is the one argument of the grouping with which I agree. The solution is to stop the meddling and allow the water and electricity supply industries to get on with the job that they know best, which will be achieved when they are in the private sector. When that position is reached, the House will be able to fulfil its proper role in ensuring that public demand is met as expressed through this place.

8.51 pm

Mr. Doug Henderson (Newcastle upon Tyne, North)

Having listened to the Secretary of State for the Environment, I am not convincd that the Government know what they want to do with the water industry, even if the House approves this enabling measure. I am not convinced that they understand the working of the industry. They know, of course, that they need to raise billions of pounds by selling the nation's assets to cover up their mismanagement of the economy. Probably every hon. Member is aware, however, that the events of last week will make it more difficult for them to raise the necessary moneys. They know also, or they should do, that privatisation will do nothing to attract the investment that the industry requires, contrary to what the hon. Member for Nottingham, South (Mr. Brandon-Bravo) has suggested. Privatisation cannot guarantee a future supply of water, it cannot attack the problem of pollution in our rivers and it cannot maintain the task of modernising our sewerage system.

The Government know that disrupting the work of the industry with their restructuring will cost a great deal of money and waste the energies of the good people who work in it. They know as well that they have deliberately increased the price of water to try to make their sale more attractive. We can expect that if the House approves the Bill the Government will eventually offer the purchaser a knock-down price to attract investors to the industry. The Water Authorities Association claims that the industry—the Secretary of State has said that no one knows better how to run the industry than the water authorities—estimates that its assets amount to £27 billion. The best estimate that City valuers can give is that the industry will sell for £7 billion. These valuations were made before the events of the past week. If a sale takes place at £7 billion or a lower sum, which is more likely, it will be nothing short of a national scandal.

The quest for speed has resulted in a complete lack of cogency in the Government's proposals. If the Secretary of State had submitted his muddled thinking to my mathematics teacher, I have no doubt that he would have said, "Not even a good try, Secretary of State."

The major problem that the Government face is what to do with the management of the water system. My hon. Friend the Member for Copeland (Dr. Cunningham) referred to the position adopted by the hon. Member for Oxford, West and Abingdon (Mr. Patten) when he had ministerial responsibilities for water policy prior to becoming Minister of State, Home Office. On 23 June 1986 he said that the Government had made it clear that a unified river basin management would continue. In lay terms that means there is one authority that is responsible for the provision of clean water for water supply and for the disposal of dirty water, sewage and other pollutants.

The Government face a dilemma and I do not believe that they have begun to resolve it. If they privatise the industry and retain one authority—some hon. Members have said that this is the position that they would prefer — it is tantamount to handing over public health regulation to the City investor. If that were to happen, the private sector would be responsible for both clean water and dirty water. The City investor in ICI at Billingham could be the same investor who invests in the Northumbrian water authority, which would have control of pollution in the Tees. This is clearly unacceptable and in no sense provides for public accountability.

The Secretary of State must be aware that the Green Paper produced on these issues is openly ridiculed by the industry. The proposed division of responsibility between the proposed National Rivers Authority and private companies has no support. It is rejected on the ground of management inefficiency. Roy Watts, the chairman of the Thames water authority, has said that the proposals are misconceived and a recipe for inefficiency and conflict. Eight out of 10 of the water authority chairmen appointed by the Government have endorsed that position. They cite the example of the Thames water authority, where the National Rivers Authority would be responsible for surface water pipes, and private companies, established under the suggested proposals, would be responsible for the sewers. In the Thames area both systems are connected in one piping system that is known as flood sewers. These sewers are connected in turn to the storm overflows. After flooding in 1985 there was a major problem with the flood sewers and 33 of the storm overflows were recognised by the Thames water authority as needing major repair. I have no doubt that after the weather of the past week in the south similar problems will have recurred.

Under the Secretary of State's proposals, who would decide what to do? Would the NRA decide that something had to be done about the pipes or would a private company decide that something had to be done about the drains? Even if they could agree that something had to be done, would they be able to agree on who should do the work? If they could agree about that, how could they agree on who would pay for the work and in what proportion?

The Government's proposals have been opposed also on the ground of cost. Sir Michael Straker, the chairman of the Northumbrian water authority, made a statement on 13 October in which he said: It seems so wrong that the cost-efficiency of the organisation should be broken. Water sell-off, he says, "will raise costs." Sir Michael Straker is well qualified to make comment. In the last year, the increase in water charges in the Northumbrian area was the lowest in the country, and actual water charges in Northumbria are the second lowest in England and Wales. They are £36 per year per household lower then they are in the Anglian water authority area. But there is a great risk to people in Northumberland that, under privatisation, the cost of water there will be put up to the same price as that in the Anglian area.

Let me speak briefly on behalf of those working in the industry. I am sponsored by the General, Municipal, Boilermakers and Allied Trades Union, which is the largest manual workers' trade union in the industry, representing some 17,000 people out of a work force of 50,000. They know the job on the ground, and they know that the Government's proposals will lead to confusion and disruption. They also point out that the National Rivers Authority, as proposed, lacks teeth. They have told me that employers in one of the large water authority areas have told them that, if the National Rivers Authority is to do anything to control the industry, it will need not 2,000 employees, as has been suggested in the Government's Green Paper, but 20,000. Those are water authority figures.

With all that weight of opinion, the Secretary of State must be in no doubt that public accountability and privatisation are incompatible. If he does not withdraw his proposals on those grounds alone, he must be condemned for his blind obduracy. Surely what should concern the House is this: what does the industry need to provide the public with a safe and secure water supply? Any independent person would surely come to the same conclusion as I have. The water authority chairmen have; the trade unions and the workers in the industry have.

The industry needs investment to modernise. It needs public accountability and control to secure clean supply of water, and to dispose of our domestic and industrial pollution. If the House demands that as well, it will reject the Second Reading of the Bill.

9.1 pm

Mr. Barry Field (Isle of Wight)

When the hon. Member for Copeland (Dr. Cunningham) opened his speech, he attributed remarks to the chairman of the Southern water authority suggesting that he was not in favour of privatisation. I have here a letter dated 19 October, signed by the secretary of the board of Southern water, enclosing its response to the Government's proposals. I shall read from the last paragraph: The board would, therefore, hope that Southern Water is the first water authority to be 'floated' once the Privatisation Legislation is in place. The Isle of Wight is the largest area to be chosen for the introduction of water meter trials. In February 1985, in September 1986 and in October 1987, the Isle of Wight consumer committee voted in favour of water metering in the Isle of Wight. There are 51,117 hereditaments in the island. I should like to know whether there will be a uniform tariff throughout the Isle of Wight, and whether there will be consultation on the introduction of water metering—perhaps even shadow or dummy bills so that householders can get used to them. Is there any intention of raising additional revenue as a result of experimental water metering? The Isle of Wight is a tourist area, and we sincerely hope that any reinstatement from the introduction of water meters will be to a high standard.

We are also interested to learn how the sewerage charge will be calculated once water metering is in place, and we should particularly like an assurance that large families in low-rated properties will not be penalised as a result of taking part in the experiment.

I welcome the introduction of the National Rivers Authority, and I hope that, when sea defence is considered, we shall take the opportunity of clearing up the large number of anomalies in the current legislation.

9.3 pm

Mr. Eric Martlew (Carlisle)

My interest in the water industry goes back to 1972. Unlike other hon. Members in the Chamber tonight, I am a member of a water committee which, strange as it may seem, supplies water to the Secretary of State's house. I did not buy any of his paintings, but I take the credit for giving him an excellent supply of Cumbrian water! I want to make only two points, as I realise that time is pressing.

There has been a lot of talk about water metering. The hon. Member for Bury St. Edmunds (Sir E. Griffiths) said that the meters are inaccurate. My working life was spent in the dairy industry. Throughout the country there are very complicated milk measuring meters that are standing idle and gathering dust. They cost many thousands of pounds. They are standing idle and gathering dust because they are inaccurate. The Department of Trade and Industry has given instructions that no regard should be paid to the readings that are obtained from meters. How can we say to people that they are to be charged for water by meters that are completely inaccurate? The people who live in the trial areas should query their hills. Many of them will be wrong because meters are inaccurate.

My hon. Friend the Member for Wakefield (Mr. Hinchliffe) said that over a century ago the forefathers of his authority bought out the water authority. Government money was not used to buy it out, so it is not Government property. In 1974, there were water authority assets in Carlisle of £8 million and debts of £3 million. That meant that the people of Carlisle had assets worth £5 million. This Government are privatising without paying compensation. That money is not theirs to give to speculators and spivs on the international stock exchanges; it belongs to my constituents. It will do the people of this country no service if the water authorities are sold off cheap. Water is a national resource and it should be kept in the public domain.

Mr. Speaker

Mr. John Prescott.

Mr. Prescott

The understanding has obviously broken down, Mr Speaker. Perhaps I could give way to my hon. Friend the Member for Makerfield (Mr. McCartney).

Mr. Speaker

That would be very kind.

9.6 pm

Mr. Ian McCartney (Makerfield)

That is the second time, in a matter of weeks, that my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has been very kind to me in this House.

As a former member of the Greater Manchester fire and civil defence authority, I am concerned about the relationship between the newly privatised water companies and the emergency services such as the fire authorities. I am concerned in particular about the provision and maintenance of fire hydrants, the placing of mains and new developments. Who will pay for the water that is used for fire-fighting purposes?

I ask these questions because my fire authority has incurred substantial costs in this financial year for services that, prior to privatisation, were provided free by British Telecom. It has had to pay £32,000 for the 24-hour service that connects its 999 land lines with the rest of the communications system. Before privatisation, the service was provided free of charge.

Because of the privatisation of British Telecom, the Government are increasing by 8,000 per cent. the cost of the telegraph and wireless licences of the police and fire authorities. I fear that this is what will happen to fire authorities when the water authorities are privatized.

9.8 pm

Mr. John Prescott (Kingston upon Hull, East)

It falls to me to make two points before I address the substance of the Bill. The first is pleasurable. I congratulate my hon. Friend the Member for Wakefield (Mr. Hinchliffe) on a most powerful maiden speech, despite the delay that the House suffered on account of his having been ill with chicken pox. I knew the hon. Member in my previous job as a spokesman on employment. He developed very good employment plans when he was chairman of Wakefield council's economic development committee. My hon. Friend made a forceful speech that fully reflected the concern for his constituents of his well-liked predecessor. I particularly welcome his opposition to the present legislation before the House. He referred to the closure of the Redbrook colliery complex. Many more pits will face closure if the Bill is enacted.

My second point is a less happy one. It concerns an intervention that the Secretary of State for Energy made during the contribution of my hon. Friend the Member for Copeland (Dr. Cunningham). The issue concerned who was to wind up the debate. The Secretary of State struck a rather sour note when he suggested that my contribution would concern the privatisation of the electricity industry and that whatever contribution I made would be largely irrelevant because it would not concern the Bill.

The Secretary of State and I met behind the Chair earlier to discuss this point and I knew only at the beginning of this debate that he was not to wind it up. The Shadow Cabinet had been informed that he was to wind up the debate. I have since sought information on this point and I have the Government's Whips' report that was give to us at a Shadow Cabinet meeting on 5 October; it clearly names him as the speaker to wind up the debate. I accepted behind the Chair that there had been some breakdown in communications, but I could not accept his sour intervention. The Secretary of State fully understood that I would have to address my remarks primarily to the privatisation of the electricity industry. One assumes that when two Secretaries of State are present in the House during a debate concerning the privatisation of the water and electricity industries, that is what the debate would be about. I strongly resent the inference that any contribution that I would make, primarily about the privatisation of the electricity industry, would be considered irrelevant.

Mr. Parkinson

May I clear up this misunderstanding? I am happy to confirm what I told the hon. Gentleman behind the Chair. It was never intended that I should take part in this discussion; I do not know how that confusion occurred. We feel that electricity is almost incidental to the Bill because, as the hon. Gentleman realises, it is mentioned in only one part of one clause that gives authorities the power to incur certain expenditure. I assure the hon. Gentleman that he and I will debate the privatisation of the electricity industry in the House on a number of occasions and I look forward to it.

Mr. Prescott

I accept what the Secretary of State has confirmed, but he will appreciate that the nature of the circumstances are such that I must address myself, as have others, to the principle of the privatisation of the electricity industry. It is not that the Secretary of State has not been making statements about what will happen to the electricity industry, either at conferences, in press statements or on television programmes on which we have both appeared such as "Question Time", to which I shall refer in a moment. He has made statements about his views on the privatisation of the electricity industry. However, I would have thought that this opportunity to address the House on his preliminary thoughts on the privatisation of the electricity industry would have been taken. Why should we have to rely on press statements, television and current affairs debates when the Bill provides an ample opportunity to discuss the major issue of the privatisation of the electricity industry?

I have complained to the right hon. Gentleman previously about the problem for Opposition spokesmen of finding out what is in the Secretary of State's mind. It is not improved by people such as the chairman of the Central Electricity Generating Board, Lord Marshall. He has made it clear that he will not meet the Opposition spokesman to discuss the privatisation of the electricity industry. The chairman of the Electricity Council has been kind enough to say that he will receive me, but we know from press reports and statements that the Secretary of State has made it clear that he does not want them in a public debate on these issues while he is making up his mind. The Secretary of State knows that that point is confirmed in the case of Lord Marshall. It is quite unacceptable for people such as Lord Marshall to say that he will not speak to those who are democratically elected and who are attempting to give their views and analyses on a major issue. I hope that that point is picked up by Lord Marshall, who, they tell me, is a bit of an awkward character at the best of times.

This is a rather appropriate day to be discussing these large privatisation measures. They are large because the assets of the electricity supply industry alone are twice as great as the privatisation programmes that the Government have already undertaken. Undoubtedly the electorate is becoming a little more critical of the privatisation programme.

There are obvious beneficiaries from the privatisation programme. The Government have earned £20 billion from selling off the silver. The City has earned about £1 billion in handling the sales and a number of shareholders have made a lot of money by getting out quickly and making a killing. As the stock market shows, being in the City is a gamble. The last two days have reminded even the professionals of that.

The consumer benefits are less obvious. Reference has been made to British Telecom. Certainly, bills now arrive faster than they did, but charges are being imposed upon hospitals for the provision of telephones. Charges are to be made for the maintenance of 999 lines and there is a possibility of a charge for the use of the inquiry service. Fewer public telephone boxes now work. Consumer benefits are less obvious.

We have yet to see what will happen in the gas industry. However, already there has been an increase of 40 per cent. in cut-offs for people unable to pay their bills. That is unprecedented and does not exist on such a scale in any other energy supply industry.

There were 4.5 million British Gas shareholders. Now there are only 3 million and 406 shareholders own 1 million of the shares. The great democratic, shareholding class is declining rapidly in the gas industry and it represents only about 15 per cent. of gas consumers.

The Secretary of State spoke at the party conference about power to the people. He was referring to the limited number of people who will benefit from shares which are paid for by consumers who use the public utilities.

The real motive for the Government's privatisation programme has nothing to do with the consumer or efficiency. There are two major reasons for privatisation. First, it is for Treasury revenue. The Government wanted £20 billion and that has without doubt reformed public finance. The Government now have the money to fund their tax programmes. The second reason is based on ideology. The Government want to roll back the frontiers of socialism, as they see it, by taking away from the public sector and giving to the private sector. Apparently by increasing private ownership, we increase democracy in our community. That is a controversial proposition which divides the parties.

The heart of the philosophy is wider share ownership and the operation of the market. Ministers say that decisions are better left to the greater decision-making market than by Government. What has happened in the last couple of days in that great market is hardly the best advertisement for the way that our finance is run or for providing investment to meet the strategic necessities in our publicly owned industries. I watched with amazement how panic spread via television monitors from Wall street to London and Tokyo.

What is meant by the market? Is it Tokyo, Wall street or the City? With the advent of technology, panic has spread faster round the world. The removal of the obstacles to the operation of the free world market in shares and money has led to mass panic on an unprecedented scale.

We heard that technology would make it easier. The arch priests of our economy who operate the market—those who have Porsches, the million pound earners who talk about a champagne index—were in utter panic and fear. What happened? They were advised not to use the technology. They refused to answer the telephones to complete a market. In Wall street they were told to pull out the plugs because computers were automatically trading and disgorging shares on to the market. All of a sudden these present-day Luddites in technology have run away from the market.

What has brought stability to the market? It is certainly not the intervention by our Chancellor who was wheeled into the television studio to tell us to stay calm. I thought that the report in The Guardian in which the Chancellor was telling small investors to stay calm was countered by a report on the other side of the page that said: an accountant with the Treasury who asked not to be named came in to sell 1,000 TSB and 600 British Gas shares. 'I've no great faith in all this, really. I've no other shares, and I think I'm better off out of it". Two contrasting views from the Treasury.

What stabilised the market? The intervention by the Federal Bank to increase liquidity in the American system; the intervention by Government to protect the market from itself. The market totally failed to get itself out of the problem and thank God there was a Government prepared to say, "We must intervene because we do not want to see another 1929." That is the reality of the market and that is the market to which the Government want to introduce our public utilities. Apparently that is the way we are to abrogate our decision-making — to the force of the market and not to the rational decision-making that Governments must make in such strategic areas.

The Secretary of State for Energy has said that there are only one or two lines in the Bill relating to the privatisation of electricity. It is true it is an enabling Bill to begin presumably to package up the electricity industry for whatever design the Secretary of State has in mind. It is clear that the Secretary of State does not know what he has in mind, as he has said that. It is clear that the Secretary of State wants the money, but he does not know how to get it. The only statement that we have from the Secretary of State is that he wants to privatise the electricity industry. However, he does not know how to do it. If one watches him on television all he talks about is "Lord Marshall and I. Lord Marshall and I." We shall wait to see what solution comes out of "Lord Marshall and I".

It is clear that there are difficulties in the timetable and that is why the clause is in the Bill — to enable the Government to get the package ready. For the legislation and the prospectus to be ready for the next parliamentary Session means that it will be 1990 before we have the Bill. Therefore, one can only assume that the electorate may have a chance to decide on what decisions are made by the Secretary of State because 1990 will be too early to launch that privatisation on the market. Perhaps the experience of the past two days and the BP experience will mean that no one will want to go on the market for a year or two to offer a privatisation sale of this scale.

The Select Committee on Energy asked the Secretary of State to consider producing a White Paper before he privatises any other public utility within the energy industry. In his reply to the Select Committee the Secretary of State said: The Government will bear in mind the Committee's recommendation that it should publish a White or Green Paper in advance of any further proposals for the energy utility privatisation. Does the Secretary of State intend to observe that statement given to the Select Committee? Before the privatisation of electricity, will the Government produce a White Paper so we can understand the Government's thinking—presumably before the Bill comes before the House? When the junior Minister comes to reply perhaps the Secretary of State will advise him to give the House some understanding on that.

In the meantime, for this debate we must rely on television and press statements and the conference statements that have been made by the Secretary of State. Indeed, I watched him make his speech. Clearly it was rhetoric, but what else do we expect from the conference? Privatisation is about power to the people … the customer will be the top priority … I am currently examining radical new ideas"— such as— rebates and vouchers for customers … competition in electricity That speech got the Secretary of State a standing ovation, but Tory party conferences are not interested in policy. The delegates are told to stand up and are timed for how long they stand and the Secretary of State got his due—

Mr. Martin Flannery (Sheffield, Hillsborough)

They get up if she gets up.

Mr. Prescott

My hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) is correct. It all depends on whether the Prime Minister leads the standing ovation.

Mr. Parkinson

The Prime Minister was not on the platform for my speech.

Mr. Prescott

At this stage we will not go into why she made that decision. I believe that the Secretary of State may be chancing his arm a little there.

Unfortunately, for information we have to rely on television appearances. Indeed, I had a debate with the Secretary of State on "Question Time" and he appeared to get rather rattled. He did make some statements. For example, he has made it clear that he does not want to transfer a public monopoly to a private monopoly. Presumably the gas experience has seared him for ever. He wants no more of the previous privatisation measure. Even by his own comments the Secretary of State has not appeared favourable to a private monopoly in gas. He said that workers will have shares. There must be a tremendous discount. No doubt they will buy them, sell them and make their killing, and good luck to them.

The most emphatic decision so far is that there will not be two switches on the wall. We are all glad to hear that. However, for many people with one switch on the wall the price is too high for the heat that they have now. Some 20 per cent. more old people die of hypothermia in winter than in summer, but in the Scandinavian countries there is no difference between winter and summer for the deaths of old people. The reason is the charges that are made for heat. Whether the industry has been nationalised or private, the charges have been too high, particularly in the past few years.

The Secretary of State made it clear that he would hate a monopoly because a monopoly exploits its position. It is more inefficient, takes more profit and exploits by charging higher prices. That is the theory of a monopoly, and I understand the point that is made.

The present electricity supply industry is not free from criticism. No industry, public or private, is free from criticism. I have several criticisms of the electricity supply industry. One is the way in which it has dealt with environmental issues such as acid rain and nuclear waste. The Secretary of State may know that I swam down the Thames to make my protest against the dumping of nuclear waste. I felt strongly about that. There are problems with technology, diversity and the power plants. Little attention is paid to power and heat facilities. Those are all areas of legitimate criticism. The concentration of power in one huge corporation is a questionable aspect.

One criticism of the industry is that it buys British—it buys British coal and British plant. Why should that be a criticism? The industry is seeking to maintain its manufacturing base, which is an important strategic commitment.

The industry is also not consumer-sensitive. Many performance indicators need to be improved, without a shadow of doubt. Anyone considering that knows it to be a fair criticism. With regard to organisation, I am a great decentraliser. I have been writing for four or five years about devolution and the regions. That is not new. I have held that view for a long time.

The Plowden commission, set up by the Labour Government, made it clear that it did not like the idea of one body being in charge of generation and transmission, which the Labour Government accepted. The commission said that it was too powerful and wanted to increase the power of the distribution boards. Thus there were countervailing powers for the bulk supply tariff. The commission even saw the possibility of a regionalised aspect of development. Those legitimate areas of concern were accepted by the Labour Government. There have been criticisms of present structures of public sector industries, as of the private sector. No industry is free of such criticism. Anybody looking at the private or public sector industries that provide electricity in Europe and America can see that criticisms are made irrespective of whether they are private or public. It is not ownership that transforms an industry from a lousy industry to a better industry. The evidence is clear for us to see if we are fair about it.

Let us look at the performance of the public sector industry. I call in aid a statement made in "Privatising Electricity", produced by the Electricity Consumers Council, which is an impartial body. It is critical in many ways. It says that in 1986–87 the electricity supply industry made profits that were 22 per cent. higher than in the previous year and is well on its way to meeting its Financial Target of 2.75 per cent. on net assets … Sales of electricity were also at record levels … prices were 0.2 per cent. lower on average than in 1985–86. Assessed on this basis, the Industry's performance has been impressive. By the criteria set by the House, the industry's performance has been impressive.

Let us look beyond what the consumers council has said. The Monopolies and Mergers Commission looked at the electricity supply industry in 1981. It found that most areas were not against the public interest, but one which was was the inefficient assessment of the nuclear industry and the construction of power plant. That was its legitimate criticism. There are unique circumstances involved in investment in construction. Anybody watching the two television programmes examining the reason why Governments of all persuasions entered the area of nuclear energy will understand that it was primarily because we needed to meet the strategic requirement for plutonium for military purposes, but all our military reasons were based in America. It is perfectly clear why we entered the massive nuclear programme.

The second stage of AGR development has been criticised for the high cost put on the industry. Indeed, in "Question Time" the Secretary of State said — I shall quote so that I get it right: At this moment the CEGB has about £8–9 billion of your money invested in nuclear power stations of a kind which Mr. Benn imposed on the industry and which don't work. He implied that the AGR programme was imposed by a Labour Government against the will of the industry. I have looked up the facts. When my right hon. Friend the Member for Chesterfield (Mr. Benn) made a statement on thermal reactor policy he said: The Government agree with the electricity supply boards that two early nuclear orders are needed and that these must be advanced gas-cooled reactors… This view is also supported by the electricity supply industry". I wondered about the view of the official Opposition. The right hon. Member for Bridgwater (Mr. King) replied on behalf of the Opposition and he said: Is the right hon. Gentleman aware that we welcome this long delayed but extremely important statement? Is he further aware that we believe that it was right not to abandon the AGR at this stage of its development, and we hope that will prove to be successful?" — [Official Report, 25 January 1978; Vol 952, c.1392–93.] If there is a difference of opinion about the AGR programme now, there was certainly no difference when the decision was made by a Labour Government. It was welcomed by the Opposition and was endorsed and supported by the industry. Therefore, I hope that the Secretary of State will not repeat those remarks. They are totally wrong. Does the right hon. Gentleman wish to withdraw his remarks?

Mr. Parkinson

I have discussed this matter with many people in the industry already. The AGR does not have a friend. The AGRs are working extremely badly. The feeling is that the industry would never have bought them if the politicians had not insisted that it did. That was the point I was making and it is still true.

Mr. Prescott

The industry made it clear — the records can be checked—that it supported the statement as did the Opposition.

Mr. Tam Dalyell (Linlithgow)

In its evidence to the Layfield inquiry the South of Scotland Electricity Board set out a full, well argued and technical case for the AGR.

Mr. Prescott

My hon. Friend is absolutely right. In fact, the AGR programme in Scotland is more successful than those in the English regions. There are reasons for that, but the point is well made.

There is a reason for the smokescreen erected by the Secretary of State. He is beginning to argue that one has to put up the price of electricity before it is privatised in order to pay for the massive investment programme of £42 billion to which he refers. I assume that he is referring to the actual cost of £20 billion but is suggesting what the final cost may be. He is preparing to put up the prices of the industry while it is still nationalised to fatten it up for privatisation.

The Government's non-statutory financial regulatory framework was mentioned earlier. If one looks at the framework of the industry, one finds that the external financing limits and monetary targets have contributed to a massive tax on the industry. Indeed, the EFLs and the accelerated capital debt policy have meant that the Government have been taking about £4 billion off the industry. All of that is a charge on the electricity consumer, precisely as the £5½ billion gas levy was. Both those industries have suffered an almost £10 billion charge, equivalent to a 9 per cent. increase in price charges. The point is well made by the consumer hoard, which states: "the ESI has made net repayments to the Treasury over this period of almost £2 billion."

The Government have imposed those charges has. The Treasury has exploited its monopoly position by passing on charges to those who pay for electricity. It comes a bit rich for a Government to criticise monopoly exploitation when the Treasury has constantly exploited that monopoly power and by imposing these extra charges has increased charges for consumers more than necessary.

The Government are now proposing that the return rate of 2.5 per cent. on assets be increased to 5, 6 or 7 per cent. to increase profits. That is why there will be an increase in charges. The problems for the coal industry, through the importing of coal, will lead to massive closures of pits. The nuclear industry, if passed to the private sector, will not be a great deal of comfort. It has a massive cost programme, a massive decommissioning programme, and is a massive cost to the environment. All those circumstances make electricity a difficult industry, and it would not be in the national interest to privatise it.

The Government's case is that if it privatises the industry prices to the consumer will come down and there will be better investment. I wish to quote the example of the private electricity supply in America. In 1983, the United States Department of Energy said: Public confidence in the electricity industry and the regulatory system has deteriorated over the past 10 years as electricity prices have gone up. There is a growing perception that utility companies are not as well managed as they could be nor as regulated as they should be. That industry is starved of investment and unless major moves are made to invest in the industry, the US Department of Energy estimates that annual electricity bills could be as much as $18 billion—roughly 12 per cent. — higher". Our case is that privatisation of the electricity industry, as of the water industry, has nothing to do with benefit to the consumer or with improving competition or the national interest — it is solely about generating money for the Treasury and increasing the power of the private market. We reject the Government's philosophy and will oppose the Bill tonight.

9.37 pm

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)

I wish to join other hon. Members in congratulating the hon. Member for Wakefield (Mr. Hinchliffe). As has been said, he made a powerful and, above all, concise speech, and I warmly and sincerely congratulate him on it.

I welcome the hon. Member for Kingston upon Hull, East (Mr. Prescott) to his new responsibilities. I think that this is the first time that he has addressed the House in his new role. I understand that he did not want the job, but I hope that he comes to like it after a while. In fact, this evening seems to have become worse and worse for the hon. Gentleman. Not only does he not get the job that he wants, but worse is to follow—much to his horror, he gets me to oppose him on his debut night. That is not part of some terrible plot against him—it is just that, as my right hon. Friend the Secretary of State said, for the electricity industry this Bill is a mini paving measure to which it is highly appropriate that a mini Minister should respond.

The question why the hon. Gentleman was not able to get together with Lord Marshall is not one for the Government. There is no question of my right hon. Friend intervening one way or another in such a matter. However, the hon. Gentleman was offered a full factual briefing by the CEGB—as, in our view, he should have been. We fully concede that it was absolutely right for the hon. Gentleman to raise in this debate the question of electricity. Indeed, I am rather relieved that he did so because I wish also to say something about electricity matters.

This has been a wide-ranging, not to say philosophical, debate. I wish to respond directly to what was said by several hon. Members, especially the hon. Member for Caernarfon (Mr. Wigley), about the effect on privatisation of the water and electricity industries of the storms that hit southern and eastern Britain and the subsequent flooding this week. As hon. Members know, the wind force on Friday was unique; there has never been anything like it. Unlike several hon. Members, especially the hon. Member for Caernarfon, I shall draw no inference from this freak and, I hope, one-time event about the structure of the electricity or water industries. There would undoubtedly have been a major problem under any system, and I hope that under any system individual employees of the industry would respond as magnificently as so many of them have done in the past few days. On my visits to the worst-hit areas, I have met employees, especially of the area boards—some of them quite junior—who had not been home for 40 hours. The whole House will wish to acknowledge and applaud their dedication and sense of service.

Understandably, the debate has touched upon the generalities of the Government's privatisation programme. It is understandable because privatising those two industries will give a major thrust forward to that programme, although the Bill is only a modest part of the process. The hon. Member for Copeland (Dr. Cunningham), my hon. Friend the Member for Devizes (Mr. Morrison) and others asked whether the act of privatisation is itself sufficient to guarantee that businesses which were previously state owned will respond to the needs of the customer and the market place. I have no hesitation in answering unequivocally no. Where there is not already substantial competition in the market, the act of privatisation is itself insufficient to guarantee customer power. Having said that, I do not accept the validity of several criticisms which have been levelled by Opposition Members against previous acts of privatisation.

Since the privatisation of British Telecom, telephone charges to the average consumer have fallen by nearly 9 per cent. in real terms. Waiting lists for telephones have been almost eliminated and the industry is putting right the distorted investment decisions taken over many years while it was in the public sector. British Telecom is undertaking £2 billion of annual capital expenditure—over one third more than before privatisation. What is more, recently the company announced that it plans to hold charges for basic telephone services at current levels for another year. Full competition has been brought into the telephone retail market.

Mr. David Blunkett (Sheffield, Brightside)

The Minister believes that privatisation had a dramatic effect on British Telecom. Does he believe that that will be mirrored in the water industry by a massive investment in providing clean and wholesome water and the disposal of effluent rather than a massive investment in metering which will create not the shabbiest but the smelliest nation in Europe, no doubt followed by the suggestion that if we cannot get water, we should ask people, Marie-Antoinette style, to bathe in champagne?

Mr. Spicer

Perhaps the hon. Gentleman will remember that, under the Labour Administration, investment in water decreased by 30 per cent., whereas under this Government it has increased by 35 per cent. We have a pretty good record and we need not take lessons on investment from the Opposition. It is likely that in a privatised market the effects on investment would, at the very least, be not as distorted as if the industry was left in the public sector.

Full competition has been brought into the telephone retail market, and British Telecom's competitor Mercury is growing into a large and successful company, with more than 3,500 business customers and with plans to extend trials to residential users.

Secondly, the domestic prices of British Gas, which has often been mentioned in the debate, are now set by reference to purchase costs and projected efficiency gains. The company was able to make substantial reductions in domestic tariffs in July, leaving United Kingdom domestic prices the lowest among our major European competitors. So we do not need to be too concerned about the effect of privatising those two industries.

The Bill is in part a paving measure to ensure that there can be no question of the water and electricity supply industries being without adequate powers to take the necessary steps to prepare for privatisation. In the case of the water authorities, this also takes into account the establishment of the National Rivers Authority. We believe, for instance, that the industries must be able to take certain advice as to how best to contribute constructively to the detailed decisions about their future.

The Bill covers the appointment by the water and electricity industries of certain advisers and the commitment of certain necessary expenditure. The industries will be empowered under clause 1 to facilitate the implementation of Government proposals for the transfer of property and functions to other bodies, including proposals for privatisation. The industries will also be able to facilitate the implementation of any related proposals of the Secretary of State or, in the case of related proposals, to secure their modification.

The rights that the industries will be given under the Bill will therefore be restricted, and clause 1 does not, for instance, give the industries the right to modify our main privatisation proposals. Naturally, there may be secondary matters that are related to our main proposals for which the industries may wish to propose modifications. Subsection (1)(b) deals with these secondary matters. They might, for example, include the detailed allocation of assets, or financial or other management arrangements following a transfer of functions.

The hon. Member for Copeland argued that it is inappropriate to give the two industries these powers before the Government's main proposals for legislation for the industries are brought before the House. I say to him and to other hon. Gentlemen who share his opinion that the Government's intention to privatise is clear and we have a mandate from the electorate to carry it through. It is only prudent to clarify the industries' powers so that they are free to play their full part in discussions about their future.

Several hon. Members have, understandably, asked for more information about the proposed future structures of the two industries. My right hon. Friend the Secretary of State for the Environment has outlined the nature of his plans for the water industry. I shall pick up one or two points about water before turning to the question of electricity. First, privatisation of water is not a novel idea. Private sector water companies have been supplying water to much of our population for more than 100 years, and doing so very successfully. A quarter of the water supplied in England and Wales comes from the statutory water companies. Areas supplied include cities as large as Bristol and Newcastle. That is perhaps one answer to those who have argued that privatised companies would be a danger to health. To the best of my knowledge, the water company areas do not have noticeably higher rates of sickness or insanitary diseases — the very notion is absurd. The water supplied by the statutory water companies is regulated and controlled in exactly the same way as that supplied by the water authorities. Indeed, the regulation of the industry on drinking water standards will be further tightened and improved under our privatisation Bill.

As my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) reminded us, water metering is not new. Indeed, it has been in Malvern, in my constituency, since 1871 and since 1 April 1982 the people of Malvern have been given the option of paying for water according to rateable value and fewer than 5 per cent. have chosen to do so.

Several hon. Members have expressed anxiety that compulsory metering will discourage essential water use and lead to a collapse of public health standards. Such fears are, of course, completely unfounded. There is no evidence in my constituency to suggest that metering has discouraged essential use over the past 100 years. What is evident in Malvern is that people have a greater awareness of the value of water.

Mr. Rhodri Morgan (Cardiff, West)

Does the Minister accept that as 90 per cent. of the costs of providing a water supply are the fixed capital costs, which exist regardless of the amount of water used, the introduction of compulsory metering would be the greatest waste of capital expenditure since the pyramids?

Mr. Spicer

The purpose of the Bill is to establish the right of water authorities to have trials and to see whether the hon. Gentleman is right or wrong. Until we have had those trials, it will be impossible to answer the hon. Gentleman.

The hon. Member for Caernarfon asked about the situation in Wales. I cannot give him the assurance that he sought. We do not propose to have a separate authority for Wales, but the Welsh water authority will be consulted about our proposals. There will be a period of deep consultation and the Welsh authority will be consulted very closely on the matter and on the structure for Wales.

The hon. Member for Kingston upon Hull, East rightly mentioned the electricity industry. I am not in a position tonight to give our plans for the future structure of the electricity supply industry, but I can give the House information about some of the principles and considerations that we are applying to the decisions that we are in the process of taking.

We shall keep in mind the technical and legal complexity of an industry which supplies a potentially dangerous product which, to all intents and purposes, is impossible to store and whose current operation is governed by 22 Acts of Parliament, going back to the Electric Lighting Act 1882.

Security of supply will always be at the forefront of our minds and there is absolutely no question of breaking up the national transmission grid.

Many arguments are made in support of the present structure, ranging from the merit ordering of generating plant to matters related to the stability of the system. I assure the House that the Government are exploring those questions with the services of specialist advisers of the highest competence. As part of that process, I spent a good deal of the summer studying the workings of the electricity supply industries in other European countries and in the United States.

In my view, there is no single overseas model on which we can properly base the United Kingdom industry, but it has been extremely useful to see how other countries run their electricity supply industries. For example, I have seen power pools whereby the operations of the network are optimised by a central organisation that has a separate identity from a number of power companies supplying the system, and I have also seen systems that optimise through a set of long-term and short-term contracts.

Within the technical constraints, we are assessing ways of introducing the maximum amount of competition into the workings of the electricity supply industry. I know that a number of my hon. Friends are interested in that matter. There will undoubtedly be elements of the industry that are not easily subjected to competitive pressures, especially at the distribution end of the business, although even here there is scope for competition by emulation.

Where competition is limited there will undoubtedly need to be tight regulation to protect consumers' interests on price and service, but my travels, especially in the United States, alerted me to the severely restrictive nature and the costly bureaucracy that can result from heavy emphasis on regulation. There are clear advantages to be gained from having competition and commensurately less economic regulation. This is a matter to which we are giving close attention, especially with respect to electricity generation which, as many hon Members have said, represents 80 per cent. of the costs of the industry and which is currently effectively the monopoly of the Central Electricity Generating Board.

It is sometimes said that the size and monopolistic position of the CEGB is necessary to manage the massive and complex assets under its control and, above all, to generate the enormous investments which lie ahead as the industry embarks on a major modernisation programme.

We are, of course, exploring these arguments. There are certainly economies of scale in electricity generation. Equally, I have seen power companies in the Federal Republic of Germany and in the United States which are much smaller than our CEGB and which manage highly complex operations, including nuclear power stations, very adequately.

In terms of new investment, the Government certainly believe that the industry's rate of return will need to improve above that of its historic levels. The industry should be earning a proper return on its capital, particularly as it gears up for a heavy investment programme.

Mr. Malcolm Bruce

Does the Minister acknowledge, as I acknowledge, that we need effective regulation and competition? Has he not confessed to the House that he does not know how to privatise electricity but is determined to go ahead and do it anyway? Would it not be wiser for him to keep an open mind until he has found out how to do it?

Mr. Spicer

If the hon Gentleman is saying that we need different regulatory systems for different industries, that is an easy point to concede. I do not concede that we do not have firm ideas, although we have not yet announced them. [Interruption.] Are the hon Gentlemen who are giggling on the Opposition Front Bench trying to suggest that the Government should not be given time to make their decisions on a matter as complex as this without necessarily having to tell the Opposition as we go along? We shall be coming up with our decisions in the very near future. That answers the question about consultation.

At present the industry is earning a rate of return of around 2.45 per cent. on assets. It can improve on this either by reducing costs or by increasing its prices, or by a bit of both. Further pressure on costs should come first. The entry of the industry into the private sector will give a great opportunity for competitive pressures on costs to reflect themselves in lower price increases than those that would result if the industry were to continue to receive the protection of the public sector.

Three specific aspects have been raised in this debate. The first was the question of safety. The British electricity supply industry has a safety record second to none. There can be absolutely no question of privatisation resulting in a lowering of safety standards. This has certainly not happened in other privatised industries, and the question of ownership does not affect the industry's obligation to meet legal safety standards which will continue to be monitored by the public authorities.

Secondly, there is the question of the future of coal. There is no doubt that for the foreseeable future coal is likely to be the predominant fuel used in the electricity generation industry in this country. Privatisation of the electricity industry will undoubtedly further underline the need for British Coal to demonstrate that it can compete in terms of price and reliability.

I am very optimistic about the coal industry's ability to rise to this challenge. I base this confidence on the remarkable increase in productivity that the industry has achieved in recent years. Productivity in British Coal has risen by over 50 per cent. since the strike of 1984 and that rate of productivity increase is continuing.

Thirdly, the future of nuclear power has been raised. The Government firmly believe in the future of the nuclear industry as a major contributor to the baseload demand for electricity. It is our aim to ensure that United Kingdom customers continue to have the opportunity to benefit from this.

There is no doubt in our minds that the changes that we propose for the two industries we are considering tonight will be to the benefit of the consumer and the nation. They will result in greater efficiency, better use of resources and the greater motivation of those who work in the industries. Nor is there much doubt that, when the substantive Bill is introduced, we will have to discuss the matter at great length. However, for the present, this is a very minor, modest proposal. I ask the House to give the Bill a Second Reading.

Question put, That the amendment be made:—

The House divided: Ayes 24, Noes 344.

Division No. 29]	[10.00pm
AYES
Alton, David	Livsey, Richard
Barnes, Mrs Rosie (Greenwich)	Maclennan, Robert
Beith, A. J.	Michie, Mrs Ray (Arg'l & Bute)
Bruce, Malcolm (Gordon)	Owen, Rt Hon Dr David
Campbell, Menzies (Fife NE)	Salmond, Alex
Carlile, Alex (Mont'g)	Steel, Rt Hon David
Ewing, Mrs Margaret (Moray)	Taylor, Matthew (Truro)
Fearn, Ronald	Thomas, Dafydd Elis
Howells, Geraint	Welsh, Andrew (Angus E)
Hughes, Simon (Southwark)	Wigley, Dafydd
Johnston, Sir Russell
Jones, leuan (Ynys Môn)	Tellers for the Ayes:
Kennedy, Charles	Mr. James Wallace and Mr. John Cartwright.
Kirkwood, Archy

NOES
Adley, Robert	Brown, Michael (Brigg & Cl't's)
Aitken, Jonathan	Browne, John (Winchester)
Alexander, Richard	Bruce, Ian (Dorset South)
Alison, Rt Hon Michael	Buchanan-Smith, Rt Hon Alick
Allason, Rupert	Budgen, Nicholas
Amess, David	Burns, Simon
Amos, Alan	Burt, Alistair
Arbuthnot, James	Butcher, John
Arnold, Jacques (Gravesham)	Butler, Chris
Ashby, David	Butterfill, John
Aspinwall, Jack	Carlisle, John, (Luton N)
Atkins, Robert	Carlisle, Kenneth (Lincoln)
Atkinson, David	Carrington, Matthew
Baker, Rt Hon K. (Mole Valley)	Carttiss, Michael
Baker, Nicholas (Dorset N)	Cash, William
Baldry, Tony	Chalker, Rt Hon Mrs Lynda
Banks, Robert (Harrogate)	Channon, Rt Hon Paul
Batiste, Spencer	Chapman, Sydney
Beaumont-Dark, Anthony	Chope, Christopher
Bellingham, Henry	Churchill, Mr
Bendall, Vivian	Clark, Dr Michael (Rochford)
Bennett, Nicholas (Pembroke)	Clark, Sir W. (Croydon S)
Bevan, David Gilroy	Clarke, Rt Hon K. (Rushcliffe)
Biffen, Rt Hon John	Colvin, Michael
Biggs-Davison, Sir John	Conway, Derek
Blackburn, Dr John G.	Coombs, Anthony (Wyre F'rest)
Blaker, Rt Hon Sir Peter	Coombs, Simon (Swindon)
Body, Sir Richard	Cope, John
Bonsor, Sir Nicholas	Cormack, Patrick
Boswell, Tim	Couchman, James
Bottomley, Peter	Cran, James
Bottomley, Mrs Virginia	Critchley, Julian
Bowden, A (Brighton K'pto'n)	Currie, Mrs Edwina
Bowden, Gerald (Dulwich)	Curry, David
Bowis, John	Davies, Q. (Stamf'd & Spald'g)
Boyson, Rt Hon Dr Sir Rhodes	Davis, David (Boothferry)
Braine, Rt Hon Sir Bernard	Day, Stephen
Brandon-Bravo, Martin	Devlin, Tim
Brazier, Julian	Dickens, Geoffrey
Bright, Graham	Dicks, Terry
Brittan, Rt Hon Leon	Dorrell, Stephen
Brooke, Hon Peter	Douglas-Hamilton, Lord James

Dover, Den	Janman, Timothy
Dunn, Bob	Jessel, Toby
Durant, Tony	Johnson Smith, Sir Geoffrey
Dykes, Hugh	Jones, Gwilym (Cardiff N)
Eggar, Tim	Jones, Robert B (Herts W)
Emery, Sir Peter	Jopling, Rt Hon Michael
Evans, David (Welwyn Hatf'd)	Kellett-Bowman, Mrs Elaine
Evennett, David	Key, Robert
Fairbairn, Nicholas	King, Roger (B'ham N'thfield)
Fallon, Michael	King, Rt Hon Tom (Bridgwater)
Farr, Sir John	Kirkhope, Timothy
Favell, Tony	Knapman, Roger
Field, Barry (Isle of Wight)	Knight, Greg (Derby North)
Finsberg, Sir Geoffrey	Knight, Dame Jill (Edgbaston)
Fookes, Miss Janet	Knowles, Michael
Forman, Nigel	Lamont, Rt Hon Norman
Forsyth, Michael (Stirling)	Lang, Ian
Forth, Eric	Latham, Michael
Fowler, Rt Hon Norman	Lawrence, Ivan
Fox, Sir Marcus	Lawson, Rt Hon Nigel
Franks, Cecil	Lee, John (Pendle)
Freeman, Roger	Leigh, Edward (Gainsbor'gh)
French, Douglas	Lennox-Boyd, Hon Mark
Fry, Peter	Lester, Jim (Broxtowe)
Gale, Roger	Lightbown, David
Gardiner, George	Lilley, Peter
Gill, Christopher	Lloyd, Sir Ian (Havant)
Gilmour, Rt Hon Sir Ian	Lloyd, Peter (Fareham)
Glyn, Dr Alan	Lord, Michael
Goodhart, Sir Philip	Luce, Rt Hon Richard
Goodlad, Alastair	Lyell, Sir Nicholas
Goodson-Wickes, Dr Charles	McCrindle, Robert
Gorman, Mrs Teresa	Macfarlane, Neil
Gow, Ian	MacGregor, John
Gower, Sir Raymond	MacKay, Andrew (E Berkshire)
Grant, Sir Anthony (CambsSW)	Maclean, David
Greenway, Harry (Ealing N)	McLoughlin, Patrick
Greenway, John (Rydale)	McNair-Wilson, M. (Newbury)
Gregory, Conal	McNair-Wilson, P. (New Forest)
Griffiths, Sir Eldon (Bury St E')	Madel, David
Griffiths, Peter (Portsmouth N)	Major, Rt Hon John
Grist, Ian	Malins, Humfrey
Ground, Patrick	Mans, Keith
Gummer, Rt Hon John Selwyn	Maples, John
Hamilton, Hon A. (Epsom)	Marland, Paul
Hamilton, Neil (Tatton)	Marlow, Tony
Hampson, Dr Keith	Marshall, John (Hendon S)
Hanley, Jeremy	Martin, David (Portsmouth S)
Hannam, John	Mates, Michael
Hargreaves, A. (B'ham H'll Gr')	Maude, Hon Francis
Hargreaves, Ken (Hyndburn)	Mayhew, Rt Hon Sir Patrick
Harris, David	Mellor, David
Haselhurst, Alan	Meyer, Sir Anthony
Hawkins, Christopher	Miller, Hal
Hayes, Jerry	Mills, Iain
Hayhoe, Rt Hon Sir Barney	Miscampbell, Norman
Hayward, Robert	Mitchell, Andrew (Gedling)
Heathcoat-Amory, David	Mitchell, David (Hants NW)
Heddle, John	Moate, Roger
Hicks, Mrs Maureen (Wolv NE)	Monro, Sir Hector
Higgins, Rt Hon Terence L.	Montgomery, Sir Fergus
Hill, James	Morris, M (N'hampton S)
Hind, Kenneth	Morrison, Hon C. (Devizes)
Hogg, Hon Douglas (Gr'th'm)	Morrison, Hon P (Chester)
Holt, Richard	Moss, Malcolm
Hordern, Sir Peter	Moynihan, Hon C.
Howard, Michael	Neale, Gerrard
Howarth, Alan (Strat'd-on-A)	Nelson, Anthony
Howarth, G. (Cannock & B'wd)	Neubert, Michael
Howell, Rt Hon David (G'dford)	Nicholls, Patrick
Howell, Ralph (North Norfolk)	Nicholson, David (Taunton)
Hughes, Robert G. (Harrow W)	Onslow, Cranley
Hunt, David (Wirral W)	Oppenheim, Phillip
Hunt, John (Ravensbourne)	Page, Richard
Hunter, Andrew	Paice, James
Hurd, Rt Hon Douglas	Parkinson, Rt Hon Cecil
Irvine, Michael	Patnick, Irvine
Irving, Charles	Patten, Chris (Bath)
Jack, Michael	Patten, John (Oxford W)
Jackson, Robert	Pattie, Rt Hon Sir Geoffrey

Pawsey, James	Stewart, Andrew (Sherwood)
Peacock, Mrs Elizabeth	Stradling Thomas, Sir John
Porter, Barry (Wirral S)	Sumberg, David
Porter, David (Waveney)	Summerson, Hugo
Portillo, Michael	Tapsell, Sir Peter
Powell, William (Corby)	Taylor, Ian (Esher)
Price, Sir David	Taylor, John M (Solihull)
Raffan, Keith	Taylor, Teddy (S'end E)
Raison, Rt Hon Timothy	Tebbit, Rt Hon Norman
Rathbone, Tim	Temple-Morris, Peter
Redwood, John	Thompson, D. (Calder Valley)
Renton, Tim	Thompson, Patrick (Norwich N)
Rhodes James, Robert	Thorne, Neil
Rhys Williams, Sir Brandon	Thornton, Malcolm
Riddick, Graham	Thurnham, Peter
Ridley, Rt Hon Nicholas	Townend, John (Bridlington)
Ridsdale, Sir Julian	Townsend, Cyril D. (B'heath)
Roberts, Wyn (Conwy)	Tracey, Richard
Roe, Mrs Marion	Tredinnick, David
Rossi, Sir Hugh	Trippier, David
Rost, Peter	Trotter, Neville
Rowe, Andrew	Twinn, Dr Ian
Rumbold, Mrs Angela	Vaughan, Sir Gerard
Ryder, Richard	Viggers, Peter
Sackville, Hon Tom	Waddington, Rt Hon David
Sainsbury, Hon Tim	Wakeham, Rt Hon John
Sayeed, Jonathan	Waldegrave, Hon William
Scott, Nicholas	Walden, George
Shaw, David (Dover)	Walker, Bill (T'side North)
Shaw, Sir Giles (Pudsey)	Waller, Gary
Shaw, Sir Michael (Scarb')	Walters, Dennis
Shelton, William (Streatham)	Ward, John
Shephard, Mrs G. (Norfolk SW)	Wardle, C. (Bexhill)
Shepherd, Colin (Hereford)	Warren, Kenneth
Shepherd, Richard (Aldridge)	Watts, John
Shersby, Michael	Wheeler, John
Sims, Roger	Whitney, Ray
Skeet, Sir Trevor	Widdecombe, Miss Ann
Smith, Sir Dudley (Warwick)	Wiggin, Jerry
Smith, Tim (Beaconsfield)	Wilkinson, John
Soames, Hon Nicholas	Wilshire, David
Speed, Keith	Winterton, Mrs Ann
Speller, Tony	Winterton, Nicholas
Spicer, Jim (Dorset W)	Wolfson, Mark
Spicer, Michael (S Worcs)	Wood, Timothy
Squire, Robin	Yeo, Tim
Stanbrook, Ivor	Young, Sir George (Acton)
Stanley, Rt Hon John	Younger, Rt Hon George
Steen, Anthony
Stern, Michael	Tellers for the Noes:
Stevens, Lewis	Mr. Robert Boscawen and
Stewart, Allan (Eastwood)	Mr. Tristan Garel-Jones.

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 60 (Amendment on Second or Third Reading):—

The House divided: Ayes 342, Noes 235.

Division No. 30]	[10.17 pm
AYES
Adley, Robert	Bellingham, Henry
Aitken, Jonathan	Bendall, Vivian
Alexander, Richard	Bennett, Nicholas (Pembroke)
Alison, Rt Hon Michael	Bevan, David Gilroy
Allason, Rupert	Biffen, Rt Hon John
Amess, David	Biggs-Davison, Sir John
Amos, Alan	Blackburn, Dr John G.
Arbuthnot, James	Blaker, Rt Hon Sir Peter
Arnold, Jacques (Gravesham)	Body, Sir Richard
Ashby, David	Bonsor, Sir Nicholas
Aspinwall, Jack	Boswell, Tim
Atkins, Robert	Bottomley, Peter
Atkinson, David	Bottomley, Mrs Virginia
Baker, Rt Hon K. (Mole Valley)	Bowden, A (Brighton K'pto'n)
Baker, Nicholas (Dorset N)	Bowden, Gerald (Dulwich)
Baldry, Tony	Bowis, John
Banks, Robert (Harrogate)	Boyson, Rt Hon Dr Sir Rhodes
Batiste, Spencer	Braine, Rt Hon Sir Bernard
Beaumont-Dark, Anthony	Brandon-Bravo, Martin

Brazier, Julian	Gower, Sir Raymond
Bright, Graham	Grant, Sir Anthony (CambsSW)
Brittan, Rt Hon Leon	Greenway, Harry (Ealing N)
Brooke, Hon Peter	Greenway, John (Rydale)
Brown, Michael (Brigg & Cl't's)	Gregory, Conal
Browne, John (Winchester)	Griffiths, Sir Eldon (Bury St E')
Bruce, Ian (Dorset South)	Griffiths, Peter (Portsmouth N)
Buchanan-Smith, Rt Hon Alick	Grist, Ian
Budgen, Nicholas	Ground, Patrick
Burns, Simon	Gummer, Rt Hon John Selwyn
Burt, Alistair	Hamilton, Hon A. (Epsom)
Butcher, John	Hamilton, Neil (Tatton)
Butler, Chris	Hampson, Dr Keith
Butterfill, John	Hanley, Jeremy
Carlisle, John, (Luton N)	Hannam, John
Carlisle, Kenneth (Lincoln)	Hargreaves, A. (B'ham H'll Gr')
Carrington, Matthew	Hargreaves, Ken (Hyndburn)
Carttiss, Michael	Harris, David
Cash, William	Haselhurst, Alan
Chalker, Rt Hon Mrs Lynda	Hawkins, Christopher
Channon, Rt Hon Paul	Hayes, Jerry
Chapman, Sydney	Hayhoe, Rt Hon Sir Barney
Chope, Christopher	Hayward, Robert
Churchill, Mr	Heddle, John
Clark, Dr Michael (Rochford)	Hicks, Mrs Maureen (Wolv' NE)
Clark, Sir W. (Croydon S)	Higgins, Rt Hon Terence L.
Clarke, Rt Hon K. (Rushcliffe)	Hill, James
Colvin, Michael	Hind, Kenneth
Conway, Derek	Hogg, Hon Douglas (Gr'th'm)
Coombs, Anthony (Wyre F'rest)	Holt, Richard
Coombs, Simon (Swindon)	Hordern, Sir Peter
Cope, John	Howard, Michael
Cormack, Patrick	Howarth, Alan (Strat'd-on-A)
Couchman, James	Howarth, G. (Cannock & B'wd)
Cran, James	Howell, Rt Hon David (G'dford)
Critchley, Julian	Howell, Ralph (North Norfolk)
Currie, Mrs Edwina	Hughes, Robert G. (Harrow W)
Curry, David	Hunt, David (Wirral W)
Davies, Q. (Stamf'd & Spald'g)	Hunt, John (Ravensbourne)
Davis, David (Boothferry)	Hunter, Andrew
Day, Stephen	Irvine, Michael
Devlin, Tim	Irving, Charles
Dickens, Geoffrey	Jack, Michael
Dicks, Terry	Jackson, Robert
Dorrell, Stephen	Janman, Timothy
Douglas-Hamilton, Lord James	Jessel, Toby
Dover, Den	Johnson Smith, Sir Geoffrey
Dunn, Bob	Jones, Gwilym (Cardiff N)
Durant, Tony	Jones, Robert B (Herts W)
Dykes, Hugh	Jopling, Rt Hon Michael
Eggar, Tim	Kellett-Bowman, Mrs Elaine
Emery, Sir Peter	Key, Robert
Evans, David (Welwyn Hatf'd)	King, Roger (B'ham N'thfield)
Evennett, David	King, Rt Hon Tom (Bridgwater)
Fairbairn, Nicholas	Kirkhope, Timothy
Fallon, Michael	Knapman, Roger
Farr, Sir John	Knight, Greg (Derby North)
Favell, Tony	Knight, Dame Jill (Edgbaston)
Field, Barry (Isle of Wight)	Knowles, Michael
Finsberg, Sir Geoffrey	Lamont, Rt Hon Norman
Fookes, Miss Janet	Lang, Ian
Forman, Nigel	Latham, Michael
Forsyth, Michael (Stirling)	Lawrence, Ivan
Forth, Eric	Lawson, Rt Hon Nigel
Fowler, Rt Hon Norman	Lee, John (Pendle)
Fox, Sir Marcus	Leigh, Edward (Gainsbor'gh)
Franks, Cecil	Lennox-Boyd, Hon Mark
Freeman, Roger	Lester, Jim (Broxtowe)
French, Douglas	Lightbown, David
Fry, Peter	Lilley, Peter
Gale, Roger	Lloyd, Sir Ian (Havant)
Gardiner, George	Lloyd, Peter (Fareham)
Gill, Christopher	Lord, Michael
Gilmour, Rt Hon Sir Ian	Luce, Rt Hon Richard
Glyn, Dr Alan	Lyell, Sir Nicholas
Goodhart, Sir Philip	McCrindle, Robert
Goodlad, Alastair	Macfarlane, Neil
Goodson-Wickes, Dr Charles	MacGregor, John
Gorman, Mrs Teresa	MacKay, Andrew (E Berkshire)
Gow, Ian	Maclean, David

McLoughlin, Patrick	Shaw, Sir Michael (Scarb')
McNair-Wilson, M. (Newbury)	Shelton, William (Streatham)
McNair-Wilson, P. (New Forest)	Shephard, Mrs G. (Norfolk SW)
Madel, David	Shepherd, Colin (Hereford)
Major, Rt Hon John	Shepherd, Richard (Aldridge)
Malins, Humfrey	Shersby, Michael
Mans, Keith	Sims, Roger
Maples, John	Skeet, Sir Trevor
Marland, Paul	Smith, Sir Dudley (Warwick)
Marlow, Tony	Smith, Tim (Beaconsfield)
Marshall, John (Hendon S)	Soames, Hon Nicholas
Martin, David (Portsmouth S)	Speed, Keith
Mates, Michael	Speller, Tony
Maude, Hon Francis	Spicer, Jim (Dorset W)
Mayhew, Rt Hon Sir Patrick	Spicer, Michael (S Worcs)
Mellor, David	Squire, Robin
Meyer, Sir Anthony	Stanbrook, Ivor
Miller, Hal	Stanley, Rt Hon John
Mills, Iain	Steen, Anthony
Miscampbell, Norman	Stern, Michael
Mitchell, Andrew (Gedling)	Stevens, Lewis
Mitchell, David (Hants NW)	Stewart, Allan (Eastwood)
Moate, Roger	Stewart, Andrew (Sherwood)
Monro, Sir Hector	Stradling Thomas, Sir John
Montgomery, Sir Fergus	Sumberg, David
Morris, M (N'hampton S)	Summerson, Hugo
Morrison, Hon C. (Devizes)	Tapsell, Sir Peter
Morrison, Hon P (Chester)	Taylor, Ian (Esher)
Moss, Malcolm	Taylor, John M (Solihull)
Moynihan, Hon C.	Taylor, Teddy (S'end E)
Neale, Gerrard	Tebbit, Rt Hon Norman
Nelson, Anthony	Temple-Morris, Peter
Neubert, Michael	Thompson, D. (Calder Valley)
Nicholls, Patrick	Thompson, Patrick (Norwich N)
Nicholson, David (Taunton)	Thorne, Neil
Onslow, Cranley	Thornton, Malcolm
Oppenheim, Phillip	Thurnham, Peter
Page, Richard	Townend, John (Bridlington)
Paice, James	Townsend, Cyril D. (B'heath)
Parkinson, Rt Hon Cecil	Tracey, Richard
Patnick, Irvine	Tredinnick, David
Patten, Chris (Bath)	Trippier, David
Patten, John (Oxford W)	Trotter, Neville
Pattie, Rt Hon Sir Geoffrey	Twinn, Dr Ian
Pawsey, James	Vaughan, Sir Gerard
Peacock, Mrs Elizabeth	Viggers, Peter
Porter, Barry (Wirral S)	Waddington, Rt Hon David
Porter, David (Waveney)	Wakeham, Rt Hon John
Portillo, Michael	Waldegrave, Hon William
Powell, William (Corby)	Walden, George
Price, Sir David	Walker, Bill (T'side North)
Raffan, Keith	Waller, Gary
Raison, Rt Hon Timothy	Walters, Dennis
Rathbone, Tim	Ward, John
Redwood, John	Wardle, C. (Bexhill)
Renton, Tim	Warren, Kenneth
Rhodes James, Robert	Watts, John
Rhys Williams, Sir Brandon	Wheeler, John
Riddick, Graham	Whitney, Ray
Ridley, Rt Hon Nicholas	Widdecombe, Miss Ann
Ridsdale, Sir Julian	Wiggin, Jerry
Roberts, Wyn (Conwy)	Wilkinson, John
Roe, Mrs Marion	Wilshire, David
Rossi, Sir Hugh	Winterton, Mrs Ann
Rost, Peter	Winterton, Nicholas
Rowe, Andrew	Wolfson, Mark
Rumbold, Mrs Angela	Wood, Timothy
Ryder, Richard	Yeo, Tim
Sackville, Hon Tom	Young, Sir George (Acton)
Sainsbury, Hon Tim	Younger, Rt Hon George
Sayeed, Jonathan
Scott, Nicholas	Tellers for the Ayes:
Shaw, David (Dover)	Mr. Robert Boscawen and Mr. Tristan Garel-Jones.
Shaw, Sir Giles (Pudsey)

NOES
Abbott, Ms Diane	Anderson, Donald
Adams, Allen (Paisley N)	Archer, Rt Hon Peter
Allen, Graham	Armstrong, Ms Hilary
Alton, David	Ashley, Rt Hon Jack

Ashton, Joe	Fearn, Ronald
Banks, Tony (Newham NW)	Field, Frank (Birkenhead)
Barnes, Harry (Derbyshire NE)	Fields, Terry (L'pool B G'n)
Barnes, Mrs Rosie (Greenwich)	Fisher, Mark
Barron, Kevin	Flannery, Martin
Battle, John	Flynn, Paul
Beckett, Margaret	Foot, Rt Hon Michael
Beith, A. J.	Foster, Derek
Bell, Stuart	Foulkes, George
Benn, Rt Hon Tony	Fraser, John
Bennett, A. F. (D'nt'n & R'dish)	Fyfe, Mrs Maria
Bermingham, Gerald	Galbraith, Samuel
Bidwell, Sydney	Galloway, George
Blair, Tony	Garrett, John (Norwich South)
Blunkett, David	Garrett, Ted (Wallsend)
Boyes, Roland	George, Bruce
Bradley, Keith	Godman, Dr Norman A.
Bray, Dr Jeremy	Golding, Mrs Llin
Brown, Gordon (D'mline E)	Gordon, Ms Mildred
Brown, Nicholas (Newcastle E)	Graham, Thomas
Brown, Ron (Edinburgh Leith)	Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon)	Griffiths, Nigel (Edinburgh S)
Buchan, Norman	Griffiths, Win (Bridgend)
Buckley, George	Grocott, Bruce
Caborn, Richard	Hardy, Peter
Campbell, Menzies (Fife NE)	Harman, Ms Harriet
Campbell, Ron (Blyth Valley)	Hattersley, Rt Hon Roy
Campbell-Savours, D. N.	Healey, Rt Hon Denis
Canavan, Dennis	Heffer, Eric S.
Carlile, Alex (Mont'g)	Henderson, Douglas
Cartwright, John	Hinchliffe, David
Clark, Dr David (S Shields)	Hogg, N. (C'nauld & Kilsyth)
Clarke, Tom (Monklands W)	Home Robertson, John
Clay, Bob	Hood, James
Clelland, David	Howarth, George (Knowsley N)
Clwyd, Mrs Ann	Howells, Geraint
Cohen, Harry	Hoyle, Doug
Coleman, Donald	Hughes, John (Coventry NE)
Cook, Frank (Stockton N)	Hughes, Robert (Aberdeen N)
Cook, Robin (Livingston)	Hughes, Roy (Newport E)
Corbett, Robin	Hughes, Sean (Knowsley S)
Corbyn, Jeremy	Hughes, Simon (Southwark)
Cousins, Jim	Illsley, Eric
Crowther, Stan	Ingram, Adam
Cryer, Bob	Janner, Greville
Cummings, J.	John, Brynmor
Cunningham, Dr John	Johnston, Sir Russell
Dalyell, Tarn	Jones, Barry (Alyn & Deeside)
Darling, Alastair	Jones, leuan (Ynys Môn)
Davies, Rt Hon Denzil (Llanelli)	Jones, Martyn (Clwyd S W)
Davies, Ron (Caerphiily)	Kaufman, Rt Hon Gerald
Davis, Terry (B'ham Hodge H'l)	Kennedy, Charles
Dewar, Donald	Kinnock, Rt Hon Neil
Dixon, Don	Kirkwood, Archy
Dobson, Frank	Lambie, David
Doran, Frank	Lamond, James
Douglas, Dick	Leadbitter, Ted
Duffy, A. E. P.	Leighton, Ron
Dunnachie, James	Lestor, Miss Joan (Eccles)
Eastham, Ken	Lewis, Terry
Ewing, Mrs Margaret (Moray)	Litherland, Robert
Fatchett, Derek	Livingstone, Ken

Livsey, Richard	Rees, Rt Hon Merlyn
Lloyd, Tony (Stretford)	Reid, John
Lofthouse, Geoffrey	Richardson, Ms Jo
Loyden, Eddie	Roberts, Allan (Bootle)
McAllion, John	Robertson, George
McAvoy, Tom	Robinson, Geoffrey
McCartney, Ian	Rogers, Allan
Macdonald, Calum	Rooker, Jeff
McFall, John	Ross, Ernie (Dundee W)
McKay, Allen (Penistone)	Rowlands, Ted
McKelvey, William	Ruddock, Ms Joan
McLeish, Henry	Salmond, Alex
Maclennan, Robert	Sedgemore, Brian
McNamara, Kevin	Sheerman, Barry
McTaggart, Bob	Sheldon, Rt Hon Robert
McWilliam, John	Shore, Rt Hon Peter
Madden, Max	Short, Clare
Mahon, Mrs Alice	Skinner, Dennis
Marek, Dr John	Smith, Andrew (Oxford E)
Marshall, David (Shettleston)	Smith, C. (Isl'ton & F'bury)
Marshall, Jim (Leicester S)	Smith, Rt Hon J. (Monk'ds E)
Martin, Michael (Springburn)	Snape, Peter
Martlew, Eric	Soley, Clive
Maxton, John	Spearing, Nigel
Meacher, Michael	Steel, Rt Hon David
Meale, Alan	Steinberg, Gerald
Michael, Alun	Stott, Roger
Michie, Bill (Sheffield Heeley)	Strang, Gavin
Michie, Mrs Ray (Arg'l & Bute)	Straw, Jack
Millan, Rt Hon Bruce	Taylor, Mrs Ann (Dewsbury)
Mitchell, Austin (G't Grimsby)	Taylor, Matthew (Truro)
Moonie, Dr Lewis	Thomas, Dafydd Elis
Morgan, Rhodri	Thompson, Jack (Wansbeck)
Morley, Elliott	Turner, Dennis
Morris, Rt Hon A (W'shawe)	Wall, Pat
Morris, Rt Hon J (Aberavon)	Wallace, James
Mowlam, Mrs Marjorie	Walley, Ms Joan
Mullin, Chris	Wareing, Robert N.
Murphy, Paul	Welsh, Andrew (Angus E)
Nellist, Dave	Welsh, Michael (Doncaster N)
O'Brien, William	Wigley, Dafydd
O'Neill, Martin	Williams, Rt Hon A. J.
Orme, Rt Hon Stanley	Williams, Alan W. (Carm'then)
Owen, Rt Hon Dr David	Wilson, Brian
Parry, Robert	Winnick, David
Patchett, Terry	Wise, Mrs Audrey
Pendry, Tom	Worthington, Anthony
Pike, Peter	Wray, James
Prescott, John	Young, David (Bolton SE)
Primarolo, Ms Dawn
Quin, Ms Joyce	Tellers for the Noes:
Radice, Giles	Mr. Frank Haynes and Mr. Ray Powell.
Randall, Stuart
Redmond, Martin

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

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1. BUSINESS OF THE HOUSE 22 words