Commons Sitting of 8 December 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]

PRIVATE BUSINESS
CITY OF LONDON (SPITALFIELDS MARKET) BILL
Order for Third Reading read.
To be read a Third time on Thursday 15 December.
AVON LIGHT RAIL TRANSIT BILL [LORDS]
(By Order)
Order for Second Reading read.
To be read a Second time on Thursday 15 December.
CITY OF GLASGOW DISTRICT COUNCIL ORDER CONFIRMATION BILL
Read the Third time, and passed.

Oral Answers to Questions

  Oral Answers to Questions
  Mr. Churchill: On a point of order, Mr. Speaker. You will be aware that in previous Parliaments there have been inquiries into the planting of parliamentary questions. Have you noticed the coincidence that today four questions on the Order Paper are in identical terms? Might this be a coincidence that you would consider inquiring into, Mr. Speaker?
  Mr. Dennis Skinner: Further to that point of order, Mr. Speaker.
  Mr. Speaker: Order. [Interruption.] Further points of order will take up a great deal of time. I shall deal with the matter.
  Mr. Skinner: When?
  Mr. Speaker: I shall protect the hon. Gentleman.
  I do not know about the planting of questions. Questions that are in the same terms often appear on the Order Paper, and that is in order. It is unusual for them to come so high on the Order Paper.

  Oral Answers to Questions
    NATIONAL FINANCE

      Budget Tax Cuts
      Mr. Graham: To ask the Chancellor of the Exchequer what estimate he can provide of the proportion of an average earner's 1988 Budget tax cut that has been absorbed by subsequent (a) water and electricity price rises, (b) mortgage interest rates and (c) interest on personal debt.
      Dr. Godman: To ask the Chancellor of the Exchequer what estimate he can provide of the proportion of an average earner's 1988 Budget tax cut that has been
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      absorbed by subsequent (a) water and electricity price rises, (b) mortgage interest rates and (c) interest on personal debt.
      Mr. Nigel Griffiths: To ask the Chancellor of the Exchequer what estimate he can provide of the proportion of an average earner's 1988 Budget tax cut that has been absorbed by subsequent (a) water and electricity price rises, (b) mortgage interest rates and (c) interest on personal debt.
      Mr. Cummings: To ask the Chancellor of the Exchequer what estimate he can provide of the proportion of an average earner's 1988 Budget tax cut that has been absorbed by subsequent (a) water and electricity price rises, (b) mortgage interest rates and (c) interest on personal debt.
      The Chancellor of the Exchequer (Mr. Nigel Lawson): As the hon. Members know, mortgage interest payments and nationalised industry prices are both reflected in the RPI. Since average earnings have risen faster than the RPI, it follows that the average earner has seen a rise in his standard of living even before any account is taken of the benefit of the tax cuts in this year's Budget.
      Mr. Graham: Does the Chancellor of the Exchequer realise that in some parts of the United Kingdom the greatest cause of homelessness is mortgage default? Does he understand that many who bought their houses in good faith are being badly let down by him? How high must interest rates rise before he will admit that his policies are wrong? How many more people will have to be made homeless because of the right hon. Gentleman's incompetence?
      Mr. Lawson: I have three points to make to the hon. Gentleman. In the first place, the overwhelming cause of mortgage default is broken marriages. It is nothing to do with the mortgage rate. And that is a fact. The second point is that it is well known that interest rates, and therefore the mortgage rate, fluctuate. The third point which the hon. Gentleman ought to take into account—so should other Opposition Members—is that when interest rates go up, on one side certainly borrowers have to pay more, but on the other side savers are getting more too.
      Dr. Godman: What does the Chancellor of the Exchequer say to the average wage earner who received about £12 by way of tax cuts in the Budget, who since then has had to pay an extra £30 a month as a result of increased mortgage payments, leaving him and his wife and family £18 worse off? Should we blame the Chancellor of the Exchequer, or the couple? May I put it to the right hon. Gentleman that it is his fiscal policies and other policies that are driving more and more Scots into the seductive but impotent embrace of the Nationalists?
      Mr. Lawson: I understand the acute problem posed to the Labour party by the Scottish National party in Scotland, I do not want to intrude into private grief and I shall not say anything more about that, but it does not really arise from the question anyway. As I pointed out, the average earner, fully taking mortgage rate increases into account, is better off today in real terms substantially, even before taking into account the tax cuts in the Budget.
      Mr. Griffiths: Is the Chancellor aware of the statement from the CBI which states: "We are consistently"—

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      [Interruption.] Is he aware of the statement from the CBI which states that it has consistently argued against the need for a price increase in electricity, which has inflicted so much harm on its members and export potential and also on over 20 million households in this country? How does the Chancellor justify forcing up electricity prices by more than 15 per cent. in 13 months?
      Mr. Lawson: Since the hon. Gentleman is interested in how business is doing, I shall quote to him, even though he is not permitted to quote to me. I shall quote to him if I may, because it is an important document, from the most recent quarterly regional business survey of the British chambers of commerce, which says:
      "Business remains buoyant"—
      and this takes full account of electricity rises—
      "Confidence is rising, turnover and profitability remains extremely strong … That confidence is being equally maintained when translated into investment activity"
      and so on. That is the state of business and industry today. I would hope that the hon. Gentleman would welcome it, because that comes from the people who are in business and industry and who know what they are talking about, unlike Opposition Members.
      Mr. Cummings: Having heard what the Chancellor has just said, what message can he send to home buyers in my constituency of Easington and home buyers elsewhere in the northern region who are subjected to the horrendous rise in interest rates, but who are earning less than the national average weekly wage? Those people therefore have not benefited from recent tax cuts. What message can he send to the 2,000 shipyard workers who have just lost their jobs in Sunderland and who are subjected to increased hardship because of the rise in home interest rates?
      Mr. Lawson: The problem of the shipyard workers in Sunderland has got nothing to do with interest rates. I am indeed sorry about the plight of the shipyard workers in Sunderland, but it is well known that there is gross over-capacity in the shipbuilding industry throughout the world. There is no way in which North East Shipbuilders Ltd. could be made into a profitable enterprise. Instead, we want to see new industries developing in the north-east. Taking the economy as a whole, I remind the hon. Gentleman that there are more people at work in Britain today than at any time in our history.
      Mr. Tim Smith: Does my right hon. Friend agree that if we had the misfortune to have a Labour Government, not only would water and electricity prices, and mortgage interest rates have risen, but income tax as well? Will he remind the House by how much the real take-home pay of the average earner has increased over the past nine years and compare that with the record of the last Labour Government?
      Mr. Lawson: My hon. Friend is making a very good point. Certainly for a married man on average earnings, with two children, his real earnings have risen during the period of this Government by 29 per cent. in real terms. Under the period of the Labour Government there was virtually no rise whatever. During the period of the Labour Government we had the lowest rate of growth of any Government since the war, the lowest rate of growth of productivity in manufacturing, the lowest level of
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      profitability and indeed a fall in manufacturing output. The only thing that they achieved highs for were inflation and taxation.
      Sir Michael Shaw: Does my right hon. Friend accept that this matter must be considered from all aspects? Will he remind us how much the taxpayer is saving by no longer having to subsidise the many loss-making nationalised industries?
      Mr. Lawson: My hon. Friend is quite right. There is a substantial saving in not having to subsidise loss-making industries now that these industries have been turned round and are in the private sector. Indeed, we are getting increasing income and increasing yield of corporation tax from those industries now that they are healthy and in the private sector.
      Mr. John Townend: Is my right hon. Friend aware that in the north of England, where we have not had the ridiculous rise in property prices that people have had in the south, real increases in wages and tax cuts have made people infinitely better off? Will he resist the pressure from the Opposition Front Bench to increase taxes and continue to decrease taxes? Does he agree that the problem is a fall in the savings ratio and an increase in personal borrowing, and that increases in interest rates will encourage saving and discourage borrowing?
      Mr. Lawson: My hon. Friend's understanding of the economy is absolutely correct. As for the regional dimension, he is right there too. The effect of a rise in interest rates, particularly now that the personal sector is a net borrower for the first time ever by a substantial amount, is most pronounced in the south-east, which is where the overheating is, and that shows how well directed that instrument of policy is.
      Sir Peter Emery: Will my right hon. Friend point out to the prophets of doom on the Opposition Benches that, to the average earner, the most important thing is to stabilise and lower inflation, and that his policy, to anybody who understands it, is bound to have a lead time of anything between five and eight months? Those critics should keep quiet until we see the success of his policy some time in the new year.
      Mr. Lawson: My hon. Friend to some extent flatters the Opposition by suggesting that they have a policy. If they do have a policy, I am sure that the Opposition Members on the Front Bench will seek to catch your eye in a moment, Mr. Speaker, to tell the House what it is, but their track record is one of total indifference to inflation and of allowing inflation to reach record levels. I share my hon. Friend's fear that if they were ever given the chance to get into office—which they will not be—they would do the same again. We, by contrast, will maintain low inflation. That is what we have done since we took office, and that is more important than anything else to the people of Britain, whether business men or private individuals.
      Mr. Beith: Will the Chancellor rule out now the tactic of using a further savage rise in interest rates early in the new year as a means of controlling overheating in the economy when there are so many other weapons that he could use—including measures to give tax relief on savings and to encourage the banks to slacken the credit explosion—which would not make him as dependent on interest rates as he has made himself?
      Mr. Lawson: Unlike the Labour party, which appears not to have any policy that it is prepared to avow, the Liberal party, or what ever it is now called—always has any number of policies or bright ideas. They are nearly all of them crackpot ideas and the electorate will see through them.
      Mr. Butterfill: Will my right hon. Friend confirm that the price increases of public utilities during the last five years of the previous Labour Government were more than double those during the past five years of this Government? Electricity prices increased 170 per cent. during the last five years of the Labour Government whereas they have gone down in real terms under this Government.
      Mr. Lawson: My hon. Friend is right. It is also the case that the average earner in Britain is better off in real terms than ever before, and that is what causes the Opposition such deep distress.
      Mr. Nicholas Brown: Inflation is higher now than when the Chancellor first started to attack it, and it comes ill from him to demand that we explain our policies when we see his policies in tatters. But I will not be uncharitable. Given the net loss of weekly income to mortgage holders set out in the Chancellor's helpful answer of 31 October to his right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), how far would the Government have to reduce income tax to offset those losses, and what would be the effect of such a further reduction on interest rates?
      Mr. Lawson: What I will tell the hon. Gentleman is that the average earner is far better off now than he was a year ago, despite the increase in mortgage rates. The table was very precise. It did not take into account the increase in earnings. It did not take into account also the fact that there is a higher interest rate on savings—and people have savings too. So I am telling the hon. Gentleman that the average income and the average earnings of the average person in this country are higher than they were a year ago. I am not going to take lectures on inflation from the Labour party, when the average rate of inflation under Labour was 15½ per cent.—and not in one single month did it ever get it as low as it is today.

      Mortgages
      Mr. Blunkett: To ask the Chancellor of the Exchequer whether his Department will commission research into the relationship between increases in base rates and levels of mortgage default.
      The Economic Secretary to the Treasury (Mr. Peter Lilley): No. A study by the Building Societies Association showed no correlation between interest rates and mortgage defaults and that the single most important cause of mortgage arrears is matrimonial breakdown.
      Mr. Blunkett: In view of the fact that between 1979 and 1987, of those accepted as homeless for whatever reason, mortgage defaulters rose from 4 to 19 per cent. of the total, does the Minister still believe, as the Government declared 18 months ago, that
      "Some people are still deterred by the costs and complications of house purchase. That is why we must look for new ways to make house buying simpler and easier"?
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      Does he believe that that statement, in the Conservative party election manifesto, has been helped, or hindered, by the Government's actions?
      Mr. Lilley: The hon. Gentleman will welcome the fact that in the first six months of this year the number of people in arrears with their mortgage, or forced into having their property repossessed, though extremely small, was 19 per cent. down on the previous year. Another factor found by the Building Societies Association to be important in affecting the level of repossessions was unemployment. With the decline in unemployment, the number of repossessions has also fallen. We believe in making it easier for people to buy their own houses and we welcome those trends.
      Mr. Holt: Will my hon. Friend note that, despite the strictures of Opposition Members, the hon. Member for Stockton, North (Mr. Cook) has just taken full advantage of the Government's legislation to purchase his own council house at a maximum 54 per cent. discount?
      Mr. Lilley: If that is the case, I congratulate the hon. Member for Stockton, North (Mr. Cook) on his good sense in taking advantage of the opportunities that we have created for all working people. I am proud that I million others have joined the hon. Gentleman in taking advantage of their right to buy.
      Mr. Frank Cook: Will the Minister note that the purchase of council houses by sitting tenants is not against Labour party policy and never has been? It has been possible to do so in Stockton on Tees since the early 1920s. If the Minister's right hon. and hon. Friends undertook any research, they would realise that their information is grossly distorted—like their mentality.
      Mr. Lilley: It would be interesting to know whether the hon. Gentleman joined so many of his right hon. and hon. Friends in voting against the right-to-buy legislation, which ensured that the majority of Labour authorities that did not grant the right to buy to their tenants were required to do so. His right hon. and hon. Friends would be embarrassed by this issue being raised.
      Mr. Dykes: Does my hon. Friend agree that home ownership on the current scale is one of the Government's outstanding successes and leaves the Labour party in a state of acute embarrassment on a constant basis? Does he also agree that the financial system is now strong enough to withstand any significant defaults next year, and that it is essential that those who are in difficulties with mortgage repayments should contact the relevant agencies before the problem develops into an unsolvable one?
      Mr. Lilley: Yes, my hon. Friend is right. He has returned to the original question, which concerns the burden of debt. Another great Labour party hypocrisy is to pretend to be concerned about debt, when a Labour Government burdened every household in this country with a level of debt far greater than that recently highlighted by the Citizens Advice Bureaux report.
      Mr. Chris Smith: Does the Economic Secretary recall that the Chancellor told the nation on London Weekend Television on 9 October, specifically in relation to the issue of mortgage default and repossessions, that he did not think that, with increasing interest rates, there would be more repossessions because families would have to spend

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      less on other things. Does the hon. Gentleman recall that the Chancellor said that, and does he not think that the remarks were deeply offensive to millions of homebuyers? What has he to say to those home buyers who budgeted sensibly in taking out their mortgages, who mortgaged themselves up to the hilt, cutting back on other expenditure, and who now have no fat in the family budget to cut out? What are they to cut out to meet the higher interest payments?
      Mr. Lilley: I agree with my right hon. Friend and disagree with the hon. Gentleman profoundly when he says that it is budgeting sensibly to mortgage oneself up to the hilt. To the extent that people have borrowed too much, and lenders have been unwise enough to lend too much, it is normal to accept—as most building societies do—that when there are difficulties in repayment because of changes in the interest rate, the mortgage can be prolonged, and that is why the level of repossessions is not related to the mortgage rate. I refer the hon. Gentleman to the report of the Building Societies Association, which says:
      "A careful examination of the statistics shows that there is no relationship between the level of mortgage rates and the level of possessions and arrears."
      Mr. Gow: Would it not add to the spirit of comradeship on the Opposition Benches if my hon. Friend were to publish in the Official Report a list of those Opposition Members and Labour councillors who have taken advantage of our right-to-buy legislation?
      Mr. Lilley: My hon. Friend is always doing his best to stir up unity in the Labour party. If it proves possible to carry out his request, I shall do so.

      Privatisation
      Mr. Harry Barnes: To ask the Chancellor of the Exchequer what is the total sum raised from the privatisation programme from 1979 to date; and to what these revenues have been applied.
      The Financial Secretary to the Treasury (Mr. Norman Lamont): The net proceeds from privatisation since May 1979 amount to some £23½ billion.
      Mr. Barnes: Have not the revenues been used to stoke up a consumer-led import drive, which is helping to ruin the British economy, and have not consumers' assets been wasted in these nonsensical sales?
      Mr. Lamont: The answer to the first point is no and the answer to the second point is, equally, no. The result of privatisation has been that businesses amounting to about 45 per cent. of the public sector in 1979 are operating more efficiently and profitably than ever before.
      Mr. Burt: Is it not the case that the privatisation programme is proceeding apace throughout the world, that Socialist Sweden has returned 15 companies with a total turnover of £100 million to the private sector, and that only the Albanian-style Labour party is kicking against this trend?
      Mr. Lamont: My hon. Friend is absolutely right. Privatisation programmes are being implemented in many countries in Europe, Asia and also North America. Yet only yesterday the Labour party recommitted itself to the
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      renationalisation of the water industry, which shows that it has not understood that privatisation is a programme that is immensely popular in this country.

      Contingency Fund
      Mr. Ronnie Campbell: To ask the Chancellor of the Exchequer if he expects to allocate resources from the Contingency Fund in 1989–90 to (a) pensions and (b) education.
      Mr. McFall: To ask the Chancellor of the Exchequer if he expects to allocate resources from the Contingency Fund in 1989–90 to (a) pensions and (b) education.
      The Chief Secretary to the Treasury (Mr. John Major): I assume that the hon. Gentlemen are referring to the reserve. In the case of pensions, the answer is yes. Other allocations from the reserve will be made as the need arises.
      Mr. Campbell: Given the break in the earnings-linked update for pensions, is the Chancellor aware that pensions now are £11 lower for single people and £18 lower for married couples, which has given the Treasury a net saving of £5 billion a year? That has robbed British pensioners of £2,000 a year since 1979. How does the Chancellor feel about being voted the No. 1 Scrooge this Christmas by the pensioners?
      Mr. Major: The hon. Gentleman's remarks are wholly misleading, for a variety of reasons. The first point that I want to make is that pensioners' average real incomes have risen by 23 per cent. from 1979 to 1986, compared with only 3 per cent. in real terms between 1974 and 1979. Frankly, we need no lectures from the hon. Gentleman, whose party, when in government, savaged pensioners' living standards.
      Mr. McFall: As skills shortages are believed to be the main impediment to the growth of industrial companies, and as a CBI survey shows that over 20 per cent. of industrial firms believe that skills shortages are the primary impediment to growth, why is it that in the White Paper published by the Secretary of State for Employment the Chancellor of the Exchequer did not see fit to allocate an extra penny from the contingency fund to further education and training?
      Mr. Major: Substantial increases were allocated to education and training in the recent public expenditure round. The hon. Gentleman may be aware that, in particular, there were substantial increases recently over the whole range of university and other education-related areas of expenditure.
      Mr. Brazier: Does my right hon. Friend agree that it is only because of the increase in growth that has occurred as a result of the successful economic policies of this Government that there are extra resources and that we can have discussions about how they ought to be allocated?
      Mr. Major: That is right. There were substantial increases in a series of priority programmes during this year's public expenditure round.
      Mr. Adley: Will my right hon. Friend consider the significance of the figures that he has just given to the House? There has been a 23 per cent. increase in the real value of pensions, compared with the miserly sum that the

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      last Labour Government managed to give to pensioners. In particular, there are now more than 1 million additional state pensioners since this Government were elected in 1979. Will my right hon. Friend point out to the people of this country that it is possible to contemplate that a Government such as might emerge if the Labour party were elected would reduce the real value of pensions for state pensioners?
      Mr. Major: It is perfectly clear that in the event of there being a further hypothetical Labour Government, and of that Government being as successful as their predecessors, they would undoubtedly, given the increase in the number of pensioners in the last few years, reduce the living standards of pensioners. That is not taking into account the effect of inflation under the last Labour Government. The Opposition would do well to recall that they twice denied the Christmas bonus to pensioners and that a considerable number of pensioners suffered a negative loss on their hard-earned savings as a result of their policies.
      Mr. Ron Brown: Does the Minister not understand that today's sick society—also known as the "tick society"—suffers greatly because of Dr. Lawson's quack medicine? Pensioners in their droves in Scotland are backing the mass movement against the poll tax. That is something that the Government will have to face next year in Scotland—as well as in England, in due course.
      Mr. Major: My right hon. Friend's policies have led to eight successive years of quite substantial growth, which is both a creditable and a remarkable record. As for pensioners, the hon. Gentleman and all his hon. Friends have neglected to mention the further substantial assistance that has just been announced in respect of older pensioners. I should have thought that they would welcome that announcement.

      Charities (VAT)
      Sir Peter Emery: To ask the Chancellor of the Exchequer whether he will list the total level of value added tax estimated to be provided by charities during the forthcoming financial year and the amount provided by charities over the last five years.
      Mr. Lilley: I regret that this information is not available.
      Sir Peter Emery: This Government have probably done more than any other to encourage giving to charities, but does my hon. Friend not realise that they are suffering considerably after donations have been made because some leading charities are paying £1 million or £2 million more in VAT? Those who make donations to charities do not believe that their money should be used for that purpose. Will my hon. Friend ask the Chancellor to consider that matter when he is thinking about next April's Budget?
      Mr. Lilley: I thank my hon. Friend for his remarks about the Government's policies to encourage charitable giving, and I pay tribute to him for his consistent interest in this issue. My right hon. Friend considered the possibility of a general VAT relief, but decided against it. First, it is inconsistent with and would not be permitted under European Community law, although specific reliefs might be. Secondly, my right hon. Friend decided that it
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      would be better to concentrate on encouraging the act of charitable giving, since it is clearly right that the amount of tax relief that a charity receives should be related to the amount of giving that it is able to attract. It is also good that, whereas £1 of VAT relief is worth just £1, an extra £1 of tax relief on the act of giving has a multiplier effect and encourages extra charitable giving.
      Mr. Rooker: What are the Government doing to distinguish between charities whose purposes we all understand and charities set up exclusively to avoid tax? What action are the Government taking to ensure that those charities are shut down?
      Mr. Lilley: From time to time measures are introduced in the Finance Bill to prevent the use of tax legislation as tax loopholes. Another safeguard is provided through the charity commissioners, who are required to examine the matter.
      Mr. Higgins: Does my hon. Friend agree that there are real difficulties in giving VAT relief to charities? Were not those dificulties recognised when the tax was introduced? Do not the compensation advantages in tax that were given to charities at that time, and continued by successive Conservative Governments for the same purpose, vastly exceed the actual cost to charities of VAT?
      Mr. Lilley: My right hon. Friend is absolutely right. Because of the benefits that we have given to charities and the inducement that we have given to encourage charitable giving, the amount of charitable giving has doubled in real terms since 1979.

      Group of Seven
      Ms. Mowlam: To ask the Chancellor of the Exchequer what information he has as to the current inflation rates of the member states of the Group of Seven leading industrialised countries.
      Mr. Norman Lamont: With permission, Mr. Speaker, I shall publish a table in the Official Report.
      Ms. Mowlam: In view of the Minister's response, will he tell the House when he expects Britain's inflation rates to fall into line with those of our competitors—this year, next year, or after the Chancellor leaves his job?
      Mr. Lamont: When my right hon. Friend the Chancellor made a speech during the debate on the Loyal Address, he told the House when he expected the rate of inflation to peak and when he expected it to come down.
      Ms. Mowlam: When?
      Mr. Lamont: The hon. Lady knows that I would never make such a precise prediction. The inflation differential between this country and the G7 countries to which the hon. Lady referred in her question has been narrowing since the Government took office. Between 1974 and 1979, when the Labour Government were in office, the gap was 6½ points on average. Under the Conservative Government, it has been a mere 1·7 points. We intend to narrow the gap even further.
      Mr. Budgen: Does my right hon. Friend agree that the history of those countries, especially Germany, shows that any relatively open economy can adjust to high and rising rates of inflation? Does he further agree that while

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      Governments are pouring excess demand into the economy there will always be those who are unwise enough to applaud that because they personally enjoy its benefits? Does he also agree that the case against inflation is not economic, but social, because of the corrosive effect that it creates for all those who lose by inflation—whether council tenants, pensioners or savers?
      Mr. Lamont: My hon. Friend is absolutely right. Those who suffer most from inflation are those on fixed incomes, savers and the elderly. A major part of our recent inflation has been caused by our very fast rate of growth. Despite the advantages of that rate of growth, we must do justice to those who are disadvantaged by inflation. That is why we have acted promptly and are determined to bring down inflation. That is why we have a Budget surplus, which is the best possible background for bringing that about.
      Mr. Gordon Brown: Is the Minister aware that the Chancellor told both the House and the Treasury Select Committee last week that inflation would rise to 5·5 per cent. in 1989 if mortgage costs were excluded? Will he confirm that with mortgage costs included—a real burden that millions face—the new Treasury forecast is that inflation will rise towards 7 per cent. during 1989? Does he now forecast inflation rising above 7 per cent.? Will he say yes or no?
      Mr. Lamont: The hon. Gentleman makes his calculations, but my right hon. Friend the Chancellor has published the figures both with and without mortgage costs being included. We are determined to bring down inflation and we have taken firm action to achieve that. The results of that policy will show fairly soon.
      Following is the information:

      Percentage increase in consumer prices over 12 months to October 1988

      Per cent

      United States

      4·2

      Japan

      1·1

      Germany

      1·3

      France

      3·0

      United Kingdom

      6·4 1(5·1)

      Italy

      4·7

      Canada

      4·21(4·2)

      1 Bracketed figure excludes mortgage interest payments.

      Source: OECD, Department of Employment.

      Company Profits
      Mr. Jack: To ask the Chancellor of the Exchequer by how much in percentage terms company profitability has changed in the north-west of England in the last five years.
      Mr. Major: The net rate of return of non-North sea industrial and commercial companies in 1987 was two and a half times its level in 1982. I am glad to say that the north-west of England has fully participated in the economy's strong growth over the past six years.
      Mr. Jack: My right hon. Friend's answer will bring enlightenment and knowledge to the dark recesses of the Opposition Benches. Will he confirm that the growth in profitability has enabled Fox's Biscuits in my constituency to invest £14·5 million in a new factory which will create
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      400 jobs in the next five years? Will he further confirm that improved profitability has benefited company liquidity in the north-west with continuous extra investment?
      Mr. Major: I am delighted to hear of that particular investment by Fox's Biscuits. I had the opportunity of visiting United Biscuits at Stockport and was delighted to see how well that company was doing. It is true to say that there is a substantial degree of capital investment, most noticeably in manufacturing industry. That has contributed substantially to the fall in unemployment.
      Mr. Ashton: The Government have been in power for nine and a half years, not five years. For how much longer are we to see this charade of staged Conservative party political broadcasts using the best figures and the best times? Is it not a fact that if a company in the north-west made £1 profit in 1982, and now makes £2 profit, the Government would say that it had doubled its profits or increased its profits by 100 per cent.? For how much longer will we have to put up with phoney figures being trotted out in the House? Give us the figures since 1979.
      Mr. Major: I shall do better than that. I can tell the hon. Gentleman that private-sector investment in 1988 as a percentage of GDP is at the highest level since statistics were first collected.
      Mr. Goodlad: Has my right hon. Friend read the latest regional survey of the chambers of commerce of Manchester and Merseyside, showing the high level of confidence in future profitability? Is that not indicative of the state of the economy throughout the north-west?
      Mr. Major: I entirely agree with my hon. Friend. I have seen the survey and it shows, among other things, that expectations have risen in the third quarter over the second quarter.

      Confederation of British Industry
      Mr. Turner: To ask the Chancellor of the Exchequer when he next expects to meet representatives of the Confederation of British Industry; and what matters will be discussed.
      Mr. Buckley: To ask the Chancellor of the Exchequer when he next expects to meet representatives of the Confederation of British Industry; and what matters will be discussed.
      Mr. Lawson: This evening I shall be meeting the economic and financial policy committee of the CBI, where a wide range of subjects will be discussed.
      Mr. Turner: In view of the hostile resolution at the CBI conference—[HON. MEMBERS: " Reading."]—and the fact that the base rate increases—[Interruption.] I shall not give way. As, since May of this year, industry has lost £700 million in base rate increases, and manufacturing companies' overseas order books are the lowest since April as a result of the Government's sterling policy, why does the Chancellor not take the Edinburgh Hundreds?
      Mr. Lawson: I must tell the hon. Gentleman that he has been sadly misled by the brief which someone has handed to him. In fact, the CBI acknowledged that British business today is doing better than ever before. Manufacturing productivity has been rising faster in this country than ever before and faster, indeed, than in any

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      other major industrial country. Investment this year is running at some 12 per cent. growth in real terms—twice as fast as the growth in consumption and there will be further substantial growth in investment next year. As my right hon. Friend the Chief Secretary pointed out a moment ago, private-sector investment this year as a percentage of GDP is at the highest level since figures were first collected in 1955.
      Mr. Buckley: Will the Chancellor take the opportunity tonight to dispel the fear of the chairman of the CBI, who is worried about the high interest rates that the Chancellor has brought into the economy? These are seriously undermining small companies. Is he aware that a £1 billion increase in costs to British industry is a direct consequence of the increase in interest rates that he has brought about since May? Does the right hon. Gentleman accept that, according to the CBI conference, his current policy is gravely undermining the Government's policy on business starts and expansion?
      Mr. Lawson: That is untrue. The CBI recognises that the Government's policy has provided a better climate for business and industry to prosper than ever before. It knows that profitability this year is expected to be at the highest level since 1960, and it knows, too, that the Government's insistence on getting inflation down is the most important safeguard for British industry in competing throughout the world.

    PRIME MINISTER

      Engagements
      Mr. Battle: To ask the Prime Minister if she will list her official engagements for Thursday 8 December.
      The Prime Minister (Mrs. Margaret Thatcher): This morning the Soviet ambassador called on me to deliver a message from President Gorbachev. Later I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today and will be addressing the annual meeting of the Per Cent Club.
      Mr. Battle: Knowing the Prime Minister's fondness for photo opportunities with British tanks, can she now tell the House that she is prepared to go for the British Challenger II tank, which is the best value for the Army and the best deal for the taxpayer? Such an announcement would reassure 14,000 workers that they will still have jobs after Christmas. Is she going to blast the Leeds tank industry in the way that she sank Sunderland's shipbuilding industry?
      The Prime Minister: A decision will be made on that by the end of the year. Naturally, the Army must have the best possible tanks for its purposes.
      Mr. Oppenheim: To ask the Prime Minister if she will list her official engagements for Thursday 8 December.
      The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
      Mr. Oppenheim: Does my right hon. Friend agree that yesterday's troop reduction proposals by President Gorbachev, which have been warmly welcomed by one of
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      the Opposition's leaders as a great initiative, would never been made if the Government had followed the one-sided disarmament proposals advocated by the Opposition and CND?
      The Prime Minister: First, I am sure that the whole House would wish to join me in offering sympathy to the victims and the bereaved following the earthquake that afflicted the Soviet Union.
      I can tell my hon. Friend that we have welcomed the unilateral reductions in forces and armaments proposed by Mr. Gorbachev as an important step towards securing a better balance of forces in Europe, in view of the Soviet Union's present overwhelming superiority. But we need to keep the matter in perspective. Even after the reductions, the Soviet Union will have 41,500 tanks compared with 16,500 for NATO, 35,000 artillery pieces compared with 14,000 for NATO, and 7,400 aircraft compared with 4,000 for NATO. Therefore, there will still be a major asymmetry in the Soviet Union's favour. There is still much tough negotiating to do.
      Mr. Kinnock: First, I join the Prime Minister in offering our deepest sympathy to the people of Armenia at this time of great suffering and loss of life. I also strongly support the offer that she has made elsewhere to provide whatever help may appear to be necessary.
      Mr. Gorbachev has taken another major and historic step towards the time when the use or threat of force will no longer be an instrument of foreign policy. May I ask the Prime Minister to ensure that, in deeds as well as in words, her responses match President Gorbachev's realism and vision?
      The Prime Minister: First, I thank the right hon. Gentleman for his words at the beginning. We all join in extending sympathy to the Soviet Union. As he knows, we stand ready with the disaster relief unit at the Foreign and Commonwealth Office to offer any help that we can. We have had an urgent request from the Soviet authorities for the use of thermal imaging equipment, which was used so successfully to locate people trapped under collapsed buildings in the Mexico earthquake. We have offered to assemble a team of London firemen, who were also used in Mexico, together with the equipment, and we stand ready to fly them out to the Soviet Union later today. We have also had many other offers which we shall follow up.
      With regard to what the right hon. Gentleman said, I described the remaining figures for conventional forces as a great asymmetry. As he is well aware, we were very anxious to get talks on conventional armaments going to try to secure asymmetrical disarmament. There is still plenty of scope to do that, and we shall be pursuing it together with NATO later.
      Mr. Grocott: It is mean-minded.
      The Prime Minister: It is very far from mean-minded. I am absolutely certain that President Gorbachev is very well aware that I am as determined to defend our way of life as he is to defend his. I repeat that the superiority of the Soviet armed forces over ours is more than two to one in their favour.
      Mr. Kinnock: President Gorbachev said at the United Nations:
      "We are witnessing the emergence of a new historic reality, a turning away from the principle of super-armament, to the principle of reasonable defence sufficiency."

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      Will the Prime Minister take this opportunity to give us her view of what for Britain is reasonable defence sufficiency? Does it include the purchase of a new generation of nuclear weapons?
      The Prime Minister: It consists of making an accurate assessment of the nuclear, chemical and conventional weaponry, which the potential aggressor still has, and making certain that we are in a position to deter aggression. I am quite ready to believe—indeed, I already know—that the Opposition would throw away the defence of this country. The approach that I have described is the one that we shall follow. We shall look at the weaponry that they have and make certain that our defence is strong enough to deter.
      Mr. Hind: Does my right hon. Friend agree that British spending on defence is about 5·1 per cent. of gross national product, compared with 13 per cent. that the Soviet Union spends on defence? Does she agree also that President Gorbachev has made a virtue out of necessity in order to bring the standard of living of his people up to that enjoyed in the West?
      The Prime Minister: We all know that the proportion of GDP spent on armaments in the Soviet Union is greatly in excess of what any democratic country can do. Our own is about 4·2 per cent. of GDP. In the Soviet Union it is very much more. I believe that the proposals made by President Gorbachev at the United Nations were made genuinely to reduce conventional weapons and the dissymmetry on his side, and no doubt also because, quite naturally, he wishes to raise the standard of living of people in the Soviet Union. Our task is to make certain that we always have a sure defence while trying to extend the hand of friendship across the European divide.
      Mr. Ashdown: Will the Prime Minister assure the House that she recognises that President Gorbachev's remarkable speech yesteday could mark a significant historical turning point? Now that President Gorbachev's attention is rightly directed to the tragedy in his own country, I beg the Prime Minister to realise that she must use her influence to ensure that there is an effective and substantial response from Western leaders to maintain the momentum for international disarmament and to ensure that President Gorbachev's position in his own country is strengthened.
      The Prime Minister: As the hon. Gentleman is aware, I was the first leader in the Western world to welcome Mr. Gorbachev's reforms. I welcomed them publicly because I believe that any possibility of enlarging freedom in the Soviet Union is to the advantage not only of the people there but of the whole world. I welcome the words that President Gorbachev used at the United Nations. He said:
      "The principle of freedom of choice is mandatory."
      I wish that all Opposition Members believed in that principle. He went on to say:
      "Freedom of choice is a universal principle that should allow for no exceptions."
      I agree with that, too. [Interruption.] I am responding. He went on:
      "The new phase … requires de-ideologising relations among states. We are not abandoning our convictions … but neither do we have any intention to be hemmed in by our values."
      I welcome all that. I was among the first to welcome his movement towards increased freedom and increased
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      responsibility, but always, as he knows, making certain that our defence is sure. I agree with my hon. Friends. It is because of that—and the same view is taken by NATO colleagues—that we have got far more disarmament than we ever could have thought possible.
      Mr. Churchill: In appreciation of President Gorbachev's most significant gesture at the United Nations yesterday, and out of humanitarian concern for the people of Armenia, will my right hon. Friend specifically offer an air-lifted field hospital and assistance from the Royal Engineers? Is she aware that the Manchester fire brigade would most certainly also wish to be associated with any civilian offer of thermal imaging and personnel?
      The Prime Minister: As my hon. Friend probably heard earlier this morning, we will offer whatsoever we can to the limit of our ability. When we were informed of what they wanted, we responded immediately. The disaster relief unit in the Foreign and Commonwealth Office is standing by. Our ambassador to Europe has already been to the Commission. We have already had offers of help from the British Red Cross, and it is in touch. We have already—[Interruption.] I am sorry that Opposition Members do not seem to be interested in the help that we are prepared to offer. We have already had—[Interruption.] We have already had messages and offers of help from surgeons in this country, who have said that they could quite easily put together an operating team, if that is needed, to relieve the stress and strain in the Soviet Union.
      Mr. Tom Clarke: To ask the Prime Minister if she will list her official engagements for Thursday 8 December.
      The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
      Mr. Clarke: Is the Prime Minister aware that there is genuine and widespread concern in Scotland about the way in which we deal with Scottish affairs in the House? Does she accept that there is to be a concentrated and orchestrated attack on Scottish Question Time, because 27 English Conservative Members have tabled questions for the next Scottish Quesion Time? That makes a mockery of the failure to provide a handful of hon. Members to allow the Scottish Affairs Select Committee to continue.
      The Prime Minister: Scottish Members play a very full part in all matters that are debated in the House. We are a united kingdom. I trust that the hon. Gentleman is not resiling from that. Is resiling from the United Kingdom a new Labour party policy? So long as we are a united kingdom, we should deal with our affairs as a united country.
      Sir Anthony Grant: Does my hon. Friend agree that it is very much in the nation's interests that the Civil Service should maintain its traditional role of serving whichever Government are in power and that, if a civil servant wishes to pontificate on party political matters, he should resign from the service and stand for Parliament, like the rest of us?
      The Prime Minister: I am sure that my hon. Friend will agree that we get extremely good service from the Civil Service, which, in general, upholds the highest traditions of the service. If that is not so, it is a matter for the head of the Civil Service to deal with.

Business of the House
3.30 pm
Mr. Frank Dobson: Will the Leader of the House tell us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): The business for next week will be as follows:
MONDAY 12 DECEMBER AND TUESDAY 13 DECEMBER— Second Reading of the Electricity Bill.
At Ten o'clock on Tuesday the House will be asked to agree the Civil and Defence Votes on Account and the Winter Supplementary Estimates
Afterwards, motion relating to the Social Fund Cold Weather Payments (General) Amendment Regulations
WEDNESDAY 14 DECEMBER—Until Seven o'clock debate on a Government motion on British Shipbuilders.
Second Reading of the Transport (Scotland) Bill.
THURSDAY 15 DECEMBER— Second Reading Of the Security Service Bill.
Committee and remaining stages of the Petroleum Royalties (Relief) and Continental Shelf Bill.
FRIDAY 16 DECEMBER—Private Members motions.
MONDAY 19 DECEMBER—Until Seven o'clock, Private
Members motions.
Motion for the Christmas Adjournment.
Proceedings on the Consolidated Fund Bill.
Mr. Speaker, the House will wish to know it will be proposed that, subject to the progress of business, the House should rise for the Christmas Adjournment on Thursday 22 December until Tuesday 10 January.
Mr. Dobson: I thank the Leader of the House for his statement.
I welcome the Government's decision to provide two days of debate on the Bill to sell off the electricity supply industry, particularly as that will permit debate on the impact of the Bill on Scotland, although there should have been a separate Scottish Bill.
While welcoming the provision of time to debate the closure of the shipyards at Sunderland, may I ask the Leader of the House to reconsider the proposal to hold the shipbuilding debate before the commencement of the Second Reading debate on the Transport (Scotland) Bill, which is of sufficient importance to the people of Scotland to merit its starting and finishing at the normal times?
While on the subject of Scottish affairs, may I ask the Leader of the House to tell us what is happening about the Select Committee on Scottish Affairs? As my hon. Friend the Member for Monklands, West (Mr. Clarke) said, 27 Tory Members have shown themselves to be so interested in Scottish affairs that they have put down questions for oral answer at the next Scottish Question Time. Surely this display of interest in Scottish affairs should lead at least a few of them to be willing to do their duty and serve on the Scottish Affairs Select Committee, which the Standing Orders of the House required us to bring into operation more than a year ago.
Will the Leader of the House tell us when the House will have an opportunity to debate the report of the Fennell inquiry into the King's Cross Underground fire, which has wide significance for the safety of passengers everywhere and for the respective responsibilities of managers,
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regulatory inspectorates and the Government? I understand that the matter is to be debated in Government time in the House of Lords, and if the Government can find time for it in the other place, they ought to find time for it here.
Finally, will the Leader of the House confirm that any controversial Government legislation should, by tradition, be introduced in this House and not in the House of Lords? If so, can he guarantee that the Bill to introduce compulsory football club membership schemes will come before this House first? Some measures have gone through the other place first on the ground that their Lordships have special and direct experience of the topic in question. Surely the Government are not suggesting that the other place has special and direct experience of the shed at Stamford Bridge or the Stretford end at Old Trafford. This is an important measure and it should come first to the House of Commons, particularly because, as with many other Government measures, it impinges on the civil liberties of everybody, not just of those immediately concerned.
Mr. Wakeham: The hon. Gentleman asked me five questions about next week's business, and I shall do my best to give him five answers. I am grateful for what he said about the Electricity Bill. It is for the convenience of the House that there should be a two-day debate, and I am pleased that I was able to arrange it. I am also glad that I was able to arrange a debate on British Shipbuilders, which, as I announced, is to be held next Wednesday. I regret that that means that the Transport (Scotland) Bill debate will start later than we had originally intended, but I think that, through the usual channels, we shall arrange for the debate to go on past its normal hour of 10 o'clock. I shall look at the matter again, but I do not undertake to make any other arrangements.
As I have already informed the House, it is my intention to have a debate on the Scottish Affairs Select Committee before Christmas, and it may be for the convenience of the House if I say that the debate is likely to take place on Tuesday 20 December.
The hon. Gentleman is correct to say that there is to be a debate next week in the other place on the King's Cross fire. It is an extremely important issue and I know of the hon. Gentleman's constituency concern. I cannot undertake to find Government time before the Christmas recess, but the question of a debate can be discussed through the usual channels. There are several occasions when this matter could be raised; for example, in the debate on Monday 19 December.
It must be for the Government to determine into which House a Bill is introduced. I do not accept the hon. Gentleman's general constitutional judgment on these matters. The Bill to which he refers—the football Bill—has not yet been published and I am glad that he is anxious for us to make progress on this matter. I noted what he said, and I am happy for the matter to be discussed through the usual channels.
Sir Bernard Braine: My right hon. Friend will be aware that this week marks the 40th anniversary of the United Nations universal declaration of human rights. However, gross violations of human rights continue in many countries. In view of the implications for foreign

437
policy, and of the rising concern on both sides of the House about this abomination, will my right hon. Friend arrange an early debate on human rights?
Mr. Wakeham: I recognise my right hon. Friend's concern—which probably goes back further than 40 years—for human rights wherever he finds them not being maintained. His record is second to none in the House. There will be opportunities to raise this question before the House rises for the Christmas recess. I am sorry to say that I do not believe that it will be possible to find Government time for a debate. As my right hon. Friend will know, my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs has written to all hon. Members on this very important matter.
Mr. James Wallace: I endorse the comments of the Father of the House, and I am disappointed by the right hon. Gentleman's reply.
The training White Paper announced this week said that training and enterprise councils would have large sums of money to dispose of and should have a clear framework for their operations. Will that involve a statutory framework, and do the Government propose to introduce legislation to implement this proposal?
What is the nature of the motion that the Leader of the House will ask the House to debate on 20 December about the Scottish Select Committee?
Mr. Wakeham: On the hon. Gentleman's second point, I am not at present able to announce the terms of the motion on the Scottish Select Committee. I recognise the hon. Gentleman's concern and I shall do my best to table the motion in good time for hon. Gentlemen to study it before the debate.
There are a number of substantial issues in the training White Paper. There will be opportunities to debate many of the issues, especially on the Second Reading of the Employment Bill. Nevertheless, it may be possible to find time in the new year for a debate on the White Paper itself, but I would prefer to discuss that through the usual channels.
Sir Hal Miller: Will my right hon. Friend consider making arrangements for a Minister from the Ministry of Agriculture, Fisheries and Food to make a statement to the House before the recess? I notice from the Order of Questions that there will be no opportunity to question a Minister from that Ministry on the subject of the damage being done to the egg industry. I regret that the matter was treated with some levity in the House during questions on Monday. The egg industry is in a serious position because of the ill-considered—if considered at all—remarks of a junior Health Minister. Could a Minister from the Ministry explain to us the position of the nation's flock of poultry and the food value of the eggs that they produce?
Mr. Wakeham: I thought that when my right hon. and learned Friend the Secretary of State for Health answered questions on Monday he was correct. He gave serious answers to serious questions. My hon. Friend must try to keep this matter in perspective. I recognise the seriousness of the matter for the egg industry, but there is a serious health risk. There have been 46 reported outbreaks associated with eggs, and 9 billion eggs are consumed each
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year. The problem must be put in that perspective. I shall, of course, refer the matter to my right hon. Friend the Minister of Agriculture, Fisheries and Food.
Mr. Michael Foot: I reinforce what was said by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) about the shocking proposal—if it has ever been a proposal—to start the football identity cards Bill in another place. Will the right hon. Gentleman take into account the fact that there was a debate in the House on that matter and that almost every speech, from both sides of the House, was against the Bill? The Bill infringes the civil liberties of British people, and the idea of introducing it in another place is absurd. Doing that will only add to the difficulties of getting any such measure through. Will the right hon. Gentleman, here and now, give us the undertaking that it will not be introduced in another place?
Mr. Wakeham: I am grateful for the right hon. Gentleman's assistance and guidance on how I can get my legislation through the House. I do not think that I can add to what I have said. If we look back to when the right hon. Gentleman was in government, we see that important legislation was started in the House of Lords. It is not constitutionally acceptable to say that that is not a proper thing to do. I have undertaken to have discussions through the usual channels, which I believe is the best way to proceed.
Dr. Alan Glyn: In view of recent events, will my right hon. Friend consider having a debate on international terrorism and on how best countries can combine to combat this terrible threat?
Mr. Wakeham: My hon. Friend raises an important matter. There was a debate on some of the issues this week, and there will be further stages of that legislation, when my hon. Friend will be able to raise points which he believes to be important. There will also be one or two other opportunities shortly when these matters could be raised. I wish that I could be more forthcoming.
Mr. Greville Janner: May I associate myself with the plea by the Father of the House for a debate on human rights? I know that the Jewish community in this country would wish to associate itself with the expressions of sympathy for the people who are suffering in the Soviet Union. I know, too, that other hon. Members would wish to raise the problems that remain for refusniks who are not allowed to leave and to plead with President Gorbachev that by the time he visits London—which we hope will be soon—there will be no further refusniks, and the Jewish people, along with all other minorities, will be able to practise their religions in freedom in the USSR.
Mr. Wakeham: I am grateful to the hon. and learned Gentleman for what he has said and I recognise the considerable part of his life that he has devoted to that particular issue. I am sorry that I cannot be more forthcoming about a debate on such matters, but I have no doubt that we shall find ways to raise them, quite properly, in the House.
Sir Michael McNair-Wilson: As the Anglo-Irish Agreement has been in existence for approximately three years and is currently under review, can my right hon. Friend say when he expects to find time

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for the House to make a contribution to that review? As we shall consider the possibility of a setting up a Scottish Select Committee before Christmas, has he given any further thought to creating a Select Committee for Northern Ireland?
Mr. Wakeham: I have no specific proposals to put before the House for a Select Committee for Northern Ireland, but discussions are going on about other Northern Ireland matters and I am always willing to listen to any views that come from any part of the House. The Anglo-Irish Agreement has much potential to benefit all law-abiding people in both parts of Ireland and in Great Britain. As I have told the House before, my right hon. Friend is anxious to hear any views that hon. Members and others wish to put forward, and we accept that the House as a whole should have the opportunity to express its views. The review will continue over several months, and the best time for a debate is a matter of judgment.
Mr. Andrew Welsh: Although I welcome the fulfilment, at long last, of the Leader of the House's promise for a debate on the Scottish Select Committee, I find it utterly objectionable that such an important Scottish matter should be treated in such a last-minute fashion by being debated just before the Christmas recess. Will the right hon. Gentleman assure us that the motion that he tables will be a positive one and that it will refer to the clear breach of Standing Orders by the failure to provide a Select Committee for Scotland.
Mr. Wakeham: I give the undertaking that it will be a positive motion, and I believe that it will be a suitable basis for debate, but I cannot go into the terms of it at the moment.
Mr. Bill Walker: When my right hon. Friend considers the terms of the motion— I know that he will give serious consideration to it—on the Scottish Affairs Select Committee, will he bear in mind that more than eight out of 10 taxpayers living in the United Kingdom live in England and that those taxpayers have an interest in what happens in all of the United Kingdom, as do the Members representing their constituencies? Will he also bear in mind that the vast majority of tourists who visit Scotland come from England and that we Scots want the terms of the motion to make it clear that the United Kingdom is an integral and important part of this unitary Parliament?
Mr. Wakeham: My hon. Friend makes some extremely valid points. I hope that he will be able to catch your eye, Mr. Speaker, and have the opportunity to develop them in the debate that will take place. I cannot give any further indication of the exact terms of the motion, but I shall bear in mind what my hon. Friend and the hon. Member for Angus, East (Mr. Welsh) have said.
Mr. Tam Dalyell: May I make a valid point on behalf of all Back Benchers of all parties? Can it possibly be true that Back-Bench rights have been eroded to the extent that the Consolidated Fund Bill debate now starts at 10 o'clock? There used to be a time when the Consolidated Fund debate was sancrosanct, other than when there were the most urgent statements, which Mr. Speaker approved, and it started at 3.30 pm. Our rights were then eroded by the Adjournment debate and now we
440
have private Members' business and the Adjournment debate followed by the Consolidated Fund debate starting at 10 o'clock. Are Back-Bench rights to be upheld, or not?
Mr. Wakeham: Compared with some of the questions that the hon. Gentleman has asked me, that is a fair one and I shall do my best to give him an answer. It is not unprecedented for the Consolidated Fund debate to start at 10 pm. The business that I have announced has been arranged for the general convenience of the House. I am sure the hon. Gentleman appreciates that it is not always possible to satisfy the demands of each and every Member. I recognise that the present arrangement is not totally convenient.
Mr. Michael Latham: May I raise with my right hon. Friend a matter that I have raised on several occasions over the past two years and on which nothing discernible has been done? It is disgraceful that many of our constituents have to queue in the rain or in cold weather to get into the House. This happens day after day. It is their Parliament and they want to visit it. Will my right hon. Friend please read early-day motion 133, which is supported by hon. Members of both sides of the House?
[That this House is ashamed of the conditions in which parties of constituents visiting Parliament are required to wait; notes that they often have to wait for lengthy periods unprotected from rain or cold at the Norman Porch; recognises that a combination of lack of space at the Norman Porch and of the existence of only one security screening machine means that there is nothing that the staff on duty can do to alleviate these deplorable conditions and demands that an alternative system be introduced; recommends that consideration be given to entry by the foot-gate to Westminster Hall at the car park end where there is space for our constituents to wait in the dry and where there is room for a better screening system; and points out that many of these parties are of elderly people or school children who have to remain in wet clothes for the rest of the day.]
Let us have no more procrastinating on this matter. If the other place will not do anything about it, let us start the line of route in Westminster Hall.
Mr. Wakeham: I am sorry that my hon. Friend is disappointed. I recognise that there has not been much progress to meet his point. Discussions are taking place between both Houses with the aim of arriving at mutually acceptable arrangements to improve admission to the line of route. I am sure that the possibility of reversing the route will be considered. I am aware that that is referred to in an early-day motion.
Mr. Martin Redmond: Will the Leader of the House give an assurance that the football identity card that is being talked about will be discussed only in this Chamber as a provision in a hybrid Bill?
Mr. Wakeham: I cannot give any such undertaking to the hon. Gentleman. The rules of order are not primarily matters for me. I am sure that the Government will proceed in due order.
Mr. Harry Greenway: I ask my right hon. Friend for an early debate on local government finance. I wish to raise in the House the difficulties of several hundred of my constituents who have been summonsed by Ealing council to pay their rates, although

441
they have been paid already. They include old people, disabled people and many extremely poor people. The fact that they are required to pay a £22 summons fee for rates that they have paid already is causing the greatest fury. There should be an early debate in the House in view of this injustice.
Mr. Wakeham: My hon. Friend will have noted that next Monday there will be two opportunities which, with his usual ingenuity, he could use to raise the matter that he has drawn to the attention of the House.
Mrs. Maria Fyfe: Opposition Members cannot understand the difficulties of the Leader of the House in establishing a Select Committee on Scottish Affairs. Surely the past 18 months have provided sufficient time to frame an appropriate motion. When the right hon. Gentleman starts to find Conservative Members to serve on the Committee, will he take into account the nature of the questions that were tabled for this month's Scottish questions? It gave great offence to the people of Scotland that none of the questions tabled by Conservative Members related to the fiasco of the conditional benefit system, to low pay for the young, to the regrading of nurses, which was a disgrace to the Government in the eyes of those in Scotland, to mounting debt, whether in respect of mortgages or rents, and to all the other issues that are of genuine concern to the people of Scotland. Most of the questions by Conservative Members were about how they and their pals could get their snouts into the trough at the expense of the people of Scotland. Will the right hon. Gentleman take these factors into account when choosing Conservative Members to serve on the Committee?
Mr. Wakeham: The setting up of a Select Committee on Scottish Affairs is more complicated than the hon. Lady would have us believe. The Labour party was unable—I understand why—to accept the proposals that I put to it. If it had accepted them, the Committee would have been set up a long time ago. I cannot accept what the hon. Lady said about Scottish questions. It is in order for Members on both sides of the House to ask questions of any Minister. Some questions, such as those on the Forestry Commission, can be answered only by Scottish Ministers.
Mr. Hugo Summerson: Bearing in mind that London's streets are becoming more and more choked by traffic, we urgently need a clear policy statement by the Government on ways of dealing with the problem. Such a policy will have to prevent private cars from coming into London and provide for a huge increase in efficiency in public transport. Will my right hon. Friend find time for a debate on this matter as soon as possible before the streets of the capital become clogged completely and nothing can move?
Mr. Wakeham: I am sure that my hon. Friend could raise that matter during the Consolidated Fund debate or during the debate on the Adjournment motion on 19 December. I recognise the importance of the matter that he has raised, and I shall refer it to my right hon. Friend the Secretary of State for Transport.
Several Hon. Members rose—
Mr. Speaker: Order. I am always reluctant to curtail business questions. I shall call those hon. Members who have been seeking to intervene.
Mr. Dick Douglas: Will the Leader of the House give us an idea of his thinking on the motion that he is to table on Tuesday 20 December? It is extraordinary that, having gone through this great episode, we have not so far seen the terms of the motion. Will it be a positive motion, along the lines that the Leader of the House wants to set up a Select Committee? Will it be possible to amend it? Will he give us some straight talking rather than the obfuscations that we have embarked upon so far?
Mr. Wakeham: It will be a positive motion and it will be possible for it to be amended, as I understand it.
Mr. Ron Brown: As the Lord Advocate has made it clear that he will not say whether the poll tax, or community charge, is legal, in other words whether it contravenes the 1707 Treaty of Union, may we have a debate to discuss the issue, bearing in mind that that individual is not responsible to the House, and also that back home in Scotland working-class people, Socialists, trade unionists and others are fighting back against the Government and against a regressive tax which they do not accept?
Mr. Wakeham: I do not accept much of what the hon. Gentleman has said. His premise is not accepted for one minute. However, I shall refer the matter to my right hon. and learned Friend the Secretary of State for Scotland. If the hon. Gentleman's question needs an answer, he will get one.
Mr. Paul Boateng: Now that the English rate support legislation has passed through the House at a cost of some £8·8 million to the hard-pressed ratepayers of Brent, will the Leader of the House ask his right hon. Friend the Secretary of State for the Environment to make a statement in the House on the unique service of a section 114 notice by the director of finance of the London borough of Brent? Will he ask his right hon. Friend the Secretary of State to make a statement about Brent's financial crisis and whether he will meet the Members of Parliament of all parties who represent Brent, and also Brent's leadership, to resolve the crisis and return to the people of Brent some of the £52 million that the Government have taken from Brent since 1979?
Mr. Wakeham: I do not accept anything that the hon. Gentleman has said in his question. However, I understand why he asked it in that way. I shall refer the matter to my right hon. Friend the Secretary of State for the Environment. It is likely that he may wish to make a statement on the rate support settlement, but not necessarily on the point that the hon. Gentleman raised.
Mr. Richard Caborn: Will the Leader of the House ask the Prime Minister to make a statement next week on the Coventry Four? As the right hon. Gentleman will know, many Opposition Members were very concerned in 1984 and 1985 when that case went through the courts. Reports in yesterday's Guardian, and an article in today's Guardian headed
"Fresh facts support PM's critic",
contain serious allegations that the Government are breaking the United Nations arms embargo on South

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Africa. The allegations also state that daily reports were given to No. 10 by Her Majesty's Customs and Excise and that for diplomatic reasons the South Africans were aided and abetted to leave Britain. I am sure that the Prime Minister, because of her recent speeches about terrorism, should come to the House to clear her name by saying that the allegations are wrong.
Mr. Wakeham: I do not accept for a minute that there is any necessity for the Government to say anything more. I shall refer the hon. Gentleman's point to my right hon. Friend the Prime Minister.
Mr. Robert N. Wareing: When the Leader of the House consults through the usual channels on the football identity card legislation, will he bear in mind that at a meeting of the all-party committee on football yesterday the crackpot idea of identity cards caused controversy between Labour Members and Conservative Members and was highly controversial among Conservative Members as well? Will he also bear in mind that that committee, which meets regularly and discusses the problem, is overwhelmingly composed of Members of this House? It would seem, therefore, that before the Bill is introduced in the other place, their Lordships should be suitably advised by those of us from this place who know what we are talking about on this issue.
Mr. Wakeham: I do not accept the constitutional point that is implied in the hon. Gentleman's question. Nor do I accept that just because a Bill is controversial the Government have got it wrong. The Government have introduced many highly controversial Bills, which have become Acts of Parliament which have brought great benefits to the country, but which have not necessarily been introduced in the House of Commons.
Mr. Frank Haynes: The Leader of the House will be aware that tomorrow we are to have a debate on the multi-fibre arrangement. Can we really have such a debate when, for the Government, it will be no more than a talking shop? We want a debate and some action, because 1,200 jobs in Mansfield and Ashfield have been lost over a few weeks. We want to know what the Government will do about the hosiery and knitwear industry, which, since 1979, they have halved. We want hosiery and knitwear jobs in our constituencies. We want to save the industry. Let us have a debate during which the Government will make some promises to save the industry.
Mr. Wakeham: We are to have a debate tomorrow in which I hope the hon. Gentleman will take part, and, if possible, I shall listen to what he has to say. However, I can guarantee that a Minister will set out the Government's position, and that he will listen to and answer hon. Members' points.
Mr. Tony Lloyd: Will the Leader of the House return to the question of Mr. Haseldine, the Foreign Office official? May we have a statement from a Foreign Office Minister making clear whether proceedings under the Official Secrets Act are seriously contemplated against that individual? Will he at least pass on the message that such proceedings would be met with a sense of outrage by many Opposition Members?
Mr. Wakeham: I find that remark somewhat curious. Mr. Haseldine has been suspended on full pay from his
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duties and the Foreign Office is investigating the matter. If a disciplinary offence has been committed, the available disciplinary penalties range from admonition to dismissal, and it would not be proper for me to comment further at this stage.
Mr. Jimmy Hood: Will the Leader of the House ask his right hon. Friend the Secretary of State for Employment to give the House a report next week on the ballot rigging in the Nottinghamshire coalfield, where a branch secretary, Mr. Stephen Knowles, was found to be interfering in the ballot on the wages issue and has since been relieved of his job as the branch secretary?
Mr. Wakeham: I doubt whether my right hon. Friend will make a statement on that, because it is not a matter directly for him. Nevertheless, I shall refer it to my right hon. Friend.
Mr. Alan Meale: Bearing in mind the needs of the elderly and the fact that thousands of pensioners die every month at this time of the year, will the Leader of the House find time for a debate before the recess on that subject so that we can try to find some solutions before more pensioners die?
Mr. Wakeham: On the face of it, I should have thought that the debate that I announced for Tuesday would be appropriate for the hon. Gentleman to make the points that he wishes.
Mr. Harry Ewing: May I try to use my persuasive powers on the Leader of the House to encourage him to find time for a debate on an important subject—the offer made by Mr. Gorbachev on the reduction in troops and tanks? Can the House be given an opportunity soon to debate what the United Kingdom's response should be as part of the Western Alliance's response to the offer made by President Gorbachev? This is an historic and important matter and the House should be given an opportunity to express its view.
Mr. Wakeham: I recognise that this is an important matter. I cannot promise a debate in the immediate future, but the House will want to debate that and I shall bear the hon. Gentleman's point in mind.
Mr. Tony Banks: While I would not describe the Leader of the House as the Vinny Jones of the Dispatch Box, he has gone right over the ball on the football identity card scheme. Surely the point is whether the legislation is controversial, not whether it is important, and this is controversial legislation. If the Leader of the House is not prepared to have the Government change their mind about introducing that legislation in this place, may we at least have a debate so that their Lordships will know how the House feels about the proposals?
Mr. Wakeham: When the hon. Gentleman wears that smart tie, he seems to be more aggressive than usual. I think that he calls himself an agency Whip these days. Surely I cannot be more friendly than to say that I shall have discussions through the usual channels. The hon. Gentleman is getting over-excited.
Mr. Max Madden: Will the Leader of the House arrange for the Secretary of State for Education and Science to make a statement revealing who will pay the running costs of any city technology college built in

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Bradford? Is the Leader of the House aware that yesterday the chairman of Dixons told me that he had no intention of paying the running costs, which will be more than £1 million a year? If it is to be taxpayers' money, it will mean £1 million a year less for renovation and repairs urgently needed by existing schools. If Bradford ratepayers are to be left to pick up the bill, it is monstrous that they should not be given an opportunity to say whether they want a college. Will the Leader of the House sort out that mess before next Tuesday's meeting of Bradford council, at which the matter is to be debated?
Mr. Wakeham: No, I cannot promise to do that. The hon. Gentleman, one of the Bradford Members, is also one of the bad losers in the House. I shall refer his serious point to my right hon. Friend the Secretary of State for Education and Science, and if there is a need for a statement he will certainly make one.
Mr. Jeff Rooker: Will the Leader of the House ask the Secretary of State for Social Security to come to the House next week to make a statement on the Department's refusal to co-operate with Birmingham city council and the fire brigade following the disclosure a couple of weeks ago that two dozen men were living in what was alleged to be a hostel but was in fact a wooden and corrugated iron shed, the landlord of which was being paid £55 a week per person by the Department? The fire brigade has since closed down and condemned that hostel.
The investigators asked the Department, which was paying out more than £1,000 for the premises, for which other premises it was paying out such sums of money so that they could investigate their safety. They did not ask the claimants' names, only for addresses, but the Department refused to give that information. That hostel was located in Hay Mills in Birmingham and it is alleged that the social security office recommended the claimants to take a bed in a hut in a garden.
Mr. Wakeham: I am not in a position to confirm what the hon. Gentleman has said, but if the matter is as he puts it, it does not sound satisfactory. I shall refer the matter to my right hon. Friend. We shall then decide how best to proceed, and I shall be in touch with the hon. Gentleman.
Mr. D. N. Campbell-Savours: Is the Leader of the House aware that, despite a procedural block, I have managed to table a series of questions relating to the Coventry Four? Will he assure me that Ministers will answer those questions in detail, if only because public opinion will want to know what happened, and the more the Government choose to equivocate in their answers, the more suspicion they will leave in the minds of the British people?
Mr. Wakeham: The hon. Gentleman puts his point of view, but my right hon. Friends will answer the questions in the way that is appropriate and right. I am grateful to the hon. Gentleman for his advice.
Mr. William McKelvey: Will the Leader of the House acknowledge that Opposition Members have conducted themselves in a dignified and patient manner with regard to the Select
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Committee on Scottish Affairs? Will a positive motion be tabled on this matter next week, I hope in Government prime time—
Mr. Wakeham: Yes.
Mr. McKelvey: I am glad that the Leader of the House acknowledges that. Does he understand that if a solution is not found, the dignified patient approach that many of us have taken may disappear?
Mr. Wakeham: I hope that there was not meant to be any element of threat in the hon. Gentleman's remarks, because that would not be the way to proceed. I make no complaint about the views of the hon. Gentleman or of his right hon. and hon. Friends. The hon. Gentleman knows the difficulties involved in setting up the Select Committee, and so do I. I have offered solutions and time for debate; but my solutions were not acceptable to the Opposition, nor was the time that I allowed for debate. I think that I can now provide proper time for a debate. The right process is to have that debate and to see whether the matter can be resolved, one way or another. That will be for the House to decide.
Mr. Sam Galbraith: Will the Leader of the House find time for a debate on the method by which oral questions are selected? Is he aware that in yesterday's ballot for Scottish questions, those by Conservative Members could be identified because they were on different coloured paper? That made it difficult for selection to be completely random. I am sure that the Leader will want to condemn that practice. May we have a debate on that matter?
Mr. Wakeham: I would also condemn any suggestion that those responsible for selecting questions do not conduct themselves in a proper and efficient manner. I acknowledge that not only must selection be done properly, but that both sides of the House must be satisfied that that is so. I shall make inquiries.
Mr. David Winnick: Is it not a matter of public anxiety that there is so much Prime Ministerial pressure on the Foreign and Commonwealth Office to appease the apartheid regime that an information officer at the Foreign and Commonwealth Office came to the conclusion that he was willing to sacrifice his career because he believed that the truth ought to be told? Should not the Prime Minister, or at least the Foreign Secretary, make a statement before the recess, and is it not the case that, once the new Official Secrets Bill becomes law, the official in question will have no defence in claiming public interest?
Mr. Wakeham: The difference between the hon. Gentleman and me is that I like to express views when I know the facts, whereas he prefers to express views when he does not know the facts. The matter is being investigated and I have nothing further to say.
Mr. Alex Salmond: The Leader of the House will be aware of the critical nature of the Council of Ministers meeting on fisheries this weekend, given that thousands of jobs are at stake. What provision will be made next week for an early statement or, better still, a debate, bearing in mind that last week's debate was severely truncated and that the ministerial responses were completely inadequate?
Mr. Wakeham: I recognise that the hon. Gentleman has made an important point. My right hon. Friend the Minister of Agriculture, Fisheries and Food may wish to make a statement early next week if that is deemed appropriate. I shall certainly find time for one if that is what he wants.
Mr. Dennis Skinner: Will the Leader of the House ask the Secretary of State for Transport to make a statement tomorrow, or early next week, about the fire aboard the P and 0 ferry European Endeavour at half past 10 last Friday? That fire raged for three hours and was the result of all the cost cutting, fatigue and incompetence of the scab crews. Is it not high time for a statement and a debate on that matter? Despite Zeebrugge and all that happened there, P and 0, which lined the pockets of the Tory party, is getting away with nigh on murder. It is the third fire since the strike and the lock-out began. Surely to God there should be an inquiry into the matter.
Mr. Wakeham: Yes, but I do not know what good it would do the hon. Gentleman, who approaches these matters with an open mouth and his eyes and ears shut.
Mr. Bob Cryer: Will the Leader of the House consider allowing a debate on the Foreign and Commonwealth Office matter? Some right hon. and hon. Members have no confidence in the Foreign and Commonwealth Office's ability to do anything other than cover up Mr. Haseldine's allegations. If one was to translate his allegations to the situation concerning Father Ryan, it would mean that four of South Africa's most wanted terrorists, who were here to get arms to use to maim and butcher black people, were released with the connivance of the Foreign and Commonwealth Office, to return to their county, having had serious criminal allegations made against them, for the convenience of the Prime Minister because she was about to meet the hated Botha, the representative of the apartheid regime. There is a strong case to answer and many right hon. and hon. Members have no confidence in the Foreign and Commonwealth Office doing anything but shoving this dirt under the carpet.
Mr. Wakeham: The hon. Gentleman makes his wild accusations, but impresses no one except his hon. Friend who sits on his right. I have indicated that it is a disciplinary matter and that it is being investigated in the proper manner. It is right that I should say nothing further.

Consolidated Fund Bill
4.15 pm
Mr. Speaker: I have a short statement to make about the arrangements for the debate on the motion for the Adjournment, which will follow the passing of the Consolidated Fund Bill on Monday 19 December.
Right hon. and hon. Members should submit their subjects to my office not later than 9 am on Thursday 15 December. A list showing the subjects and the times will be published later that day. Normally, the time allotted will not exceed one and one half hours, but I propose exercising discretion to allow one or two debates to continue for longer, up to a maximum of three hours.
Where identical or similar subjects have been selected by different right hon. or hon. Members whose names are drawn in the ballot, only the first name will be shown on the list. As some debates may not last the full time allotted to them, it will be the responsibility of right hon. and hon. Members to keep in touch with developments if they are not to miss their turn.
Mr. Tam Dalyell: On a point of order, Mr. Speaker. You gained the Chair with the good will of us all, and not least among the many reasons was that you said that you would be the protector of Back-Benchers' rights. In the opinion of one hon. Member—myself—you have done your best over many years to do so.
There is a non-party issue for the House of Commons to consider. Is it proper that the Consolidated Fund Bill—which until recent years was considered sacred and a time when some of your predecessors would not even allow statements at 3.30 pm because they felt that the Consolidated Fund should start straight away—should be eroded gradually and by a trickle, first, by Adjournment debates, then by long statements, and now by starting at 10 o'clock at night? Several right hon. and hon. Members feel that they are being given even less opportunity to raise matters in prime time. This is a matter that you, Mr. Speaker, ought to consider as a matter of principle.
Mr. Speaker: I share the hon. Gentleman's concern, but, as the Leader of the House said, it is not unprecedented. The Consolidated Fund Bill gives Back-Bench Members a precious opportunity to raise matters of interest to them, and perhaps the hon. Gentleman should draw the matter to the attention of the Procedure Committee to see whether, in future, a definite arrangement can be made to ensure that Back-Bench time is preserved.
Mr. Max Madden: On a point of order, Mr. Speaker. On the business statement—
Mr. Speaker: Order. I shall deal with points of order on the business statement after the statement by the Secretary of State for Wales.

Welsh Rate Support Grant 1989-90
4.17 pm
The Secretary of State for Wales (Mr. Peter Walker): With permission, Mr. Speaker, I should like to make a statement about the Welsh rate support grant report 1989–90 and the supplementary reports for 1986–87, 1987–88 and 1988–89, which I have today laid before the House.
I am today announcing the details of the 1989–90 settlement to the Welsh Consultative Council on Local Government Finance. Copies of the text of my statement to the consultative council, together with a number of key statistical tables, have been placed in the Library of the House.
As required by the Rate Support Grants Act 1988, in each report total expenditure—a crucial factor in determining entitlement to block grant—has been treated for each authority as equal to a "relevant amount" determined according to specific rules, and based on information with me by 6 July 1988.
The supplementary reports for 1986–87, 1987–88 and 1988–89 update grant entitlements and are intended to be the final reports for those years. Authorities have been notified of the total expenditure figures on which the reports are based, and it has been open to them—and remains open to them—to make representations about the figures that I have used. If, under the rules, I am able to agree that an authority's expenditure figure should be changed, that authority's grant entitlement will be recalculated accordingly.
My hon. Friend the Minister of State announced my proposals for 1989–90 to the House in July, and these have since been the subject of consultations with the local authorities and their associations. In making the report, I have taken account of the views that they have expressed.
The main elements of the 1989–90 settlement are as follows. Provision for relevant expenditure will be set at £2,057·8 million, some £124£7 million or 6·5 per cent above 1988–89 budgets and 8·6 per cent. above relevant provision. Provision for current expenditure is set at £1,785 million, an increase of £86·6 million or 5·1 per cent above 1988–89 budgets and 8·8 per cent. above current provision. Aggregate exchequer grant is set at £1,316 million, an increase of £63 million or 5 per cent. above the amount made available for 1988–89, and £68·6 million or 5·5 per cent. over the amount to be paid out in respect of 1988–89. Specific and supplementary grants total £267 million. Domestic rate relief grant remains unchanged at 18·5 p in the pound, and in aggregate is £27 million. Block grant totals £1,021·9 million, an increase of £50·7 million or 5·2 per cent. over the amount paid in respect of 1988–89. It is fixed at this level.
The final year of the rate support grant system will be 1989–90, and in the interests of stability—and with the full agreement of the local authority associations—I have decided to retain the same block grant mechanisms as those used in the present year. Certain minor changes in methodology have, however, been made at the request of the associations.
The settlement provides stability and it also provides a firm indication of grant entitlement. Authorities will know when they are setting their budgets what they will receive
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in the way of grant support. It is a realistic settlement which enables councils in Wales to contribute to the accelerating economic and social regeneration of the Principality. I am sure that they will do so in a responsible manner by keeping control of spending, budgeting for the low rate rises that are clearly attainable and continuing their encouraging progress towards greater efficiency. They know that this is in the interests of their ratepayers and their electors. I fully expect them to grasp the opportunity.
Mr. Barry Jones: The Secretary of State mentioned 5 per cent., but 10 per cent. is more like the real figure. The statement is a clever sleight of hand. Its flaw is that it ignores the rise in inflation and interest rates. Current expenditure is £37 million short and districts will find that they are £7 million down on block grant. Worse, block grant declines as a proportion of the aggregate Exchequer grant. The Government still dictate on specific grant, and the casualties will be housing benefit administration, schools services, environmental health, recreation and leisure services and the crucial local authority efforts in economic development to create jobs. It will be hard to keep rate rises down to reasonable levels.
Is the Secretary of State aware that the settlement is very unsatisfactory and that much has changed since the July statement? The Government say that a settlement based on a GDP deflator at 4 per cent., RPI at a similar 4 per cent. level and interest rates at 9·5 per cent. is still sufficient to meet the needs of local government. However, the GDP deflator is now an estimated 5 per cent., inflation is 6·4 per cent., and forecast to rise to 8 per cent. next spring, and interest rates are 13 per cent. Is that not a definition of strain on local authority budgets?
I remind the right hon. Gentleman that the Secretary of State for Education and Science has proposed a 5·1 per cent. pay settlement for teachers next year. Does the right hon. Gentleman understand that, as teachers' pay constitutes more than a quarter of most county budgets, the difference between the provisional 4 per cent. and 5·1 per cent. is very significant? The Secretary of State said just now that, if under the rules he was
"able to agree that an authority's expenditure figure should be changed, that authority's grant entitlement will be recalculated accordingly."
I know that the Secretary of State is aware of the concern in Cardiff. The city council met every requirement—and better—yet it stood to lose £2·3 million as a result of the retrospective arrangements that were announced on 7 July, which were then legalised in the recent Rate Support Grants Act 1988. I must also report to the House that Torfaen borough was a major victim and lost more than £300,000.
Is the Secretary of State aware that the aggregate figures will not be sufficient to cover the increasing cost of preparing for the implementation of the poll tax and meeting the requirements of homelessness? I want to make a plea to the Secretary of State for a rethink by the Welsh Office on this defective settlement, on the ground that, with inflation at 6·4 per cent. now and estimates that in 1989 it will be 7 per cent. or even 8 per cent., inflation will push spending well above the Government's proposed figures. I understand that even the Chancellor of the Exchequer thinks that inflation may rise as high as 9 per cent. in August 1989. This is the last rate support grant settlement and, like all of them since 1980, it is unsatisfactory, to say the least.
Mr. Walker: I admire the courage of the hon. Member for Alyn and Deeside (Mr. Jones) in putting those views because the rate support grants for which I have been responsible have been very different from those that were drawn up before this Administration came to power—[Interruption] Here we go. During the last three years of the Labour Government, at the time when the hon. Member for Alyn and Deeside was at the Welsh Office—
Mr. Ron Davies: On a point of order, Mr. Speaker. Will you confirm that the subject that we are now discussing is, specifically, the statement that the Secretary of State made to the House? You would restrict us to questions on the statement, so surely the rules of the House and the rules that govern you require the Secretary of State to restrict his remarks to the precise terms of the statement.
Mr. Speaker: That is correct, but the right hon. Gentleman is answering questions that have been put to him.
Mr. Walker: I intend to make the comparison between our record and that of the Labour Government. I understand why Opposition Members want to do anything to stop that comparison being made. The comparison is simply that, in the last three years of the Labour Government, rate support grant fell by 16 per cent. in real terms. Had that trend continued, the rate support grant today would be £640 million, not £1,049 million. Therefore, if we had followed their example, Wales would receive £409 million less than it is receiving. Opposition Members have no right to ignore those comparisons.
To summarise, as a result of this year's and last year's rate support grants, the 8·8 per cent. increase in current provision for 1988–89 has to be considered alongside the 8·2 per cent. increase in gross capital provision, giving a combined increase of 8·7 per cent. over 1988–89 and no less than 15·4 per cent.—or £298 million—over the two years in which I have been responsible for the settlement. By any standards, this is a reasonable and sensible settlement.
I hope that it will also be recognised throughout the Principality that, as a result of the settlement, 67 per cent. of the cost of local authority expenditure in Wales comes from central Government and 19 per cent. from non-domestic rates in the form of business rates. Only 14 per cent. of all local government expenditure in Wales comes from domestic ratepayers. There are other parts of the United Kingdom that would like to be in that position.
Sir Anthony Meyer: Is it not clear that, as expected, my right hon. Friend has managed the best settlement possible for Wales? Is it not also clear that the question whether there have to be substantial rate rises will largely depend on the ability of local authorities to concentrate on doing the jobs that they were elected to do and in standing up to claims from public sector unions?
Mr. Walker: That is certainly true. There is scope for that. I am grateful to the local authorities in Wales for looking into the Audit Commission's proposals. It pointed to a potential saving of £40 million. I know that good work is being done in that direction. The increase in interest rates does not necessarily result in a similar increase in costs for local authorities. The 3 per cent. increase so far in interest rates has resulted in a 0·91 per cent. increase in the pool rate for local authorities. Much of their
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borrowing is on fixed terms. We believe that this is a reasonable and sensible settlement. Prudent and sensible local authorities will have perfectly reasonable rate levels.
Mr. Richard Livsey: Does the Secretary of State not realise that the economic goal posts have moved since last July to nearly 6·5 per cent.? That must surely have an effect on local authority budgets in Wales. What allowance has he made for the poll tax set-up costs? We understand that only 50 per cent. of those costs are to be allocated to councils, which I regard as completely inadequate. What is the Secretary of State doing about Tai Cymru's budget, now that the district councils have practically no housing functions left to them? When does he expect to make an announcement? Capital expenditure in some of the rural counties is very tight indeed, particularly because of bridge repairs, such as those in Powys where half the bridges need attention. Is the Secretary of State making any allowance for that and for sparsity factors?
Mr. Walker: I repeat that, taking the two years for which I have been responsible, the total increase has been substantial. It will provide important assistance for all the tasks that need to be done. The inflation of 6·4 per cent. in recent months is mainly due to the increase in the mortgage interest rate. That does not have an effect on the retail prices index as it affects local authorities. Therefore, it is not a fair comparison.
Mr. Gwilym Jones: I congratulate my right hon. Friend on his statement, which I am sure will be widely welcomed in Wales. Once again he has achieved for Wales a far better settlement than has been achieved for England. May I take it that his reference to the revision of local council entitlement strongly suggests that at last a common sense response has been made to Cardiff's plea for grant entitlement for the last financial year rather than the bureaucratic response that has greeted it so far? What steps does my right hon. Friend intend to take to ensure that more of the capital receipts are used to repay the debts that have been incurred rather than spent, which would result in extra expense for Welsh ratepayers?
Mr. Walker: New proposals will be made next year about the treatment of receipts and the repayment of existing debt. They will have an important impact. The change that took place in Cardiff and the manner in which the present system was broken off was a disadvantage to Cardiff. However, it has been to the advantage of a whole range of district and county councils. Some were advantaged while others were disadvantaged. My hon. Friend will be pleased to know that the total rate support grant for Cardiff is to be increased from £15·8 million this year to £19·8 million next year.
Mr. Roy Hughes: Does the Secretary of State appreciate that Newport borough council is worried about the amount allocated for preparatory work in connection with the introduction of the poll tax? If that fear is well founded, will the Secretary of State ensure that our local authorities are suitably reimbursed?
Mr. Walker: The figures suggested by local authorities for capital costs have been met in our assessments. As for revenue costs, local authorities submitted figures that we recognised were wrong. We went back to them and said that they needed a lot more than they were asking for; we

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more or less doubled that figure. However, they consider that they should have still more. There is a difference of opinion between us about current costs. However, the majority of the expenditure—the capital cost figures—has been agreed.
Dr. Dafydd Elis Thomas: We welcome the Sectretary of State's statement that local authorities can still make representations to his Department about the calculation of the settlement. We shall encourage local authorities to do so. However, will he confirm that this percentage increase in the block grant is not enough to meet the manual workers' settlement of 8·7 per cent.? That is a low-paid sector of the Welsh economy. Pay settlements will put pressure on local authorities.
Will the Secretary of State also confirm that the settlement falls short of the needs that were set out by the sub-group of the Welsh Consultative Council on Local Government Finance? The demands that were made to him by that group are £30 million more than has been granted. The Secretary of State is aware of my personal interest in the level of supplementary grant to the national parks. That is an important though minor part of the environmental protection of the Welsh countryside. Will he confirm that the settlement will put pressure on local authorities? Would he not be a more honest Secretary of State if he were to accept that fact?
Mr. Walker: In the 27 years that I have been a Member of Parliament, under both Labour and Conservative Governments and Lib-Lab pacts, I have never known local authorities to say that the settlement was just what they wanted, that they had been given just the right amount of money and what a super Government they were. Nevertheless, they are rather nearer to saying that this time round than was the case under certain other Administrations.
I shall write to the hon. Gentleman about the national parks and give him specific figures.
Of course there is pressure because of wage increases. If wage increases are given at 8·2 per cent.—well above the rate of inflation—they will have an impact on local authority expenditure, but I do not believe that all those increases should be met by direct Government grant. Local authorities must constantly continue to look for improved efficiency.
Mr. Donald Coleman: Reference has been made to the upward movement of interest rates and inflation since the original statement in July. Will the right hon. Gentleman tell the House—so that we can plainly understand it—what, in money terms, is the effect of the settlement? Furthermore, what recompense can local authorities expect to receive?
Mr. Walker: I have just explained that to date the effect of the increase in interest rates is far less on local authorities, because much of their borrowing is at fixed interest rates over the long term. Therefore, the pool rate is important. At the moment it is running at about one third of the increase in interest rates. There have been periods recently when interest rates went down, but local authorities did not suggest that there should be a cut in the grants that were being made because interest rates were
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lower. Such fluctuations have an impact—sometimes to the benefit of local authorities and sometimes against them.
Mr. Win Griffiths: Bearing in mind the controversy over exactly how interest rates will affect local authorities and what is the real effect of the retail prices index on local authority costs, what indicator does the Welsh Office use when assessing the effect of inflation on local government? The housing waiting lists in Wales are growing. How does the Secretary of State intend to meet that challenge? Will it be through the local authorities or through Tai Cymru? There is a huge waiting list in my local authority, Ogwr, for central heating conversions. Many of the people on the waiting list are sick and elderly. Does the Secretary of State recognise that, despite the fact that he believes that he has been generous over this settlement, many needs in Wales are still not being met?
Mr. Walker: Of course many needs are still not being met. The hon. Gentleman specifically mentioned housing. He knows that the total expenditure on local authority housing repairs and improvements in recent years has been at record levels. This Conservative Government have spent over £700 million on both private and public housing. Of considerable advantage in the coming year will be the use of receipts for council house repairs. Those receipts have risen quite sharply this year, and they are likely to rise again during the coming year.
Mr. Donald Anderson: Are not those receipts destined to fall because of the natural limit at which housing sales will proceed? In view of the inadequate provision both for inflation and for wage settlements, is the Secretary of State deliberately forcing local authorities to increase rates in a way that will make them even more unpopular, thereby paving the way for the poll tax?
Further to what my hon. Friend the Member for Newport, East (Mr. Hughes) said about the preparatory costs for the poll tax, is it correct that the Welsh Office estimated the costs for the two years 1988–89 and 1989–90 to be about £9 million—of which £5 million is being provided by the Welsh Office through grants—but that actual expenditure will be nearer £14 million? Will the right hon. Gentleman accordingly revise the grant in line with the actual rather than the estimated expenditure by Welsh local authorities?
Mr. Walker: There is a difference between us on current expenditure and assessment of costs, but there are similar figures for capital expenditure. I do not accept the figures given by the hon. Gentleman. If, as is the hon. Gentleman's theory, I had wanted to introduce a rate support grant increase designed to put up rates in preparation for the poll tax, I could have followed the example set by the previous Labour Government during their last three years and introduced a rate support grant nowhere near the rate of inflation. That is what the Labour Government did, and it resulted in a reduction of 16 per cent. over three years. I have not done that. An increase in both current and capital provision of 15·4 per cent. over two years is not doing what the hon. Gentleman suggested.
Mr. Gareth Wardell: Is the Secretary of State suggesting that he will fully meet the costs of administering the poll tax?
Mr. Walker: I am not saying that I will send local authorities a cheque to cover whatever they might want to spend on administering the poll tax. I shall make a genuine assessment of what it should cost if it is carried out efficiently.
Mr. Dafydd Wigley: Will the Secretary of State answer the question put to him by my hon. Friend the Member for Meirionnydd Nant Conwy (Dr. Thomas), and confirm whether, earlier this year, he received a report from the expenditure sub-group of the Welsh Consultative Council on Local Government Finance, which established a figure for the needs of Wales £13 million above what the right hon. Gentleman has announced today? Has he told that sub-group that he disagrees with its analysis, or does he accept that there will be either a reduction in services or an increase in rates?
Mr. Walker: There is bound to be a group that suggests that everything that it can think of should be paid for. As I have said, during the 27 years that I have been in this House that has happened with every rate support grant, and it is likely to continue to happen. That sub-group did not include in its calculations the potential for improved efficiency. It did not, for example, suggest, as the Audit Commission has said, that there was potential for improvements in efficiency worth £40 million. There is a balance between the two.
Mr. Ron Davies: The Secretary of State has already acknowledged that the settlemant will be much less than that asked for by the local authority associations. Does he also acknowledge that it is, in fact, less than they need? That is the vital question. It is only a 5 per cent. settlement. The Secretary of State has deliberately evaded all questions about inflation and interest rates. Will he now say unequivocally on what rate of inflation and what rate of interest the settlement was predicated? Has he made any contingency arrangements for increasing the settlement in the likely event of further increases in interest rates next year?
Mr. Walker: I should be interested to know whether the Opposition are, for the first time, saying that the rate support grant should give an exact increase in line with the prediction for inflation—
Mr. Davies: I did not say that.
Mr. Walker: It is what the hon. Gentleman is suggesting should happen. As we know from my right hon. Friend the Chancellor's recent statement, the reality is that, apart from the effect of mortgage interest rates, the current rate of inflation is about 5 per cent.
Mr. Rhodri Morgan: I wish to press the Secretary of State on the question about Cardiff and the missing £2·3 million. He has already been questioned by my hon. Friend the Member for Alyn and Deeside (Mr. Jones) and by his hon. Friend and my neighbour the hon. Member for Cardiff, North (Mr. Jones). The right hon. Gentleman appeared to be offering half an olive branch to Cardiff when he said that authorities' grant entitlement could be recalculated. Does he recognise that cross-party representatives, including his colleagues on Cardiff city council, are firm in their view of what happened to that £2·3 million? Will Cardiff get back that missing £2·3 million in the forthcoming rate support grant entitlement?
Mr. Walker: I am sure that the hon. Gentleman has studied the matter in great detail and will know that we decided to draw a line, on a particular date, to end the present system, based upon the budgets received. It so happens that Cardiff considered that that settlement, compared with the budget that it was putting in thereafter, left it disadvantaged. We now have figures from all the districts in Wales, of which 11—including Cardiff—are disadvantaged and 15 are advantaged, some of them by very small amounts. We had to draw a line to end the present system, and some councils benefited and others did not.
Mr. Barry Jones: For the last time, I ask the right hon. Gentleman whether he will do the decent thing by Cardiff city council and say that it can have its £2·3 million?
Mr. Walker: We made it perfectly clear that the line had to be drawn. Does the hon. Gentleman want those councils that have been advantaged to have their money clawed back? Cardiff city council's rate support grant in this settlement is going up substantially, as is shown in the figures that I have given to the House. That will be of great benefit to Cardiff in the coming year. Indeed, based on the grant figure that it will receive, I do not expect its rates to rise by very much.

Prime Minister's Question Time
4.46 pm
Mr. Gavin Strang: On a point of order, Mr. Speaker. You will no doubt have noticed that during Prime Minister's Question Time, in order to prevent hon. Members from asking questions about the historic unilateral troop cuts announced by the Soviet leader yesterday, the Prime Minister deliberately quoted at inordinate length from Mr. Gorbachev's speech in the United Nations yesterday. I accept that the right hon. Lady is entitled to do that, but it is not the first time that she has clearly indulged in a practice designed to reduce the number of hon. Members asking questions. Prime Minister's Question Time is, arguably, the most precious time in the House and extends to just two 15-minute sessions a week. If the Prime Minister intends to persist with such behaviour, should you not raise the matter with her, Mr. Speaker?
Mr. Speaker: I am not responsible for what is said from the Dispatch Box, provided that it is in order. It is permissible for Ministers and the Prime Minister to read their answers.
Mr. Alan Williams: Further to that point of order, Mr. Speaker. I realise that you are in a difficult position when a Minister persists in abusing Question Time, as the Prime Minister has done during the last three or four sessions of Prime Minister's Question Time. The right hon. Lady has read statements rather than make statements to the House on which she could be questioned.
When Opposition Members ask questions—which is all that they can do—you sometimes intervene, Mr. Speaker, and say that we must try to be brief. In view of the Prime Minister's growing and persistent abuse, is it not possible
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for you to point out to her that it is precious Back-Bench time and that she, too, should learn to be succinct and not abuse our proceedings?
Mr. Patrick McLoughlin: Further to that point of order, Mr. Speaker. When considering the conduct of Prime Minister's Question Time, you might also wish to consider the conduct of the Leader of the Opposition, who was called four times and thus prevented other hon. Members asking questions. It is a little rich for Opposition Members to complain that they do not have time to ask questions when, in fact, they continually persist in shouting down my right hon. Friend the Prime Minister when she is answering questions.
Mr. Dafydd Wigley: Further to that point of order, Mr. Speaker. May I, as somebody who is neutral in the main argument—although I am hardly on the side of the Prime Minister—say that Mr. Speaker Thomas and Mr. Speaker Lloyd, I think, used to allow injury time at Prime Minister's Question Time for three or even four minutes beyond 3.30 pm if there was a feeling that there had been any abuse. Is that not a possibility open to us when the Prime Minister makes the sort of statements that she has done on a number of occasions recently?
Mr. Strang: I am grateful for your answer, Mr. Speaker, but the issue here is the length of time that the Prime Minister takes to quote from speeches. If we were to take that to its logical conclusion, the Prime Minister could stand at the Dispatch Box and read a statement for 10 minutes. Surely in those circumstances she should be pulled up.
Mr. Speaker: That would be considered an abuse, but I have not so far noticed an abuse of that sort. A certain scope is given to both Front Benches at Question Time. It is true, as I hope the House will agree, that I am anxious to call as many Back Benchers as possible, and that is helped by brief questions and answers.

Orders of the Day

  Water Bill
  Order read for resuming adjourned debate on Question [7 December], That the Bill be now read a Second time.
  Question again proposed.
  Mr. Speaker: I must announce to the House that today I propose to limit speeches to 10 minutes between 6 and 8 o'clock. I hope that those who speak after 8 o'clock will also limit their speeches to that time, so that every hon. Member who wishes to be called can be accommodated.
  Mr. Donald Coleman: On a point of order, Mr. Speaker. Water is a matter of enormous significance to us in Wales, yet I notice that, apparently the Secretary of State for Wales is not going to participate in this important debate, and that it is being left to the Minister of State. Is there any way in which you, Mr. Speaker, can arrange for the Secretary of State to take part in this vital debate?
  Mr. Speaker: That is not a matter for me. I do not designate who speaks from the Front Bench.
  Mr. Andrew F. Bennett: On a point of order, Mr. Speaker. Will you confirm that this debate is adjourned from yesterday? If you look at Hansard you will see, and since you were in the Chair you will also recall, that at 10 o'clock you had to interrupt the Parliamentary Under-Secretary of State towards the end of his speech because of the 10 o'clock rule, which allows him to return to the Dispatch Box now to complete his reply to yesterday's debate. In particular, he did not answer the questions from amenity groups about the recreational use of land or about charges. If he had wanted to answer these questions he would have the right to complete his speech at the Dispatch Box this afternoon.
  Mr. Speaker: Technically, that is correct, but I can only call Members who seek to catch the eye of the Chair.
  4.53 pm
  The Minister of State, Welsh Office (Mr. Wyn Roberts): I want to devote a proportion of this opening speech in this second day of the debate to the changes that the Bill will bring about in Wales. Many English Members will be interested because they obtain their supplies from Wales. As the House will know, water is a sensitive issue in Wales, partly because we can supply it to others cheaper than we can buy it ourselves. Our geography, which provides for an abundance of rain, requires that our water charges, related as they must be to distribution costs, are relatively high. But I shall return to charges later.
  In general, the provisons of the Bill apply equally to both Wales and England. The Bill will create in Wales private-sector undertakers to provide clean, wholesome water and take away dirty water through the sewerage system. I am confident that the privatisation of the utility functions of the water authorities in Wales will allow the provision of a more efficient operation to the benefit of Welsh consumers.
  Mr. Dafydd Wigley: The Minister suggested that he thought that the Bill would be helpful to Welsh consumers. Given that the average equated water
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  rate for 1988–89 in Wales is 108p compared with 50·95p in Severn-Trent—over twice the level—will he say whether that gap will close when the Bill comes into effect?
  Mr. Roberts: As I hope to show, privatisation of the utility function of the authority will make for greater efficiency and will contribute towards the reduction of prices, but there are other factors to be taken into account.
  The Bill will also establish the National Rivers Authority to take over the other functions of the water authorities.
  This split of the present water authorities, a split of interests that were often in competition, will not, as has been suggested by some, break up the system of integrated river management. It will sensibly divide the functional provision of water and sewerage services from the present regulatory and promotional roles. It will lead to a better system of benefit to us all.
  Our proposals for a National Rivers Authority have been widely welcomed by all the major conservation groups and reflect the Government's commitment to the protection of the water environment. The NRA's functions will include water pollution control, water resource management, flood defence, fisheries and recreation—all matters of considerable importance in Wales.
  The NRA will be an England and Wales body, but its real presence and the impact of its policies will be in the regions. The NRA regions will be based on the boundaries of the present water authorities, and there will be one region covering the present area of the Welsh water authority.
  The main NRA committee in each region will be the regional rivers advisory committee which will encompass all the main interest groups and be able to make representation to the authority about the way in which it carries out its functions in its region. The authority will appoint the members of that committee.
  The NRA will discharge its land drainage functions through regional flood defence committees, successors to the current regional land drainage committees. These will be based on the same areas as the existing RLDCs and will be constituted on similar lines.
  I can assure the House that the provisions of the Bi11 do not fundamentally alter the present position with regard to land drainage and flood protection. The chairman and a number of other members of the regional flood defence committee will be appointed by my right hon. Friend the Secretary of State for Wales.
  The National Rivers Authority will also be advised in its regions by regional fisheries advisory committees, appointed by the NRA, which will also determine how many local advisory committees it requires. In doing that, it will take into account the views of the interested organisations. Those concerned with fisheries will also have a voice on the regional rivers advisory committee, so those interested in fisheries will be able to pursue local needs and problems as well as considering the broader, more general issues.
  The responses to the consultation paper on the National Rivers Authority published in July 1987 showed that few were in favour of a separate NRA for Wales. Respondents were more concerned to ensure that they would receive a good quality service.
  My right hon. Friend the Secretary of State for Wales will have a considerable interest in NRA functions in

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  Wales. To help him, the Secretary of State for Wales will appoint a special NRA committee to advise him on Welsh issues, related to NRA policies and activities. The special committee will advise on matters related to the whole of Wales, including that part currently served by the Severn-Trent water authority and will include the chairmen of the various regional committees for the area currently served by the Welsh water authority. This special committee will be chaired by the Secretary of State for Wales' appointee to the NRA. We consider that the chairman of Severn-Trent's regional river advisory committee should also be a member, and there is a case for one or two more independent members.
  Mr. Dafydd Elis Thomas: The Minister is aware of my keen interest in reducing the number of quangos in Wales to reduce public expenditure. Will he explain the proposed structure and where it is set out in the Bill because so far I have failed to find it? Perhaps it is in an appendix. Will he confirm that the NRA will be accountable to the Secretary of State for the Environment and that the structure in Wales is that the NRA advisory committee will advise both the Secretary of State for Wales and the NRA? In other words, the NRA is an English body accountable to the Secretary of State for the Environment and another Welsh quango will advise the Secretary of State about his response to the NRA.
  Mr. Roberts: I thought that I had made the position absolutely clear. The Secretary of State for Wales will appoint a member of the National Rivers Authority. The Secretary of State will have a special committee that will be chaired by that appointed member of the NRA. On that committee, which will be non-statutory, there will be the people that I have mentioned who are themselves chairmen of statutory bodies. As I said, there will be a case for other independent members. We shall be looking for an efficient and effective NRA that will secure in Wales improvements in environmental water matters.
  The new water plc that succeeds Welsh Water will be responsible for the supply of water and the removal of effluent. The Bill will also provide new powers allowing the Secretary of State to set out clearly in regulation the quality of the water that the new undertakers will be obliged to provide. There is no doubt that if the trends that faced the Government in 1979 had continued, the proposals in the Bill to establish private sector water and sewerage undertakers would not now be before the House. That the proposals are before us is the result of Government policies and of the work of the various managements of the water authorities who have successfully implemented Government policies. Welsh Water's management has played its part.
  As Welsh Members said yesterday, much time has been spent in the House discussing the many aspects of the performance of the Welsh water authority, but the authority's performance has stood up well to scrutiny, and I pay tribute to what it has achieved. When the Bill is enacted, the successor company to the Welsh water authority must, of course, concentrate on the core businesses of water and sewerage, but it will also be able to develop other business activities with less restraint than in the past.
  Mr. Andrew F. Bennett: The Minister has spoken about the existing water authority. Could he tell us a little about the conflicting demands for use of the rivers by canoeists and fly fishermen? To what extent will those conflicts be resolved by charges? He will be aware that on the Conway and on other rivers in north Wales there has been almost open warfare between canoeists and fly fishermen over who should use them. How will these changes improve that argument?
  Mr. Roberts: I look forward to debating that matter in Committee because it will make for an excellent Committee debate. I am coming to various aspects of the points that the hon. Gentleman has raised in this debate and that he raised yesterday when my hon. Friend the Minister responsible for sport replied to him. However, we can go over the ground again if he wishes.
  We recognise that the new public limited companies will be natural monopolies. Safeguards for the customer are therefore necessary and the Bill provides for regulatory arrangements. Some conditions, including the general duties to provide water and sewerage services and compliance with the quality standard set for water supplies, will be enforced by the Secretary of State. But additionally, the Bill establishes the Director General of Water Services who will be independent of Ministers and accountable to Parliament. His role will be to protect consumers by monitoring the performance of the water companies against the conditions of their licence, to set charges limits and to ensure that the water companies carry out their functions efficiently and effectively. Customers will be directly represented in the regulatory system by a network of regional customer service committees reporting direct to the director general.
  Mrs. Ann Clwyd: What assurances can the Minister give customers that disconnections in Wales will not increase under the privatised authority? He will know that under the present arrangements the Welsh water authority is top of the league for disconnections to customers. What assurance can he give that things will not get worse under a privatised industry?
  Mr. Roberts: The hon. Lady will have to wait for the terms and conditions of the licence that will be given to the water plc. At present, Welsh Water appoints seven local consumer advisory committees, one to match each of its original operating divisions. This structure differs from that operating in the areas of the nine English regional water authorities.
  Under the Bill the customer service committees will be appointed by the director general and will be totally independent of the undertakers that they will monitor. There will be two such committees operating in Wales, one covering the Severn-Trent area and the other covering the Welsh water authority area.
  Schedule 4 of the Bill allows customer service committees, with the approval of the director general, to establish local and other sub-committees. In a statement to the House on 5 February 1986, the then Secretary of State for Wales, my noble Friend Lord Crickhowell, gave a commitment that the customer service committee operation within the area of the Welsh water authority could be assisted by divisional committees. We hold to that view, although I should add that the number of sub-committees required will need to take into account the structure of Welsh Water's successor company and the

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  changed responsibilities of the committees in Wales because of the establishment of the National Rivers Authority.
  The membership of the committee in Welsh Water's area will be the same as its English counterparts, with members drawn from broadly the same interest groups represented on the present local consumer advisory committees. The customer service committees will represent to the director general the views of the customers on the operations of the water undertakers. The hon. Member for Cynon Valley (Mrs. Clwyd) will be interested to know that they will have a statutory duty under clause 26 to investigate complaints and to consult companies about matters that seem to the committee to affect the interests of consumers. They have a vital role in the regulatory system.
  I want to touch upon three issues of particular sensitivity in Wales—land, public access and charges.
  The privatised water and sewerage undertakers must have the freedom to dispose of land surplus to their operational requirements. This is the present practice. The Welsh water authority has the right to dispose of surplus land, and the Government have consistently encouraged the water authorities to dispose of land surplus to their requirements.
  Dr. Thomas rose—
  Mr. Roberts: I can assure the hon. Member for Meirionnydd Nant Conwy (Dr. Thomas) that such disposals are currently taking place. No company, whether private or public, will wish to dispose of land that it requires for operational purposes. By getting rid of land that is required—for instance, as a gathering ground for water—might raise the danger of an adverse effect upon the quality of supply, and water undertakers can be penalised if water is not up to the specified quality.
  Much of the land held by Welsh Water is in national parks or in environmentally sensitive areas. The value of any such land to a prospective purchaser depends on the receipt of planning permission for development. I find it difficult to visualise a situation in which planning permission would be more easily obtained than it is now, especially in our national parks or in other areas of outstanding natural beauty. Such sites will continue to be subject to stringent planning controls, and land in other areas will remain subject to local planning controls.
  Dr. Thomas: The Minister knows that I represent more national parks than any other hon. Member. I am therefore deeply concerned about the implications of what he has said. Will he give an assurance to me and to the hon. Member for Brecon and Radnor (Mr. Livsey) who represents the Brecon Beacons national park that no land will be disposed of in the national parks by the successor utility to the Welsh water authority or any other authority before consulting the national parks authority? Is it the Government's intention, in privatising water utilities, to privatise land holdings in national parks which are environmentally sensitive?
  Mr. Roberts: I cannot give the hon. Gentleman the assurance for which he asks because, as I have said the existing authorities have the right to dispose of land and the successor companies will have a similar right.
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  Obviously, we are seeking to assess the value of the land, and that will have to be taken into account in fixing the price for shares on flotation.
  The majority of us who are interested in the protection of the environment have nothing whatsoever to fear from the proposals in the Bill and should welcome the additional safeguards provided. That has not of course stopped the numerous scare stories that have come to the surface in recent weeks. Water authorities, once privatised, it is said, will not care for the environment. They will be so concerned to make profits that everything else will go by the board. They will charge exorbitant prices for facilities and even, according to the Daily Post of 25 November, charge for admission to national parks. Anyone who has studied the provisions of the Bill will realise that that is certainly not intended and I am surprised—indeed appalled—that such stories should appear.
  As my hon. Friend the Minister responsible for sport pointed out in his closing speech last night, clause 7 of the Bill places duties on both the National Rivers Authority and the privatised undertakers in relation to conservation of the environment, the development of water and land for recreational purposes and the preservation of public rights of way and rights of access.
  Moreover, clause 9 provides for a code of practice which the Secretary of State may produce to give practical guidance to undertakers and promote best practice. The code, a draft of which will be available in the new year, will be taken into account. by the Secretary of State in exercising his powers under the Bill and in assessing the performance of any particular water or sewerage undertaker.
  The Bill allows for charges to be made for recreational facilities, but facilities are not free now. At present, costs not recouped from specific receipts are paid for by all customers through the environmental services charge, which is quite significant in Wales. That will no longer be available, and it is only right and proper that those who use facilities should pay for them. But the charges must reflect the standard of the facilities offered and the availability of alternatives. Another constraint is the simple practicality of collecting and enforcing charges. The water undertakers will have a public image to project and undoubtedly, as other private companies have sought to do, will seek to show the community that they are worthy and effective custodians of the water environment.
  Mr. Andrew F. Bennett: I well understand that if the water authorities do something to improve the opportunity for people to enjoy facilities there is an argument for making charges. Will the Minister guarantee that there will be no charge when canoeists use a river and the water authority does nothing to facilitate that activity? Will he guarantee that there will be no charges on people who walk over land which is not a public right of way, but traditionally the water authorities have allowed people to walk over it, if nothing is done to improve the facilities?
  Mr. Roberts: In his earlier intervention, the hon. Gentleman posed the problem with which I am only too familiar of the conflict between canoeists and anglers. As I have said, we would be well advised to discuss that in Committee rather than on the Floor of the House. With regard to his other point, as he knows, I have referred specifically to where there are rights of way, where there are facilities that have cost money and have to be charged

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  for. We have covered that point. I am sure that if one pursued it in detail, as I know the hon. Gentleman is so capable of doing, we shall have to examine very carefully specific areas such as those he mentioned.
  The level of water charges in Wales has always been a contentious subject. I do not intend to go into the reasons for that today, except to say that charges in Wales are set, as they are throughout England and Wales, at the lowest possible level to maintain and improve services to the customer. We are all concerned with protecting the environment and that cannot be achieved without cost.
  Mr. Allan Roberts: Does the Minister accept that the water services charge is a precept upon the rates of local authorities by the water authority at the moment, and that the change that takes place under the Bill is that the National Rivers Authority will be responsible and will use taxpayers' money instead of ratepayers' money? The Government believe in cutting public expenditure and not contributing the money that we expect. That is why we think that they will be caught. The White Paper and the Bill state that charges will be increased to maximise income.
  Mr. Roberts: I do not think that the hon. Gentleman has got it quite right. He knows how the NRA will be financed. It will receive Exchequer support. However, whatever service is provided must be paid for somehow. Currently, in some places many services are covered by the environmental services charge.
  If we are to have bathing waters that comply with European Commission requirements, if we are to meet demand for wholesome water at constant and reasonable pressure, if we are to be free from polluted waterways and foul flooding to a greater degree than in the past, those higher standards need to be paid for, regardless of whether the undertakers are in the private or the public sector. Because of the discipline of the private sector and the market, privatising the industry may well mean that those necessary charges turn out to be less than they would have been otherwise.
  There is considerable interest in Wales in this measure and we intend that it should benefit the people of Wales in all the ways possible under its provisions. They can become share owners and have a real stake in the new company. They can own Welsh water in a way that they have never owned it before. There are all sorts of ways in which the Welsh people can participate actively in the new arrangements and ensure that this measure is of benefit to them and to Wales as a whole.
  5.17 pm
  Mr. Barry Jones: The Minister of State is right in saying that water is a sensitive issue in Wales, so why does the Secretary of State not address the House on what is arguably the most important measure to affect Wales this year? Why is the Secretary of State absent? Why has he left the Chamber?
  The Welsh water authority has 1 million customers, 3 million consumers and 4,600 employees, and the overwhelming majority of them are against privatisation. The Minister of State proposes a course of action that does not have the backing of the people in Wales. Nor has he been persuasive today.
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  The hon. Member for Brecon and Radnor (Mr. Livsey) yesterday promised vehement opposition. He said that before the industry had been put into the public domain there had been horrendous problems related to health. I agree with him. That memory remains in Wales, and that is why there is no body of support and why the measure is totally friendless in Wales, as there is a generation still active in public life in the Principality which suffered great privation between the wars. That generation tells those who will listen about the chaos and inaction, and about dysentery and other diseases, that were prevalent when standards were low.
  Yesterday, my hon. Friend the Member for Gower (Mr. Wardell) denounced Her Majesty's Government for their hypocritical acts in pulling the plug on the water industry. My hon. Friend's chief point was that, by imposing artificially low ceilings on the Welsh water authority's capital investment and borrowings, the Government have created a backlog of remedial works that will cost enormous amounts of money to clear. My hon. Friend should know—he chairs our Select Committee. Opposition Members do not believe that that money will be available in the right amounts on the right terms.
  Last night the hon. Member for Glasgow, Govan (Mr. Sillars)—a Scot—said that the nation's resources were to be stolen. There is certainly an echo of that assertion throughout Wales. Welsh public opinion is deeply hostile to the Bill.
  In a passionate speech in the same debate last night, my hon. Friend the Member for Wakefield (Mr. Hinchliffe) asked about the consequence of metering on the poorest families and the largest families. They are often the same. They must economise on water. I emphasise my agreement with the remarks of my hon. Friend when he said that there is deprivation in Wales and that the Welsh Office must face the issue when the Bill is considered in Committee.
  Again, from the Opposition Front Bench, my hon. Friend the Member for Copeland (Dr. Cunningham) dealt with the crux of the Bill which is that, faced with the priority of making profits, it is extremely unlikely that the vigorous policy of environmental improvement that is urgently needed will appeal to privately owned water companies. I can truthfully report to the House that that is the fear in Wales.
  When he wound up the debate, my hon. Friend the Member for Bootle (Mr. Roberts) touched on another crucial feature. He said that there were contradictions in the Government's stance. They must persuade the City that, first, there are no destabilising uncertainties about costs attached to environmental controls, and, secondly, that there are genuine additional environmental safeguards, backed by cash. So far in the debate, we have not been persuaded. My hon. Friend the Member for Bootle was shrewd to make that point. We in Wales are sceptical of the Government's supposed good intentions, and we are cynical because of the Government's record so far.
  Last night, too, my hon. Friend the Member for Burnley (Mr. Pike) said that the Government had skilfully and ruthlessly removed from the water industry almost everybody who might have opposed its privatisation. Will the National Rivers Authority impose centralisation to such an extent that Wales will lose? Will the Welsh authority plc be able to attract the necessary capital to

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  tackle the huge challenge that remains in polluted areas? That was the gravamen of the complaint by the hon. Member for Caernarfon (Mr. Wigley).
  Mr. Win Griffiths: On the question of paying to deal with pollution, the Welsh water authority has a programme for cleaning up beaches which is due to be completed in about 15 years. is it not a good idea to warn potential purchasers of water authority shares that action could be taken against the Government to bring beaches into line in a much shorter period than the 15 years that are currently planned? The Commission is recorded as being prepared to consider that proposal.
  Mr. Jones: My hon. Friend has made an apposite point. The warning is serious. Swansea bay may be the exemplar of my hon. Friend's accusation.
  Last night my hon. Friend the Member for Denton and Reddish (Mr. Bennett) made a balanced contribution to the debate. He sensitively referred to the drowned valleys and destroyed communities of yesteryear. Those communities were damaged or obliterated so that the big cities of England could benefit.
  The Bill increases resentment. The people of Wales do not want the Bill, but the Prime Minister and her ideologues want to impose it upon us. Yesteryear saw insensitivity for the benefit of English cities. The Government's actions tomorrow will be insensitive, and they will be for profit. That is an insensitive approach, and it is one of the main reasons why there is so much resentment in the Principality.
  "The time has come when we must stop taking our water resources for granted. Water is too scarce; it costs too much to collect, transport and distribute any longer to be wasted, polluted or fenced off from recreational use. The Government's proposals are, therefore, radical and far-reaching. They are designed to create the conditions and to provide the necessary modern machinery for the cleaning up of our rivers, the improvement of our sewerage and sewage disposal arrangements, and the safeguarding of the nation's water supplies for the remainder of this century."—[Official Report, 2 December 1971; Vol. 827, c. 679.]
  Those are not my words; they were the words of the Secretary of State for Wales. They were uttered on 2 December 1971, when he was Secretary of State for the Environment, when he made social and economic history by proudly introducing in a statement the forerunner of the far-reaching 1972 water industry legislation.
  The right hon. Gentleman is the Secretary of State for Wales, but he is the man who begat the last great water reorganisation. He was then a young Heathite Cabinet Minister, pledged to interventionism. As a Cabinet Minister, he saw the right hon. Member for Old Bexley and Sidcup (Mr. Heath) sack the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the present Secretary of State for the Environment, who was then an Under-Secretary of State for Trade and Industry. [Interruption.] Yes, it happened. The present Secretary of State for the Environment lost office because, even then, he was a market forces man.
  The Secretay of State for the Environment (Mr. Nicholas Ridley): Of all people, as a member of the Labour party, the hon. Gentleman must know the difference between resignation and being sacked.
  Mr. Jones: I am grateful to the right hon. Gentleman for that gracious intervention. I remember that after he left office he behaved true to form on the Committee
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  considering what became the Counter-Inflation (Temporary Provisions) Act 1972 and demonstrated that even then he was a market forces man.
  The logic of the 1971 statement by the now Secretary of State for Wales was that of social ownership of a vital public utility. By his statement, the right hon. Gentleman established quangos. He ackowledged the importance of local authorities and gave them substantial water authority places. How times change in British politics. The sacked then Under-Secretary of State for Trade and Industry, who left office gracefully—he was not sacked, he said—now dictates to the Secretary of State for Wales. The sacked then Under-Secretary of State, who left office gracefully, is today's Cabinet market forces apologist.
  Today is a sad day for civil servants in Wales. They do not want the Bill. They know its flaws, they know its risks and, doubtless, they have advised against it. I do not think that they had to argue long with the Secretary of State for Wales.
  Mr. Wyn Roberts: The hon. Gentleman has no basis whatsoever for saying that the loyal civil servants in the Welsh Office, which has been loyal to successive Governments, are against the Bill. If he has a shred of evidence, will he please produce it?
  Mr. Jones: That intervention would have been so much more effective if the Secretary of State for Wales had been able to make it. Where is the Secretary of State for Wales? Nothing that the Minister of State has said today has any ring of conviction or of truth.
  When the right hon. Member for Cirencester and Tewkesbury introduced this matter in the Cabinet, I suspect that the Secretary of State for Wales went pale before he went red with rage. At that Cabinet meeting, and certainly at that Cabinet Committee meeting, I do not think that the Secretary of State for Wales shaded his advice. I believe that he called for a rethink. What he probably said was on these lines: "Leave well alone. Privatising the water industry is a step in the dark. We have better things to do, and with better political returns."
  Mr. Ridley: Will the hon. Gentleman give way?
  Mr. Jones: I shall not give way at the moment. I am grateful for the presence of the Secretary of State for the Environment, if we cannot have the Secretary of State for Wales. Where is the Secretary of State for Wales? If the right hon. Gentleman will tell me where he is, I might later allow him to answer some of the questions that I intend to put.
  Mr. Ridley: Will the hon. Gentleman give way?
  Mr. Jones: Later.
  Before I was interrupted, I was saying how I saw that Cabinet meeting.
  Mr. Ridley: Will the hon. Gentleman give way?
  Mr. Jones: No, later.
  If the right hon. Gentleman can contain himself and listen to me, I was saying that the Secretary of State for Wales was probably saying: "We have better things to do, and with better political returns. Privatising the Welsh water authority will be seen as an affront by most Welsh people. Lately, the Principality has gone through a very rough patch. Nationalism in Wales has little support, but all parts of Wales have a high degree of national

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  consciousness. They are already cynical about the advantages of those in the south-east and about what is called the City and speculation."
  The right hon. Gentleman probably went on: "This measure will stir up policial trouble for us. The Welsh like their water authority even though they criticise it. I created the Welsh water authority, so I should know, should I not? The party in Wales has some difficult seats to defend. Frankly, the privatisation of water is political suicide in Wales."
  I suspect that the right hon. Gentleman went on in this way: "Do you not think it would also be disastrous in the regions, for example, in the north-west and in Yorkshire? Why make such an ideological fetish of privatisation, Nick?" However, the Prime Minister said, summing up: "Peter, we are not going to be moved. Nicholas and I are not for turning." No one else in the Cabinet supported the Secretary of State for Wales.
  Before turning to the next business, the Prime Minister probably then said: "Peter, if you and Ted created the water authorities, Nick and I will be bound to sell them off to the highest bidder."
  Mr. Ridley: I am grateful to the hon. Gentleman for giving way at the end of his description of the Cabinet meeting at which the Secretary of State for the Environment is alleged to have presented his proposals for privatising the water industry. At the time, the Secretary of State was my right hon. Friend the Member for Mole Valley (Mr. Baker) and the Secretary of State for Wales was my noble friend Lord Crickhowell. The hon. Gentleman has cast the characters two years out of date, which shows his extraordinary historical ignorance.
  Mr. Jones: Lord Crickhowell is under a kind of house arrest in the other place. I had hoped that the Secretary of State would tell the House where the Secretary of State for Wales is. I am sure that this little drama was enacted before the Gracious Speech was finalised.
  Mr. Ron Davies: The Secretary of State referred to the previous Secretary of State for Wales. Does my hon. Friend feel it somewhat amiss that that individual, who was then a member of the Cabinet that gave birth to these proposals, is now receiving £40,000 a year as the chairman-designate of the National Rivers Authority? Does my hon. Friend agree that if that happened in local government the individuals involved would now be in prison?
  Mr. Jones: My hon. Friend signed the appropriate early-day motion at the time.
  There was unease yesterday among Conservative Members about the effectiveness of the National Rivers Authority, the proposed watchdog for pollution. To put it bluntly, the hon. Member for Devizes (Sir C. Morrison), always his own man, asked:
  "What guarantee is there that the Treasury will be less mean than usual?"
  There is no guarantee. The hon. Gentleman went on:
  "Without that … the NRA may not be able to live up to its responsibilities, especially in monitoring the effect of pollution along the 25,000 miles of rivers, in coastal waters, on ground water and in estuaries".—[Official Report, 7 December 1988; Vol. 143, c. 362-63.]
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  I should warn fishermen in the Principality to watch the situation carefully.
  The Minister of State referred to the National Rivers Authority, but I must tell him that both the Wales TUC and the Welsh Consumer Council sought a Wales National Rivers Authority which would have been accountable to our own Secretary of State. The regional aspect of the hon. Gentleman's speech was not at all persuasive.
  Mr. Wyn Roberts: Of the 51 responses to our consultation document, only nine were in favour of a National Rivers Authority for Wales.
  Mr. Jones: I have quoted the two substantial bodies of opinion.
  Mr. Wigley: The hon. Member for Alyn and Deeside (Mr. Jones) has raised an important matter that has not been clarified by the Government, either today or yesterday. I am referring to the responsibility for river water in Wales. Will it remain a Welsh Office function if the National Rivers Authority is answerable to the Department of the Environment? There will be an almighty tangle in terms of answerability if the Bill remains as it is.
  Mr. Jones: The prospects for complications are considerable and the hon. Gentleman's point is well made.
  When will the Minister of State make a statement on the impact of the changeover on Welsh industry? Industrialists in Wales will be under pressure on prices from day one. Privatisation could mean that the control of water supplies and sewerage services to Welsh customers will, for the first time, pass to non-Welsh organisations, chiefly because the shares in the new water company are likely to be held by finance houses in London or abroad. Welsh public opinion will not accept that.
  Last year the Welsh water authority was top of the league for cutting off water supplies to defaulting families. Between 1984–87 and 1987–88, the cut-off rate escalated. That came through with startling clarity in an answer to a question tabled by my hon. Friend the Member for Cynon Valley (Mrs. Clwyd). Our fear is that the new company, driven by profit reasons, will drive up the cut-off rate dramatically. I remind the House that Wales manages to top the league tables of poverty, ill health, pollution and dereliction, and that there is a public health consequence in respect of cut-offs, as there is in respect of the imposition, should it occur, of metering.
  I should like to set out the size of the task ahead of us if the measure goes forward. There are 10 Welsh lakes and 90 miles of Welsh rivers without fish. The Welsh water authority has more coastal sewage discharges than any English water authority region. The majority of the authority's discharges to tidal waters are short outfalls discharging crude, untreated sewage. Some 40 per cent. of these outfalls are more than 40 years old and a few date from the 19th century. The Welsh water authority has a greater number of small, older outfalls than any other water authority, and many of them were designed with little attention to environmental effects. In Wales, there are also hundreds of private sewage discharges, but these now come under the control of the water authority.
  Mr. Tim Devlin: I have not been in Wales for some months, but if what the hon. Gentleman

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  says is true, does it not make sense to separate the function of licensing pollution discharges and being the water authority? Is that not what is achieved by the Bill?
  Mr. Jones: The point that I am making, by giving highly relevant and impartial information, is that we do not believe that the great task ahead can be tackled by the plans which the Government have so far outlined, and which the Minister adumbrated with regard to Wales.
  The Wrexham and East Denbighshire water company is a statutory water company. I make my remarks about it in the knowledge that in Wales even the remotest prospect of our most basic commodity falling under foreign control will raise the nation's hackles. Does the Welsh water authority have any shares in the Wrexham water company? Does that authority harbour the objective of taking the Wrexham water company over on privatisation? Are any of the French water companies negotiating with the Wrexham water company for the possession of shares? I have established that Wrexham water company shares have increased in value since December 1987. The 4.9 per cent. consolidated ordinary voting stocks have increased in value by nearly six times this year.
  These are the justifiable queries of those who have a care for this statutory company. I hope that before the end of the debate there will be some answers. I also want to know whether the Wrexham water company is vulnerable to a stock market raid during the complex flotation period.
  I can illustrate my case against this privatisation by the briefest of references to a previous privatisation measure—the selling off of the bus industry. Examples may be drawn from the lamentable consequences of the Government's legislation on that. I shall attempt to illustrate the defects of this legislation by telling the House that shareholders of Crossville Wales are being asked to back a £6 million takeover of the North Wales Bus Company, a bid that will earn them a massive 300 per cent. profit on every share. This company was privatised for around £3 million, and 15 months later it will be sold off for around £6 million.
  National Express, the country's biggest operator of long-distance coaches, has offered to buy Notiontreat Limited, the holding company of Crossville Wales, for £30 cash for every £1 ordinary share. The three directors, who own just over half Crossville Wales ordinary shares, are recommending that the offer be accepted. They have irrevocably undertaken to accept the offer. The chairman of the company has 48,000 shares, the commercial director and the engineering director have 26,000 shares. A sale at £30 a share would make the chairman's holdings worth, instead of £48,000, £1·3 million. The other two directors would see their holdings worth £754,000.
  Let me give the House a warning about why this privatisation legislation should not be accepted. The fourth director of Notiontreat, who took no part in the board's deliberations on the offer, is not joining in the board's recommendation to accept the offer, as he is also a director and chairman of National Express, which is making the takeover offer. However, that member had more than 4,000 ordinary shares in the North Wales company and I understand that they have been transferred to close family. They will be worth about £122,000 if the annual general meeting accepts the offer.
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  Why do I refer to that effect? My reason is summed up by the divisional officer of the Transport and General Workers Union, Mr. Jim Morris, who said:
  "I don't blame individuals, but the Government who created such a situation. This is privatisation at any price. We always said National Bus Company was being sold at a knock down price. The price being asked for individual companies was giving them away."
  That must be the case in the bus industry, and we fear that it may be the case with the water industry. We fear a rip off, and the Daily Post of today was doing a public service in publishing that information.
  This is a land Bill. The Welsh water authority owns over 91,000 acres. When last in Wales was such a huge acreage sold off in one fell swoop? In the history of Wales, this proposal is of considerable social and economic importance. It is offensive to Welsh people that a great, successful and viable utility, a strategic resource, is to be sold. Some 9,700 acres make up the water surface. Approximately 63,000 acres surround the lakes and reservoirs. The Welsh water authority owns some of the wildest and grandest land imaginable, and the authority also owns 385 acres of important and valuable urban land. It has planning consent for nearly 10,000 acres across Wales. At the moment it is seeking planning consent for another 2,000 acres. There may be a number of other sites for which planning consent will be sought in due course. The Welsh water authority owns land worth tens of milions of pounds, and I want the Minister to tell us how much, on the basis of its land holding alone, the authority is worth.
  Land with planning permission is worth a fortune. Land of scenic beauty in the late 20th century is worth a fortune. Land with scenic beauty alongside water reaches is worth even more. At the moment the authority is a sensitive developer and exploiter of the land, but the Bill opens up the possibility of speculation by people and forces with fewer scruples. There is even the prospect of windfall profits for the new owners. I remind the Minister that the Brecon Beacons have breathtaking beauty. Snowdonian scenery is awesome, and the Welsh marches are charming walking countryside. There is a welcome in our green valleys. There is access to the hillsides as well as a welcome, and we are telling the House, "Do not change a successful formula." I think that the people of Wales should know that the Labour party will return the water companies to social ownership.
  There is widespread dismay in Wales that the Government have arrogantly proposed this measure without a shread of support from our people. Welsh consumers expect a surge in the price of water. We are contemptuous of a Government who impose the measure on Wales but not on Scotland. We support the environmentalists, who fear commercial pressures on the landscape. The Bill sets up a monopoly that will have no competition. The Bill appears to set no specific water quality standards. It hands over some of the most important assets in Wales to private enterprise, and probably at a rip-off price.
  Nobody believes that there will be sufficient capital investment to tackle outstanding pollution problems. Even at this late stage, I ask the Government to omit Wales from the legislation. For the people of Wales, this legislation is retrograde. Everybody expects the new company to put profit before investment and exploitation before quality. No local authority, no church, and no voluntary

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  organisation in Wales supports the Bill. It is completely friendless. The Bill is a 343-page long political suicide note. It will cost the Government dear in Wales. We know that it will lose them national political power. We have no hesitation in urging all hon. Members to vote the Bill down tonight.
  Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. I believe that you have a responsibility to safeguard the interests of individual hon. Members. As no Conservative Member has risen to provide an alibi for the Secretary of State for Wales, I wonder whether you have been told why he is not here to defend the contrast between his 1971 position and his position today.
  5.50 pm
  Mr. Chris Butler: Most of my remarks are not concerned with Welsh Water at all, but I listened carefully to the speech by the hon. Member for Alyn and Deeside (Mr. Jones) and I found it interesting. He called for a Welsh National Rivers Authority, which would cover the whole of Wales. I remember the passage of the Wales Bill—of which the hon. Gentleman was an enthusiastic supporter—through the House. It proposed that the Welsh assembly should deal only with the area covered by the Welsh water authority, not with the area covered by the Severn-Trent water authority. Therefore, the hon. Gentleman appears to have changed his mind on the matter of Welsh Water.
  He also advanced a new concept, which was that the Welsh water authority was a popular establishment in Wales. That is certainly news to me. I understood his point about the history of the planning of water and that the establishment of a water supply was tainted with incidences of disease, because I remember my father telling me when I was young of his experience as a GP in the south Wales valleys. However, the quality of water depends not so much on its ownership, but on the statutory framework within which the relevant authorities are run.
  In 1886 there was a cholera outbreak associated with a bakery that was noted for its especially fine quality bread. Sanitary inspectors were called in. They found that there was a connection between the local privies and water reservoirs that were used in the bakery. They closed off the connection and the cholera outbreak subsided. However, this was followed by public outrage because the quality of the bread deteriorated.
  Mr. Rhodri Morgan: It had no taste.
  Mr. Butler: Quite so.
  My hon. Friend the Under-Secretary of State for the Environment told me in a written answer:
  "All public supplies of drinking water in the United Kingdom are safe to drink."—[Official Report, 26 October 1988; Vol. 139, c. 228.]
  On the very next day, in The Daily Telegraph, it was reported that Thames Water admitted that its water contains five times the legally permitted level of polycyclic aromatic hydrocarbons, which are well known carcinogens derived from the coal tar linings of water pipes. Thames Water said that it would cost £1 billion to put right, and a sombre official admitted, "Someone's got to pay for this".
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  My hon. Friend the Under-Secretary of State for the Environment in a reply on 3 November said that there was unlikely to be
  "any significant health risk from drinking water which occasionally exceeds the standards".
  But how significant is significant? After all, the levels are five times those permitted by European Community law and presumably those standards are devised on the advice of experts. How occasionally is occasionally? After all, the coal tar is in the pipes all the time. The North West water authority is engaging in urgent research to find out whether its water, too, is contaminated with PAHs.
  I question whether all public supplies of water are safe to drink. We know that 85 water supplies in Scotland exceed the European Community lead limit, that in 61 out of 168 samples the carcinogen trichloroethylene was found at levels above the World Health Organisation's permitted limits, and 4 million people in this country drink water contaminated with nitrates at above the limit permitted by the European Community maximum of 50 mg per litre.
  I am especially worried about the quality of water in the London area. I try not to drink London tap water. I find it rather disgusting. I drink mineral water and I believe that my habit is shared by many others because sales of mineral water keep rising dramatically. The Select Committee on the Environment took evidence that 30 per cent. of people have water which is extracted from lowland rivers. We use our rivers as sewers, so those poor people are drinking water which is 10 per cent. sewage. The Thames, too, is used as a sewer. We know of sewage works which are so old and decrepit that they disgorge their contents directly into the Thames.
  There are also doubts about the quality of the ground water in the Thames valley area, which is used for gravel and sandpit digging. Once those pits are dug, they are filled with domestic and building refuse. The end result is that the dilute and disperse policy in this very permeable area is a recipe for pollution of our ground water with leachate. Increased extraction of water from the upper Thames area will only add to the strong pressures of ground water running through landfill areas. There were no controls on leachate dumping prior to 1974 and cowboys were rife in that area. There is still inadequate control of building rubble, which produces methane and also contains nasties such as lead and asbestos, which themselves can leach out. We know of landfill areas that are leaching direct into water courses that lead to the Thames. The Halcrow report, published last week, said:
  "Landfill sites continue to be a major potential threat to ground water quality."
  In my constituency there is a 390 acre landfill site just opened by Cheshire county council. It will have a clay bund which is meant to contain the many millions of gallons of leachate that it will produce. However, I question the sense of Cheshire county council in placing that site where it has, because it is directly between the two major water courses of the north-west—the Mersey and the Manchester ship canal. Worse than that, Cheshire county council has placed it directly over a major aquafer which feeds a large part of the north-west. I believe that it feeds part of Wales, too.
  The North West water authority sent me a letter saying:
  "It is recognised that landfill sites always produce leachate and that even engineered sites can and do leak … It is considered better to risk the resources in one area for a long period rather than have several short-term risks scattered about."

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  That is hard cheese for Warrington, which must shoulder the risk for many other areas.
  It is against that general background that I welcome the establishment of the National Rivers Authority. I welcome the appointment of my old boss, Lord Crickhowell. Those who know Nick well will realise that bureaucratic incompetence and insensitivity will wither before him. He has an immense task. The river quality survey on which the Select Committee on the Environment reported said that the quality of rivers over the past five years had deteriorated. The DOE expects no change in that before 1990.
  In the North-West water authority, area between 1980 and 1985, 266 km of river length deteriorated in quality. The Mersey remains probably the most polluted estuarial area in Europe. In 1986, 22 per cent. of all sewerage works were breaking their own sewage discharge consents for 95 per cent. of the time.
  In many respects the Halcrow report is extremely disturbing. It says that monitoring and investigation are insufficient to enable an understanding of the distribution and behaviour of many important contaminants. It says that the level of nitrates in water is likely to rise and that the level of pesticides in water will be a serious problem.
  In my view:
  "The creation of a National Rivers Authority within a privatised water industry offers excellent opportunity for conservation, protection, monitoring and overall management of ground water resources to be co-ordinated nationally."
  Those are not my words but those of Sir William Halcrow, and I agree with him.
  The public sector's record of protecting our water is not one of which we can be proud.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. It being 6 o'clock, speeches between now and 8 o'clock must not exceed 10 minutes, and I very much hope that those following will not exceed 10 minutes either.
  6.1 pm
  Mr. Roy Hughes: So far this debate has tended to have a Welsh flavour, which is understandable because water has always been an emotive subject in Wales. As a consequence, I feel that we have a right to expect the organ grinder himself to be present rather than to leave the debate to the Minister of State, Welsh Office.
  I believe that the Bill is summed up by a cartoon that I saw in one of the newspapers a few days ago. The caption posed the question, "Who owns the rain?" That cartoon illustrates the absurdity of the Government's proposals. Water is essential to life on this planet. Surely it is logical and sensible for it to be in public ownership. Nevertheless, we must face the situation and ask what the future pattern of ownership is likely to be.
  We already know that three French water companies have taken substantial holdings in 28 statutory water companies. There is little doubt that their attention will now turn to the privatised water authorities. My hon. Friend the Member for Alyn and Deeside (Mr. Jones) has already said what could happen to the Wrexham water company. What will the Government do to prevent takeovers and asset-stripping? If the Government's past record is anything to go by, it will be precious little.
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  We are told that water authority land holdings throughout the country amount to 435,465 acres and that 97,000 acres of that land is in Wales. Much of it is unspoilt. It is not difficult to reach the conclusion that that land will be vulnerable to new pressures. The report published by the Council for the Protection of Rural England and the Royal Society for the Protection of Birds has said:
  "Following privatisation, pressure for residential, commercial and recreational development is likely to increase very sharply."
  It would seem that with the privatisation of water, as with Royal Ordnance, the Government are selling a property portfolio, not an industry.
  There is already talk of development and windfall profits. It has not escaped my notice that the Government are proposing to write off no less than £5 billion debt from water undertakings. In other words, that will be a gift to future shareholders. For years I have campaigned for the writing-off of the paper debt on the Severn bridge, the very gateway to Wales. But that campaign has been like knocking one's head against a stone wall. When I compare the Government's skinflint attitude with the generosity that is being shown to future shareholders in the water industry, it makes me cynical about their intentions.
  We know that when water is privatised there will be no competition. Therefore, what will happen to prices? In recent years the Welsh people have been plagued by rocketing water charges. Now there is speculation about a further 50 per cent. increase, and Ministers have made little, if any, attempt to refute such a suggestion. Stemming from such price increases there is every likelihood of a marked upward trend in disconnections.
  The Government have said that privatisation will lead to a boost in investment. But there is a big question mark about that. In any case, such arguments come a bit rich from a Government who have set such tight external financing limits for the water industry that they have had the effect of forcing up prices and curtailing urgently needed investment.
  Britain has been named the dirty man of Europe. In recent months there have been revelations about sewage, pesticides and nitrates gushing out into our water. In turn the Government, not before time, have shown concern about the environment. Perhaps the threat of European prosecutions has had something to do with that. Likewise, that newfound Government concern may assist the salesmanship needed to convince the public of the merits of privatisation.
  Admittedly, the Government propose the establishment of a National Rivers Authority, but it is, of course, a 6,000-strong quango. Among other things, the NRA will seek to control water pollution; yet environmental groups, whose interest in such matters goes back a long way, say that it will have neither the regulatory teeth nor the resources to do that job properly.
  It is suggested that clauses 49 and 50 are vague and imprecise and that no specific water quality standards have been written in. The Government's proposals, enshrined in the Bill, are littered with contradictions. Water is a natural monopoly, and there can be no competition within any water authority area. That monopoly should provide for guaranteed profits, but massive investment is needed.
  There is a public demand for improved drinking water quality; likewise, there is an urgent need to repair and replace our crumbling sewerage system. The NRA will not be able to prosecute the water companies until 1992, but 20

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  per cent. of sewage treatment works currently break the law. The Government recognise that immediate insistence on higher standards would frighten off investors.
  The overriding motive of every private company is profit for the shareholder. It is argued that capital will be easier to raise on the private market, but such funding will require quick and massive return. With the Government's proposals, reluctant investors will be concerned about the costs that face the industry; and increasingly hostile consumers will be faced with ever-growing bills.
  Proper investment could be provided by the taxpayer at less cost than raising capital on the private market, and control would rest directly with the Government. We are fully committed to the social ownership of the water industry, with proper provision of local services and accountability to the consumer. Water is a vital natural resource that should remain in public hands. The Bill is an abomination. It is bad for the environment and for the customer. If Wales cannot be omitted from it, the Bill should be thrown out this evening.
  6.10 pm
  Mr. Nicholas Baker: All who speak in this debate will be heavily influenced by their local experience of the water industry, and none more so than the hon. Member for Newport, East (Mr. Hughes), who spoke mellifluously and passionately. As a mere Englishman, I feel somewhat of an intruder into a Welsh day on the Water Bill.
  I appreciate the opportunity of contributing to a debate on privatisation. I support the concept of privatisation for no reasons of dogma. I believe that it will enable us to run businesses in a better way, to provide better services to the customer, and those who run the businesses will suffer less interference from politicians. I resent the suggestion that private companies are less able to perform key functions in our society than publicly-owned companies. Companies engaged in defence contracts and companies that now participate in the previous 18 areas of privatisation are good evidence of the wrongness of that view.
  It is easy for us in Parliament to set out a system for regulating and controlling private companies which are engaged in areas of activity, such as the water industry, and I am glad that the Bill is setting about that task. But there is another reason why I am in favour of privatisation where it is appropriate, and it is one that I have not heard mentioned so far. I believe that companies in the private sector are better able to accommodate change than public sector undertakings. They are better and quicker at expanding and contracting, as the need for their services or as the market for their product demands. We have the history of nationalised industries. A recent example is the sad tale of British Shipbuilders. I think that the House will recognise the truth of what I am saying.
  At various times all businesses need to expand and contract. If they operate in a private capacity, they are better able to do so. Our company law provides a framework that is designed to enable companies to grow and contract. Large national undertakings, by their very structures, are less able to do so. Therefore, I welcome this further measure of privatisation. The advantages enjoyed by private companies will apply in this instance. In addition, they have the advantage of being able to raise
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  capital on the market. I am less terrified by the prospect of publicly-owned water companies than some Labour Members. That is because the water to my house is supplied by a private company. Water in Dorset is provided by the Bournemouth District Water Company, and it does an extremely good job. It does so safely and securely in conjunction with Wessex Water.
  I have some worries about the Bill, and I shall present them to my right hon. and hon. Friends on the Treasury Bench. First, I hope that we shall not over-regulate water companies to the extent that they are not marketable. It would be extremely dangerous to the supply of good quality water if the shareholders did not wish to invest in the companies on privatisation day.
  Secondly, I am worried about price increases. Whether we pay for water services and necessary environmental controls as taxpayers or as consumers, it is necessary for charges to be increased, irrespective of whether the undertakings are privatised. The water industry has suffered from a lack of investment over many years. Indeed, that was a subject of our discussion yesterday. There is an urgent need for more investment, and that has been recognised by Labour Members. Of course, we shall have to pay for that investment. I hope that we shall not be too timid about facing the prospect of price increases. If the water industry is in private hands, it should be possible to keep necessary price increases lower than would otherwise be the case. That is another reason why I favour the privatisation of the industry.
  My third worry is based on the need for a special share. Wessex Water, the authority that has overall responsibility for the water that is supplied to and around my home, has efficient management, effective controls and good assets. I suspect, however, that it and other water authorities will be especially vulnerable in the period following the flotation. There should be a special share to enable the authorities to overcome the flotation and the move into the private sector. The special share could be of infinite duration, subject to revocation by the Government if that is considered to be in the public interest.
  Fourthly, I am troubled about connection charges. I live in an area with a high-growth population, and the infrastructure has not been properly planned to accommodate the growth. Water consumption is increasing at a dramatic rate. The efforts of the water authorities to accommodate the increased demand are laudable, but they have been maintained only with the greatest difficulty. Water authorities have no control over development and the pies will not have that control in future. If the infrastructure is inadequate, planning authorities should reject applications for development unless the developer is willing to finance the cost of new sewers and water supply. My right hon. and hon. Friends should maintain a connection charge to ensure that developments in areas with a high-growth population, such as the one that I represent, do not outstrip the ability of the water companies to supply proper services.
  Fifthly, great fears have been expressed about the sale of assets. Mention has been made of 450,000 acres of land. I have no objection to the assets being sold. That may be in the interests of maintaining, if not improving, the quality of the job that is done by the water authorities, which are required to provide a good supply of high-quality water and other services. However, the assets must not be sold in defiance of existing planning procedures. I hear the fears expressed by the Council for

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  the Protection of Rural England and the Royal Society for the Protection of Birds. If I thought that there was any ground for believing that the normal planning procedures would somehow be avoided, I would be seriously concerned. I hope that those of us who have mentioned this issue will be given the assurance that we seek.
  The Bill is an environmental measure. I welcome the creation of a National Rivers Authority. Our former colleague Sir Phillip Holland may wince at the creation of another quango, but the NRA is necessary, and it will have a very important job to do.
  I end on a local point, which I believe has national applications, with which the NRA will have to deal. The demands on our rivers and water resources have increased and are increasing so greatly that in some parts—and my area is one—the ecology and environment of rivers is under threat. Water authorities have so far coped quite well. In 1969 the River Allen where I live in Barnsley—which, as everyone will know, is in the county of Dorset —had a water abstraction rate of 1·5 million gallons a day. This year, the abstraction rate is 5·5 million gallons a day. Of course, the river level has fallen. The ecology and the natural environment of the wildlife that depends on the river are being depleted and there is a threat of damage. There is a very strong need for an NRA. Its enforcement powers must be strong. If I were selected to serve on the Standing Committee—
  Mr. Deputy Speaker: Order. Mr. John Cartwright.
  6.21 pm
  Mr. John Cartwright: I want to register a very strong objection about the basis on which water authority assets are to be sold off under the terms of the Bill. In 1974 local authorities saw their water service assets transferred to the new regional water authorities without receiving a penny in compensation. They received only an assurance that there would be a majority of local authority representatives on the boards of the new authorities. That assurance from a Conservative Administration was torn up in 1983 by another Conservative Administration when the so-called commercial business men's administrations took over the water authorities.
  The privatisation that we are discussing will remove the last vestige of any democratic involvement in the running of those essential services. More important, it will put the Government in the very happy position of selling for billions of pounds valuable assets for which they paid absolutely nothing. Conservative Members often quite rightly object to the concept of nationalisation without compensation. I suggest that privatisation without compensation is just as unacceptable.
  The case in principle for privatisation rests on the belief that market forces will generate greater efficiency by ensuring that competition makes management more sensitive to the needs of the consumer, makes it improve its service to the consumer and makes it hold down prices to retain the loyalty of its customers. That may work in many areas of industry and commerce, but, as we know, it is absolutely impossible to achieve that in terms of water and sewerage services.
  The Government accept that there is no possibility of genuine competition in water and sewerage services. Therefore, they dreamed up the concept of what they call comparative competition. Yesterday the Secretary of State for the Environment said:
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  "the customer will be able to make comparisons between each of the companies."
  That produces a marvellous mental picture of a typical constituent in a high-rise block of flats in my constituency staying up late at night poring over the detailed figures trying to decide which company can offer, in the words of the Secretary of State,
  "the best management to deliver exacting environmental and water quality standards at a lower price."—[Official Report, 7 December 1988; Vo. 143, c. 338.]
  Anyone who believes that that will happen is not living in the real world.
  Even if my mythical constituent, gazing at the world from his 24th storey flat in his tower block, bothered to take an interest in the concept of comparative competition, what possible good could that do him? If he finds that he is being badly served by Thames Water plc, he cannot switch his water suppliers like he changes his supermarket or pub. He certainly will not have any power to influence the operation of water plcs. Under the Bill, customers will be completely captive, bound hand and foot, to a private profit-making monopoly. The Bill bestows on private companies an effective power to levy taxes. That is a distinctly medieval concept. However, since that is brought to us by the same team that gave us the poll tax, perhaps I should not be surprised by that approach.
  This debate has already generated a good deal of concern about the impact of privatisation on the level of water charges. Yesterday the Secretary of State spoke about a 7·5 per cent. to 12 per cent. increase in prices in order to fund the capital improvements. On television a couple of weeks ago the Minister of State did not deny that the overall price increases would be between 50 per cent. and 90 per cent. by 1993. The Minister appears to be showing dissent. However, he is quoted to that extent in the Daily Mail which is not known for its virulent opposition to this Administration.
  Other people have suggested that the price increases will be a great deal more. We know that consumers will have to meet the costs of renewing aging Victorian systems, improving water quality and providing higher environmental standards. In addition, they may well have to meet the overall costs of water meter installation. Privatisation will bring the added burdens of having to pay dividends to shareholders and to meet the cost of corporation tax. Against that background, only the Secretary of State would have the nerve to say that this is a good Bill for the consumer.
  Like Opposition Members, I am concerned about the impact of rising prices on the poorest families. We know that the social security changes have brought problems because there is no longer a specific allowance for water charges which must be met from the general social security benefit. We know that some poorer consumers have difficulty paying by instalments because the existing water authorities are not flexible about accepting instalments from those who do not have bank accounts.
  The most worrying spectre of rising prices is the prospect that there will be more water disconnections for non-payment. We have already experienced an increase in the number of disconnections. If the consumers advice bureau in Bath, not an area noted for being deprived, can report 35 disconnections in one week in September. we know that the situation is serious. Given the risks to health

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  and the obvious hardship, we simply cannot accept that private profit-making companies should be given unfettered power to disconnect consumers.
  In the 1970s I was involved in the battle to stop gas and electricity disconnections. Major hardships were involved. However, at least there was the possibility of an alternative in terms of heating or lighting one's home if one was disconnected by a fuel board. However, there is no possible replacement if one is deprived of one's water supply.
  Last night the Parliamentary Under-Secretary of State tried to assure us that a code of practice would be at least as extensive as the present one. That simply is not reassuring. The present arrangements do not stop vulnerable families from being disconnected from their water supplies. Our experience of the gas and electricity authorities shows us that codes of practice are simply not the answer. They do not prevent hardship.
  Water disconnection is a massive power. It is a much more severe punishment than many meted out by the criminal courts. It simply must not be exercised by junior officials in water companies. Water debt should be pursued through the courts like other debts and disconnection should be considered only in the most rare and extreme circumstances.
  I want to consider now the consumer protection machinery. The Minister of State, Welsh Office who opened the debate today tried to suggest that the Bill represented a universal and very effective system of consumer protection. I dispute that. The concept of a director general who has the twin roles of regulating an industry and trying to protect consumers has not worked well so far for British Telecom. That model does not inspire a great deal of confidence in the hearts and minds of consumers. The arrangements for a chain of consumer committees takes us back to the consumer consultative committees of the old nationalised industries. There was no great public confidence in those either.
  Given the monopoly of water plcs and their tremendous powers, it is essential that consumers feel that they have a genuine body, free and independent of the industry and properly resourced, which can fight on their side—a watchdog that has the power to bite as well as to bark.
  In many ways the Government's case has not been made out. They have not been able to show that, simply because they are private, the water companies will be able to offer any better service to consumers than we now enjoy. The improvements that we shall see in water quality and environmental standards are welcome, but the Government have not shown that those improvements cannot be achieved by the existing water authorities.
  The Bill offers no guarantee of effective competition. It offers no guarantee of effective protection for the consumer. It involves real danger for the poorest families in our society and I and my right hon. and hon. Friends will oppose it in the Lobbies tonight.
  6.31 pm
  Sir Giles Shaw: I cannot follow the hon. Member for Woolwich (Mr. Cartwright) in his antagonism to the Bill. My hon. and learned Friend the Minister for Water and Planning will, I trust, accept that I shall be a strong supporter of it, despite some of the difficulties that
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  have been associated with it. Let me declare at the outset an indirect interest in so far as one of the companies to which I am a consultant numbers among its clients the Water Authorities Association. However, my direct interest in the industry stems from a long time ago.
  Private sector involvement in water supply has probably been one of the most consistent influences whoever happened to own or direct the water authorities. Private sector involvement came very much through the municipalities and the cities; from councillors who took an active part in ensuring that their particular city had a substantial and effective water system.
  That was certainly so in the West Riding of Yorkshire where, for example, the city of Bradford was run by citizens who, as elected councillors, came from the wool industry and created the massive reservoir system, scouring industry and all the other essential ingredients to form the basis of the textile industry in West Yorkshire. They were essentially private sector individuals taking a role in municipal supply.
  When I joined a rural district council in West Yorkshire I remember being told by a local councillor, "Right lad, there's a lot in't drain, but remember there are no votes in it". To a certain extent he was right because the problem with the municipally-owned water industry is that since the 19th century, when the citizens who made the big decisions to invest in public water supply had all the infrastructure put in, there has been little reassessment, replacement and replenishment of the infrastructure. So it was that after the period between the wars and immediately after, the municipal owners of the public water supply found a run-down system.
  Then followed the reconstruction of the water industry through statutes passed by the House, in which my right hon. Friend the Secretary of State for Wales played a major part. The current water authorities who invested in replenishment, struggling within the public sector to try to find sufficient resources within the external financing limits and Treasury restraints, have done as well as they reasonably could. If we want major changes in water and sewerage standards, better control of pollution and the environment, and better conservation, new sources of capital investment must be found and a speedy and effective solution found. The Bill provides a balanced arrangement for achieving that.
  I say "balanced" because the crucial element is the setting up of public sector control—the National Rivers Authority—in such a way that the private sector can flourish to the extent required to maintain the investment level in the improvement of the assets. In my judgment, the balance is just, but only just, there. My hon. Friend has designed a system of control of the water industry through the NRA which is infinitely more rigid than it is for any industry that has so far been privatised.
  My hon. Friend will share my anxiety about whether shareholders will have sufficient confidence to ensure that the industry has the asset backing that it most sorely needs. If there is to be such confidence, the operations of the NRA must be sensitive to the costs being imposed upon the industry by statute, EEC directive, the director general and the reasonable public accountability process that has been built into the NRA and the advisory committees so that the monopoly that remains does not abuse its power. The power of the NRA, a monopoly in its own right, must not abuse the private sector either which is struggling to provide a public utility for all our citizens.

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  I want to ask some direct questions. The first is in relation to the cost pass through provisions, which have been, I think, adequately dealt with in the Bill. However, I noted from what my right hon. Friend the Secretary of State said yesterday that he was anxious to demonstrate that the major cost for the revised anti-pollution programme would have to he carried by the plcs. He pointed out that the £2·4 billion was part of the pollution programme.
  I am sure that neither my hon. and learned Friend the Minister nor my right hon. Friend the Secretary of State would wish the House to assume that the only significant increase in costs would come from those programmes which would be costed out at between 7·5 per cent. and 12·5 per cent. total increase in charges. That surely is not so. The cost associated with the pollution programmes, which, as is shown in Hansard, run on different time grades—1992, 1995, and the year 2000—may enter the industry's price stream at that level. But the industry, under direct Government pressure, has started to make significant improvements in its investment, all of which will have to be paid for through the cost price mechanism. We should be under no illusion that, although the pollution programme may cost £2·4 billion, significantly more millions of pounds require to be spent to maintain the existing system of supply, to improve the investment record and to cure a number of the problems already associated with a system that still shows signs of strain when under pressure.
  The NRA is to be responsible for land drainage operations and coastal defence work. The House may well be aware that those two important responsibilities have to date been carried by the water authorities. In most areas, certainly those with long coastlines such as Yorkshire, the problem of coastal erosion and the massive danger of inundation or other such disasters results in an authority having to have flexible borrowing powers and usually substantial reserves. The same could well be true of land drainage. I think particularly of the problem in Anglia. It is also true in parts of Yorkshire and parts of north Lincolnshire. Will the NRA's borrowing powers be sufficient and sufficiently flexible to deal with those issues?
  Schedule 1, paragraph 18, says:
  "The Authority may, with the consent of the Secretary of State or the Minister and the approval of the Treasury, borrow temporarily in sterling by way of overdraft or otherwise from a person other than the Secretary of State or the Minister, such sums as it may require for meeting its obligations and carrying out its functions … The Authority shall not be entitled to borrow otherwise than under this paragraph."
  May I have an assurance from my hon. and learned Friend the Minister that that borrowing power is comparable in every way to that currently enjoyed by water authorities in discharging the same functions; for example, land drainage investment and cost, and flood protection investment and cost? I detect in schedule 1(18) the mortmain of the Treasury having rather more inflexibility than that function of the National Rivers Authority deserves.
  Much has been made also of the fact that under the new regime, which we hope will be successful, companies can be more flexible in what they do, can extend their operations to a number of other activities, and can generally behave like the French. I am all in favour of that but hope that my right hon. Friend the Secretary of State and my hon. and learned Friend the Minister will take note of one further point. If that objective is to be realised, it is
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  essential that some kind of golden share arrangement is made to protect water authorities in handling the crucial five-year period between vesting and privatisation and arriving at the full potential for their powers. I hope that my hon. and learned Friend will address that aspect too, because I doubt that the new authorities will be able to behave like the French unless they are given a measure of protection from predation by French investors during the period in question.
  Under the Bill, the future will be safe for private water supply, which will improve in both quality and environmental access. But I am concerned to see that the plcs will have the flexibility to develop as I trust the House wishes to see them develop, and that initially at least they will have a measure of protection to ease them on their way.
  6.41 pm
  Mr. A.E. P. Duffy: I wish to ask two questions. First, what impact is privatisation likely to have on the scale of water charges in Yorkshire? Secondly, how adequate will the National Rivers Authority be in its monitoring role in Yorkshire?
  There is already a strong upward thrust towards increased water charges there. As Yorkshire water authority investigates the condition of its underground assets, it finds that more work needs to be done, calling for as much as £400 million investment in the forecast period. Moreover, the authority is under increasing pressure from environmentalists and others to improve the quality of its rivers. That can be done only by spending enormous sums on improving sewage treatment works. Only half of Yorkshire water authority's current capital programme is committed to water quality improvements, with most of the remainder going on the maintenance and repair of underground assets.
  To meet the Government's new requirements without prejudicing those programmes will mean increased charges to customers or increased borrowing from the Government. However, over the past four years the Government have reduced the amount that the authority may borrow to fund its capital investment programme, at precisely the time when its needs are increasing. The burden inevitably falls on customers in the form of increased charges. Twice this year I have appealed to the Minister for some relaxation of the borrowing rules, but he reminds me that Government policy is for water authorities to move away from investment based on borrowing. For 1988–89, the Government set an external financing limit on Yorkshire water authority of only £40 million, yet its accumulated deficit is more than £500 million. Last year, the servicing charges on that debt accounted for nearly half of its operating profits. It can only mean, as the chairman of Yorkshire water authority confirmed recently, that if all the money must be raised from charges,
  "then we might have to face a 27 per cent. charges increase next year."
  And that comes on the threshold of privatisation.
  Over the past five years, Yorkshire water authority has given investment priority to improvements in drinking water quality. Even today, about 1·25 million customers receive discoloured water through their taps. Further capital expenditure may also be affected by two incipient problems that water authorities need to monitor closely, especially in Yorkshire. The first relates to aluminium in

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  purification processes; the second to the presence of nitrates in drinking water, which hon. Members on both sides of the House have mentioned.
  While a causal link has yet to be made between aluminium for purification and Alzheimer's disease, the contingency must be met in Yorkshire, one of the worst affected areas, where more than 800,000 consumers are supplied with water that may contain aluminium levels above the legal limit. The same contingency thinking—and this is where money is involved—must be applied to nitrates. Some fertilisers, such as those containing nitrites, find their way into streams and aquafers, and ultimately into domestic water supplies. Yet one quarter of south Yorkshire's drinking water comes from rivers, such as the Derwent, around York, which are fed by streams and rivulets running through agricultural land. Sheffield and Rotherham benefit from the mixing of Pennine water with Derwent supplies. Not so as one moves eastward, along the south Yorkshire valley, where high nitrate levels occur in, for example, the Doncaster area. Yorkshire water authority insists that nitrate levels are below the EEC's maximum permissible concentration—but for how long?
  On 3 October 1988, The Guardian reported:
  "Bottle-fed babies may run a greater risk from nitrates in water than the Government has publicly accepted, according to a confidential Department of Health report."
  The potential problems of aluminium and nitrates in water need to be borne in mind and may call for more capital resources than is currently envisaged.
  Even though Yorkshire water authority's accumulated debt will be written off, it faces such a huge outlay as the result of upgrading sewers and pipes to meet new standards, investing in new equipment, and the need to provide against future water supply problems—and therefore such enormous capital levels and service charges—that a dramatic increase in Yorkshire water prices following privatisation appears unavoidable.
  I turn to the role of the National Rivers Authority. Nowhere was the passage of the Control of Pollution Act 1974 received more eagerly than in south Yorkshire, as it gave rise to the expectation that its rivers would become cleaner. However I understand that by 1988 river quality worsened throughout south Yorkshire, and plans to return fish to poisoned waters have been postponed—perhaps until the next century. Yorkshire water authority chairman, Gordon Jones, admitted to me in correspondence that hundreds of kilometres of south Yorkshire's rivers are still polluted.
  Sheffield city council is committed to the regeneration of its east end, yet the designated area is flanked by the rivers Don and Rother, probably the dirtiest in Britian in their local stretches. Hard though it may be to imagine today, the Rother and Don valleys once provided some of the finest countryside in all England and inspired Sir Walter Scott to write "Ivanhoe". The Rother and Don catchments were also renowned for their excellent fishing and kingfishers. I recall from my boyhood the heronries and swimming clubs that existed there.
  In a letter dated 28 December 1980, I asked the Department of the Environment what estimate has been made of the effect of its spending cuts on Yorkshire water authority's plans to clean up south Yorkshire's waterways. In his reply of 29 January 1981, the then Under-Secretary
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  of State for the Environment, the hon. Member for Pudsey (Sir G. Shaw), who has just spoken, described my inquiry as unnecessarily gloomy, and claimed
  "the overall trend in river quality is improving."
  Two years later, according to a survey produced jointly by the then South Yorkshire county council and Yorkshire water authority, more than half the county's rivers were still of "poor" or "bad" quality and would cost more than £100 million to clean up. That programme was never put in hand. Instead, a 19 per cent. cut in the capital programme for 1979–80 that we bequeathed to the Government meant that 32 of south Yorkshire's 46 major schemes were affected and three were scrapped.
  In May 1982, South Yorkshire county council urged the Government to implement the Flowers commission recommendation that national funds be made available to tackle the problems of river pollution arising from abandoned mine workings. In April 1987, Gordon Jones made the same plea to the Department of the Environment—also in vain. Today, perhaps as a result, south Yorkshire's rivers remain among the filthiest in Britain. Every day, tonnes of toxic chemicals and materials pour into the waterways—often illegally and out of area. Pollution on this scale is no longer confined to south Yorkshire, nor to industry. Pollution from farms has also risen steadily in Yorkshire and Humberside in recent years. The Yorkshire water authority recently announced a crackdown on illegal pollution, but environmentalists and the trade unions involved in the water industry remain sceptical. They fear that the NRA will have insufficent resources and expertise to deal effectively with massive pollution problems.
  The number of pollution control staff has been cut substantially since the water authorities were set up in 1974, but, over the same period, the amount of time-consuming monitoring work required has increased in line with ever-stricter regulations. In Yorkshire Water's southern division, for example, which is the area with the highest concentration of polluted rivers in the country, there are more than 1,800 registered dischargers over hunderds of miles of rivers, yet there are only 17 pollution control staff. Will the staffing levels for the NRA be significantly higher than the total pollution control complement that is presently available to the 10 existing water authorities? The privatisation of water is a depressing prospect for Yorkshire in respect of water charges and pollution. The Bill is entirely inappropriate to the needs of south Yorkshire.
  6.53 pm
  Mr. Gerrard Neale: It is tempting to take up the points that were raised by the hon. Member for Sheffield, Attercliffe (Mr. Duffy). I am certain that if he discussed the matter with any company that has recently been privatised, he would discover that there is relief among management that it now only has to make out a good commercial case for borrowing money on the open market, whereas previously a commercial case was insufficient and a political case had to be made—among political cases that were irrelevant to it—to obtain the sanction for cash from the Government. In that sense, privatisation offers a great deal of hope to the public sector part of the water industry.
  I should like to take up some of the points that were made by the hon. Member for Woolwich (Mr. Cartwright) who, unusually for him, made a speech that did him some

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  disservice. He seemed to throw all his weight against the Bill, and he did not utter one good word for it. He gave the impression that there is no need to change the statutory framework for the water industry. I must tell him that if he talked to any of the 20,000 consumers in the Camelford area of my constituency, he would find that they have no confidence in the existing statutory framework, but they find a great deal of hope in the provisions that have been included in the Bill.
  People in the Camelford area would tell the hon. Gentleman—and other hon. Members—that they realise, of course, that it is impossible to have a competitive water supply. In all logic, there can be only one institution supplying water, whether private or public. What has concerned them is the monopoly of power over that supply. Opposition Members have extolled the virtues of the public sector over the private sector. I beg them to obtain a copy of the inquiry report into the Lowermoor treatment works incident on 6 July. If they can still feel confident about the public sector water industry after reading that report, I should like to hear from them individually. It was an appalling chapter in the public water industry.
  The events that followed the dumping of 20 tonnes of aluminium sulphate into a tank of water that was prepared for going into the mains and the subsequent chapter of incidents surrounding the discovery of the events that led up to it were unbelievable. People in the Camelford area are considerably reassured by the fact that the inspectorate powers of the Department of the Environment will be increased by the Bill. After the incident, it was evident that, had it not been for the Department's officials keeping a close eye on what South-West Water was doing, consumers would have received less information and the matter would not have been brought under proper control. If my hon. and learned Friend the Minister can give an assurance that the inspectorate will be manned by experienced people and properly funded, that will reassure not only my constituents, but people in the rest of the country.
  The Minister is also aware of the incredibly slap-happy way in which the water authority moved quickly to discharge the contaminated water into local rivers and streams. That led to the wholesale killing of fish and was a flagrant breach of all that one would expect from a water authority. If there was ever a case for the establishment of a separate authority, such as the National Rivers Authority, that was it. I am certain that my hon. and learned Friend the Minister is correct in ensuring that that authority is set up.
  Other hon. Members have spoken about the authority's funding and powers, and I hope that the Minister will consider those points carefully. My hon. Friend the Member for Pudsey (Sir G. Shaw) said that we must be careful to ensure that private investors have the proper incentives to invest in the companies. I agree, but we must remember that people have to drink the water, so they must have confidence in it.
  If the water authorities are to be policed properly, a strong National Rivers Authority is needed. In view of the flagrant breaches in my constituency, people will be reassured by the fact that criminal sanctions are included in the Bill. It is right and proper that if a water authority—or individual within it—is party to water that is not of wholesome quality being put into the system, criminal sanctions should apply. There is a maximum sentence of
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  two years' imprisonment for that. Perhaps my hon. Friend will also consider adding to the Bill a provision for a maximum of two years' imprisonment for anyone who recklessly publishes information that leads people to consume water when it is unsafe for them to do so. That should be punishable by a prison sentence if the circumstances require it. We must ensure that all people working in the water industry have a clear understanding that they have a personal as well as corporate responsibility to supply wholesome water.
  I want to reinforce a point that I have made separately to Ministers, which has come out of the incident in north Cornwall. There appears to be no statutory responsibility—and I stress the word "statutory"—for the water authorities to inform the local health authority and the local environmental health authority when it can no longer supply wholesome water. No certain information was given to those authorities in Cornwall, because there was no statutory obligation to do so. Therefore, they did not treat the incident as seriously as they should have done. I hope that my hon. and learned Friend will re-examine that particular aspect and make it a statutory duty for the water authority, in any case in which it cannot supply wholesome water but has, nevertheless, allowed unwholesome water to get into the system, to tell the local health and environmental health authorities. I ask my hon. and learned Friend, in view of the Camelford incident. to give me an assurance in his winding-up speech that he will keep a close eye on the incident and ensure that the Bill covers health matters, which are the responsibility of the Department of Health. The Minister has greatly reassured me, on behalf of my constituents, and for that I thank him. I thank also my right hon. Friend the Secretary of State. They have both been of great help.
  My final point is not entirely related to the Bill, and I hope that the House will forgive me for making it. During this incident in north Cornwall, it became clear that a large number of people were using hot water to cook their vegetables or to make coffee and tea.
  Mr. Robert Key (Sailsbury): And to cook eggs.
  Mr. Neale: Yes, and to cook eggs.
  The contaminants in water affect the hot water system much more seriously than they affect the cold water system. It was news to me that no water authority is responsible for supplying wholesome water by means of the hot water system. I hope that my hon. and learned Friend will consider a short advertising campaign to draw attention to such dangers. It would greatly benefit water consumers.
  I welcome the Bill. It will greatly improve consumers' water supply.
  7.1 pm
  Mr. Harry Barnes: The last four speakers on the Government Benches said that they approve of the Bill, but they all expressed reservations about it. They fall into two groups: those who stress the role of the National Rivers Authority and who believe that its role is important, and those who are worried about its role and stress the values of privatisation. When those two elements are added together they create the nonsense that is to be found in the Bill.
  The hon. Member for Dorset, North (Mr. Baker) argued in favour of privatisation. In his ideological speech

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  he stressed the wide-ranging benefits of the Government's privatisation policy. He referred in particular to the shipyards. I suggest that he ought to look at what is happening elsewhere. The dry docks in Malta are among the best docks in Europe. They are under public control and a system of worker self-management. Workers are elected to the board of management and have an influence on management decisions. Such ownership provisions need to be examined, considered and developed by hon. Members.
  We discussed Wales earlier this afternoon. Last night the hon. Member for Antrim, South (Mr. Forsythe) joined in the discussion, as was his right, although the measure does not apply to Northern Ireland. The poll tax will not apply to Northern Ireland either. If the poll tax and what was described last night as the water poll tax were to be introduced in Northern Ireland, where there is vast unemployment, social disruption and division, they would add to the unhappiness of the people of that Province. If the Government understood that point, they would realise what is wrong with such highly divisive measures for the rest of the United Kingdom.
  What will happen to the revenues that are raised when the water industry is sold off? We have gone past the stage when we were selling off the silver. We are now selling off the commodes and other basic necessities. The money that has been raised so far has been used to carry unemployment, to help to maintain it and to cut the labour market. It has also been used to cut taxes, which has led to an import-led consumer boom and the current economic crisis. The Government have flogged off the people's assets and then thrown the money down the drain. That includes this measure, which will result in fewer drains and a less effective public sewerage and water supply.
  The Prime Minister tells us regularly that the Government have no money—that they have only the taxpayers' money. If that is a simple truism—it is perhaps too simple—it is also true that the Government have no water or any public utilities. The water industry belongs to the people, but its assets are being sold off to groups within society instead of society being given the opportunity to control them. Water belongs to everybody. It does not belong to a special few. A special few will benefit initially from it, but eventually there will be a decline in public health standards if water is privatised. That will create vast problems, and more taxpayers' money will be needed to overcome them.
  Conservative Members ought to consider the history of the water industry. They should consider Edwin Chadwick's report of 1842. He stressed the unsanitary conditions in which the labouring population were living in 1842 and the importance of making public provision for sanitary conditions. If inadequate provision is made for sewage disposal, it will affect all classes of society. Edwin Chadwick believed that all classes, including the middle classes, needed a good public supply of water.
  There is a statue of Joseph Chamberlain in the Members' Lobby. He instigated many forms of public provision in Birmingham during the 1870s. He upheld the old Victorian attitude of public and civic pride. In 1894 he said:
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  "It is difficult and indeed almost impossible to reconcile the rights and interests of the public with the claims of any individual company seeking as its natural and legitimate object the largest private gain."
  These will be called old-fashioned, collectivist ideas. They could not be described as Socialist ideas, because Edwin Chadwick and Joseph Chamberlain were not Socialists. But what of the modern, with-it, dynamic, go-ahead Government who are introducing this measure? The ideas of Chadwick and Chamberlain are supposed to be yesterday's ideas. The Government say that they have new, fresh ideas to offer to us. However, they are old hat, ancient ideas.
  The concept of a National Rivers Authority to regulate private industries is taken from economic theorists such as Alfred Marshall in 1890. In "The Principles of Economics" he said that natural monopolies, such as the railways, had to be regulated and that certain conditions had to be laid down for them. All that the Bill means is that 1890 limited provisions are to be introduced. That is in keeping with this Government. Their political ideas go back to Thomas Hobbes in the 17th century, who thought that everybody was selfish and grasping, to the Combination Acts of 1799 and 1800 in relation to the workers at GCHQ and to 14th century medieval provisions for a poll tax.
  The Bill is just as bad as the poll tax measure. It means that those who were paying less for their water than others will have to pay more. A larger number of people, living in small houses, will need to use more water than a smaller number of people who live in large houses, and they will have to pay high water rates. This modern, with-it, dynamic Conservative Government are as old-fashioned and old hat as anything that has ever emerged from the Benches in this House.
  Just what is this fantastic people's capitalism that we are being offered? Whatever the industry, if the shares are spread among people so that there are tiny bits all over the place, and if a cartel is allowed to have only 4 or 5 per cent. of the shares, who will control the industry? It will be controlled by the small groups who get together. The dissipated masses with their bits of shares will not run the company; it will be run by small, elitist groups. As time goes on, the little people will sell to the big people. Year after year, the top companies listed in "The Times 1,000" book buy smaller groups and split areas among themselves to concentrate capital. Even if people's capitalism could work, it could do so only on market principles where profitability would be the only criterion, and it would not be one of the many criteria that are required for the proper use of resources.
  7.11 pm
  Mr. Hugo Summerson: Unlike the hon. Member for Derbyshire, North-East (Mr. Barnes), I shall not look back and attempt to give the House an inaccurate history lesson. Instead, I shall look forward to the establishment of the National Rivers Authority, which is an excellent idea. I hope that it will satisfactorily perform its role.
  Exactly what powers will the NRA have? On 30 November in my constituency a train carrying oil and paraffin in tankers was derailed. Some of the oil and paraffin got in to the River Lee and it was polluted. Will the NRA have the power to tell British Rail that that section of track is dangerous and must be made safe so that similar pollution incidents do not occur through the

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  derailment of trains? That is not as far-fetched as it might sound. The particular section of track is on the Gospel Oak to Barking line, and I am sure that many hon. Members know that it is one of the worst equipped and managed lines in the country.
  I have a strong constituency interest in the Bill because there are six reservoirs in the Lee valley, which take up about one quarter of the land area in my constituency. There is also the River Lee, a flood relief channel, a canal and the Coppermill works—a large water purification plant owned and run by the Thames water authority, which stores 50 tonnes of chlorine gas on site. Because it is a highly dangerous substance, the site is designated by the Health and Safety Executive. Will the NRA have the power to regulate the storage of such chemicals?
  I wish to refer to two rivers that I know well—one in the north and one in the south—that I consider to be examples of mismanagement, and explain what I hope will be achieved through privatisation and the establishment of the NRA. The River Skerne lies in the north and may not be familiar to hon. Members. It rises in the north of County Durham, runs through the pit country and through Darlington, and empties into the River Tees a mile or two further south. I know that river well because I was born and brought up in that area. When my father was a boy it was a beautiful, clear stream supporting many types of fish. One day, about 50 years ago, my father went to the river and found a black, stinking ditch. Pit washings from pits in the north of the county had been put straight into the river, which ran black for decades and supported no life. Today, the river apparently runs clear, but it has a nasty smell, has scum and foam on the surface and appears to support no life. The river is a classic example of mismanagement and water authority indifference over many decades. It is a disgrace.
  The River Kennet is in the south, and I am fortunate to fish there from time to time when I can scrounge an invitation. The water keeper is concerned about the amount of water that the river carries, because it has declined over the years as a result of abstraction. That problem can be solved only by the metering of water supplies. There is currently no link between cost and consumption. There can be dripping taps in homes, hoses can be turned on to wash the car or to water the garden and then left running, but the bill does not reflect that increased use of water. More and more people and more and more businesses are using water and there must be some form of metering so that people can see how much they are using and understand that they will be charged for the amount that they use. That already happens with other essential utilities such as gas and electricity, so there is no reason why it should not apply to water.
  There appears to be great uncertainty about funding. On the national news at 6 o'clock there was an item about a sewer collapse in Bristol. The spokesman for Wessex Water said that it faced difficulties because limits had been placed on its spending and only limited funds were available. He said that he looked forward to the time when the industry was privatised so that it could be released from the constraints imposed by Government. We sit here and talk a great deal, but we are just politicians. What do we know about running the water industry? We should give it to those who know about it—to the experts and to those who can raise the money and put it to good use.
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  The Bill will forge a strong link between the shareholder, the consumer, the taxpayer and the Government. For that reason alone, it will be warmly welcomed.
  7.20 pm
  Ms. Joan Ruddock: In a recent poll 82 per cent. of those questioned expressed anxiety about water pollution and only 5 per cent. believed that a private industry could be trusted to regulate itself and control pollution. Nothing that we have heard during the debate leads us to believe that those people were wrong. The Bill is not an expression of the wishes of our people; it certainly is not an expression of the wishes of my constituents.
  Although water quality is uppermost in people's minds, many other matters concern them. As has already been said during the debate, water authorities control and maintain not just tap water but sewage, lakes, rivers, beaches, reservoirs and discharges from factories. It is highly irresponsible to be tampering with the existing monitoring arrangements and to be dramatically changing the way in which water authorities are run, at a time when water quality is declining.
  Pollution incidents are up by 50 per cent. since 1980, not because of carelessness or a lack of awareness or vigilance on the part of most of those responsible for monitoring and control, but because of Government inaction and a lack of public resourcing. As a result, levels of nitrates, nitrites and aluminium compounds in particular are rising in our drinking water, with a consequent deleterious effect on health.
  Within my water authority, Thames Water, there are a dozen areas that suffer from unacceptable levels of nit rites. In Lewisham, samples have shown that on 13 occasions between 1985 and 1987 there were unacceptable levels of pesticide residues. Clearly, the polluters who are responsible for this contamination must be investigated and controlled. However, it is impossible to believe, as Conservative Members have suggested, that putting things right will be achieved more effectively by private companies committed to making profits. On the contrary, everything in the Bill makes improvements in water standards less and less likely. Let us take as an example the agency arrangements which exist in local authorities. Clearly, the Government intend to replace them with private contractors who will take over the sewerage and drainage systems. Those arrangements will put us further at risk from polluted supplies, and the possibility of increasing water-borne diseases.
  The rapid repair and sensitive maintenance of sewerage systems are imperative to the prevention of pollution and the maintenance of good standards of public health. The ending of existing agency arrangements would mean that faults would have to be reported to a remote, private water company. The body of knowledge and expertise that exists within local authorities is not duplicated anywhere in the private sector.
  The involvement of environmental health officers is particularly important and there is widespread concern that changes in agency arrangements that would make environmental health officers more remote from the managers of sewerage systems could seriously jeopardise the vital work of rodent control in sewers. Perhaps the

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  Minister is not aware that the rodent-borne disease Leptopirosis has caused several deaths in London in recent years.
  There are other fears relating to the land sales and asset stripping activities that we are all sure will follow this privatisation. Thames Water owns more than 4,000 properties and 17,000 acres with a value, we are told, of £1 billion. Clearly, they were worth many more billions when planning permissions were obtained. For Londoners, many of those holdings have a significance far beyond their potential commercial value. They have an environmental worth for wildlife and for recreation. They are the green lungs of those of us who live in the congested and squalid inner city. Privatisation and the inevitable maximisation of profit could result in those facilities being lost for ever.
  The Government's green veneer is already transparent. They fail to understand the need for open space to be maintained if we are not wholly to destroy wildlife in London, with all the appalling consequences that that holds for our urban environment. Some things cannot be bought and sold to the highest bidder without a disproportionate cost to society.
  I am concerned about the people in my constituency who already face enormous difficulties paying their water bills. We do not live in the prosperous south-east. The average wage in my constituency is two thirds that in the south-east, and 12 per cent. of my constituents are unemployed. The social security changes have brought greater and greater hardship and an increase in the number of water supply cut-offs.
  The supply of clean water is regarded by the world community as a basic human right and we want to retain that right. I want it particularly for the people in my constituency who cannot compete and cannot pay. It is a mark of the increasing cynicism and inhumanity of this Government that they put profit-making above that right. In doing so, they risk damage to human health and a further deterioration in our natural environment. We can be certain that the arguments put by the Opposition are the arguments best understood by the people of this country and of its capital city. They do not want water to be bought and sold by those who can best compete. They believe in basic human justice and rights. A clean water supply should be the right of every person and every nation.
  Whatever happens in the vote tonight we shall have expressed the hopes and aspirations of the people, and their view that this vital commodity should not be subject to the market place as the Bill envisages.
  7.24 pm
  Mr. Derek Conway: The hon. Member for Lewisham, Deptford (Ms. Ruddock) made a calm and reasoned speech and I congratulate her on that—such is the tenor of most of her speeches—but in fairness I must point out that some of her reasoning was wrong. She was right to speak of her concern for her constituents, a concern we all have, but she must accept that her constituents have long memories. It is not enough to say that all that is to come is appalling and all that has gone before is good. Her constituents will recall, as mine do, the price increases under the Labour Government and
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  that during their tenure of office, capital investment fell by a third. Those are the words, not of a Tory Back Bencher, but of the Select Committee on the Environment. When the hon. Lady comments to her local newspapers, I hope that she will remind them of the historical background that has led the Government to introduce the Bill.
  I welcome the Bill, although it will increase our mailbags and increase anxiety in all quarters. The general public read all sorts of stories in the press, including scare stories, and I hope that the tenor of the debate and the opening remarks of my right hon. Friend the Secretary of State yesterday will allay the fears that many constituents have at a time of change. I doubt whether the concern is justified.
  The general public appreciate that the job of the Opposition is to try to scaremonger about the denationalisation programme and to say how wonderful nationalisation was and how wicked the Tory party's privatisation scheme is. The public have not fallen for that line in many general elections, because they are not fools and they have memories. Our constituents know that all has not been heaven under the nationalised scheme, and that when they knock on the door of a nationalised industry they can never get a name or have any effect. What pressure can they bring to bear? Many of us have found that when constituents come to our surgeries about a private company it is easier to get redress, action or sympathy from it because private companies are more sensitive to the pressure of the media or to being brought into the public forum of this place than is often the case with nationalised industries. One merely has to travel on a British Rail train that is running late to know how effective one can be in controlling a nationalised industry.
  We must be concerned about accountability. The provision for a Director General of Water Services gives more than adequate protection for consumers, as my right hon. Friend explained in detail yesterday. The director general will have to take account of the public view, and he will be able to protect consumers from unjustified price increases, monitor whether there has been a reduction in services and advise Parliament accordingly. I am sure that as a result of that monitoring of performance we shall have a much more effective service than has been possible to date.
  I used to live in an area serviced by one of the 29 private boards, and I do not recall that many people knew whether they were being served by a private water company or by a water authority. I do not think that the general public know for a moment. Opposition Members keep telling us about polls, but I wonder whether any have been conducted in those 29 areas to find out how many of the general public know who serves them and whether they believe that the service is different from the one that they will have. I doubt it. The same will be true when the 10 water authorities are privatised.
  There has been a great deal of discussion about the NRA, which I particularly welcome. It is a progressive step. While there is general howling in the press, which likes to depict the Tory party as being unconcerned about the environment, this is a major contribution to allay the concern that is felt across the House. Why is it always the wicked Tories who want to see a nuclear holocaust that will wipe out our nation's families? Why is it that we are said to want to see the destruction of the ozone layer, resulting in a hideous future for our children and do not want to see Britain's children brought up in a safer and

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  more pleasant land? [HON. MEMBERS: "Hear, hear."] Some Opposition Members say, "Hear, hear". It is families with children who support the Tory party, not the strange hangers-on that keep the Opposition from getting anywhere near the trammels of government. We have as much concern as any other political party, for our children and grandchildren, and people know that.
  The Opposition have engaged in scaremongering about the Bill and about the effectiveness of the National Rivers Authority. Our people do not believe the Opposition, and that has been clearly shown in one election after another. The control of water pollution requires positive measures, and those measures must include far more effective control of effluent discharge. Those matters are of concern to all hon. Members. Sadly, some of the 10 water authorities have been responsible for such discharges. I hope the House will accept that it is not a matter of all that is private is evil, and all that is nationalised is good, because the facts do not prove that. The Bill gives the National Rivers Authority the backing that it needs to get to grips with the problem.
  I have a personal and constituency interest in the effectiveness of the National Rivers Authority in dealing with flood defences. All too regularly the part of the Severn that runs through Shrewsbury in my constituency bursts its banks. It is a matter of grave concern to my constituents that when severe weather hits that part of the country the flooding will go too far. From time to time Shrewsbury's main roads are flooded. I look forward to lobbying the NRA for the action that has not been taken by the state-owned corporation. We may have better success now that things are looking a little brighter.
  I understand that 90 to 95 per cent. of United Kingdom homes are now connected to the sewerage system, but many villages in my constituency are nowhere near that percentage. During the recess I met my local borough council to look over its plans for the villages. The council thinks that it will be 100 years before some of those villages are connected to the main sewerage system. They have not fared very well under the present regime, and I hope that they will fare better under the new one. Meanwhile, the people in those villages wait patiently.
  Another of the great scare stories put about by the Opposition is that prices will double or treble. I understand that about £1·3 billion will be needed to update our sewerage systems and to improve the quality of water. I understand that a doubling or trebling of prices would produce £6 billion. Clearly, some of the stories put about by the Opposition have not been subjected to a great deal of research. At the end of the day, people will see that the Opposition have been crying wolf on this subject, just as they have cried wolf on so many others.
  One hopes that the Bill will receive its Second Reading and then enter a protracted Committee stage. I hope that this two-part Bill will be considered in great detail. I am sure that our constituents will be relieved to know about all the consideration that the House will give the Bill. I hope that hon. Members will deal with the detail of the Bill and not engage in filibustering. This is an important matter. Sometimes people are right to criticise the method by which we consider Bills in Committee, where some hon. Members feel that they have to continue talking in order to clock up the hours. I am sure that will not be the case with this Bill and that the Opposition will put forward
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  genuine points of concern, in the certain knowledge that the Government will more than satisfy genuine public concern.
  According to public opinion research polls, a ratio of 5:1 does not welcome the proposal. However, that is not the response that I have had in Shrewsbury, and I suspect that it will not be the response to my hon. Friends. The measure will make a big difference to the quality of water. The National Rivers Authority is long overdue and will be welcomed by the House. The Minister has some difficult and long nights ahead of him. The Bill will bring about great improvements in the provision of water, and I hope that the House will support the measure.
  7.34 pm
  Mr. Tom Pendry: Legislation on the water industry would be timely if it addressed the many gigantic problems that face that crucial industry after a decade of under-investment. This tardy Bill will do nothing to ensure that the millions of pounds needed to repair our decaying sewers and to improve the quality of water will be provided.
  In my region of the north-west it is estimated that £5 billion is needed over the next 25 years to address the problems that have accumulated in water supply and sewage treatment. Nothing in the Bill convinces me that such investment will be made. The Bill will do nothing to ensure that the quality of water is improved. As the hon. Member for Hornsey and Wood Green (Sir H. Rossi) said, it took the Government an inordinate time to reply to the third report on pollution by the Select Committee on the Environment. That shows the low regard that the Government attach to trying to improve water quality.
  The Select Committee sought assurances that were not given. It asked that under a privatised system water authorities would be treated in the same way by the new rivers authority as farmers and industrialists who were guilty of acts of pollution. As we know, the existing controls are far too weak. It is time that polluters paid the full cost of the damage that they cause to the environment. Privatisation seems to be an opportunity for backtracking on existing pollution controls, even though those are inadequate. In pollution cases courts award nominal costs and that makes prosecution financially unviable. In 1984 the report of the Select Committee on the Environment said:
  "Safe, healthy water supplies are totally dependent on effective water pollution control."
  Four years on and facing privatisation we are no nearer to imposing such controls. The Department of the Environment and the Water Authorities Association figures show that there has been a 50 per cent. increase in river pollution. Why do the Government not address themselves to problems such as that instead of inflicting on people this piece of political dogma? On 25 November The Times leader lined up with the Opposition on this question when it said:
  "Anxieties about the quality of drinking water have grown and river quality has diminished. It is clear that the Government has got it wrong."
  For members of my union, the National Union of Public Employees, the problem is not academic, because as quality gives way to profit and cuts, their jobs will be at stake. I am sponsored by that union and I feel as outraged as its members about the consequences of the Bill.

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  The water industry requires investment but after privatisation it is the consumer who will pick up the tab. I hope that the Minister will assure the House that the burden will be passed to shareholders as well as consumers. The Minister should spell out how he thinks water charges will move, especially in my region in the north-west which faces the heaviest rebuilding burden of all the regions.
  I am glad to see that the miniature for sport, as he is effectively known, is in the Chamber. He is not wearing his Charlton Athletic tie. It is probably a rambling club tie or some sort of "sexy" tie. Millions of people will be offended by the restrictions on major sporting and recreation facilities that will result from the Bill. In Committee on the Bill about water metering I received no assurances from the Minister. He of all people should have been in the vanguard of those assuring sporting and leisure activity communities about the way in which they will be protected, but he did not do that. I do not know what the Prime Minister has got against the Minister with responsibility for sport. The poor lad has tried to defend the indefensible in measures such as identity cards for football supporters and now this Bill. All those measures come from on high, and he has to carry the can. We feel for him.
  I have received representations from many individuals, constituents and organisations who are up in arms about the Bill's implications for sport and recreation. The fine print of the Bill—or the lack of it, if that is possible in such a weighty document—could decimate water recreational and sporting pursuits on water industry and neighbouring land. Clause 7 deals with recreation, but it is no more than a grotesque parody of section 20 of the 1973 Act which places on the water authorities a duty to open up their land for ramblers and other peaceful countryside use.
  Mr. Christopher Hawkins: Hear, hear.
  Mr. Pendry: I am glad that I have the support of the hon. Member for High Peak (Mr. Hawkins) who knows something about this matter.
  The water authorities responded well to that duty giving access to most of their extensive land holdings. Clause 7 lifts many phrases from the 1973 Act, but they are simply hollow gestures. Clause 7(3) places a duty on the water undertakers to make their land available for recreational purposes. That has already been interpreted as a way of exploiting available land in an uncontrollable way. Roderick Paul, chief executive of Severn-Trent, said:
  "I accept that we have not had to develop the skills required for pleasure-type exploitation. Where there is a scope for that, we might franchise it."
  Will the Minister responsible for sport comment on that as soon as possible?
  Mr. Christopher Hawkins: Will the hon. Gentleman give way?
  Mr. Pendry: Time is pressing, but I shall give way to the hon. Gentleman.
  Mr. Hawkins: I want merely to support the hon. Gentleman. The important thing about clause 7 is that, although legal rights of way will be protected, all the access agreements that have been signed voluntarily have no protection. I have one of the largest national parks in
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  Britain in my constituency and there is no protection in the Bill for those rights of access to the Peak district and the Pennine way. I hope that the Minister will ensure that that point is considered seriously in Committee.
  Mr. Pendry: I am glad that I gave way, although I hope I shall not be penalised. I hope that the Minister is aware that the open and free nature of mountains and woodlands provide a strong attraction to many citizens. Walking in the countryside is still one of the most popular outdoor pursuits. Some 8 million regular ramblers use our open countryside each week. Perhaps the Secretary of State should follow that example and take a walk—many of us would suggest a very long walk and would like him to take the Minister of State and the Under-Secretary with him.
  Charging for access to our countryside is anathema. It is odious and alien to the British way of life. It should be clearly and unambiguously ruled out, not sneaked in at the back of a clause which promises greater access, but in reality removes it.
  The code of practice in clause 9 provides no more comfort. Like clause 7, it applies to water authorities but not to enterprise subsidiaries and subsequent landowners. It is weak and ineffective and should be replaced with adequate safeguards. The Bill does not even touch on the thorniest point, the extent to which the Government want the NRA to contract out work. How on earth can the NRA conserve the use of land and water if it gives its regulatory functions such as quality monitoring to others, perhaps even to the water companies which may be polluting the water. The Bill cuts across all recreational users of the countryside. Organised sporting pursuits will be threatened too. The Central Council of Physical Recreation rightly wants to enshrine in the Bill a strong code of practice for both water companies and the NRA. In particular, there needs to be maintenance of current recreational facilities and pricing must take into account the financially disadvantaged groups. That was never touched on by the Minister who opened this debate.
  What is needed and is sadly lacking from the Government is consultation with interested parties before such legislation is drafted. Unless the Government talk and, more importantly, listen to groups ranging from the Council for the Protection of Rural England to the regional sports councils, all the developments in recreation during the past decade will be wiped away. In my constituency it would be a tragedy if the paths and riding trails with facilities for the disabled and the water sports in the Longdendale valley were lost in a tide of political dogma. For those reasons and many others, I shall vote against the Bill tonight.
  7.44 pm
  Mrs. Gillian Shephard: I very much welcome the opportunity to contribute briefly to the debate. I apologise to the House for the fact that I was unable to be present earlier today, although I was here yesterday. I perceive that, regrettably, there is in the House an urban-rural divide in attitudes to the Bill. In my constituency the supply of water and its management have a peculiar significance, composed as it is partly of fen land, which requires carefully regulated drainage, and partly of light land, which requires considerable irrigation if it is to produce crops at all, and containing an important source of domestic water for a large part of East Anglia at Denver sluice. In addition, part of my constituency is deliberately

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  flooded each year. Washes constitute an important flood defence mechanism. Therefore, it is easy to understand why the passage of the Bill is being watched closely by my constituents. Many of its provisions touch their lives very closely.
  Many of my constituents will be as astonished as I was to learn that 96 per cent. of the population of Britain are connected to a sewer—as some of the background material quaintly puts it. I have lived half my life unconnected to a sewer, as have many of my constituents, and can only say that a considerable proportion of the remaining 4 per cent. of the population must live in Norfolk or, more particularly, in south-west Norfolk.
  Rural people do not take water for granted. It is not something which they simply drink and wash in, but something which they understand is necessary for their working lives and for their environment.
  Mention has been made of the political dogma behind the Bill. I assure the House that in south-west Norfolk it is not regarded in any way as a political problem, but as a deeply practical problem that affects everyone. The establishment of the National Rivers Authority and the office of Director General of Water Services and the powers that they will have will provide better protection for the consumer and for the environment than we have enjoyed hitherto, provided that those bodies are adequately funded. As has been pointed out, the fact that water authorities have responsibility for sewage disposal and for pollution control has always seemed to be anomalous. It is certainly a system that has lacked credibility with the public. Clearly, the functions should and will be divided, according to the proposals in the Bill.
  The office of Director General of Water Services is welcome, as he will be directly accountable to Parliament for the regulation of charges, the standard of services to the public and the proper provision of the infrastructure of water services. It will be important for the public to feel —as they do not in my constituency at present—that the buck for charges and the service provided stops with someone. I sincerely hope that the director general and his customer service committees will prove to have effective teeth. It will be interesting to see precisely how, if the Bill gains its Second Reading tonight, he will be equipped with those teeth.
  In East Anglia we are served by a very large water authority. Until the last couple of years its response to the public and its accountability have left a great deal to be desired. We also have a statutory water company, and there are not many fears in my county about changes affecting the water authority. When it was first established, the point that stuck in most people's minds was the size and splendour of the headquarters which, as its first task, it was setting up for itself. Many people in my area will be glad to have a more cost-effective and cost-conscious water authority.
  It is clear that, given their dependence on private land drainage, and on water abstraction for irrigation and flood defences, members of the agricultural community are carefully watching the Bill and its contents. Their attention is focused on the nitrate content of water. As hon. Members and farmers know, if no action is taken, nitrate levels in the United Kingdom will reach unacceptably high levels by the end of the century. East Anglia has one of the highest nitrate levels in the country and, incidentally, the
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  lowest incidence of cancer of the bowel. High nitrate content must be tackled by a partnership between agriculture and water services.
  Provisions for the compulsory establishment of protection zones already exist in the Control of Pollution Act 1974, although I believe that they have never been used. No one would argue that such powers should not be retained as a fallback, although, where possible, restrictions on agriculture should be voluntary. The National Farmers Union has promised its fullest co-operation with the new water authorities. As yet, clause 104, which deals with that point, contains no suggestion about how objections might be considered or, if necessary, a local inquiry mounted. I hope that the discussions that are taking place between the industry, the Ministry of Agriculture, Fisheries and Food and the Department of the Environment will result in such provisions being included in the Bill.
  Farmers are defensive about nitrate levels in water. They accept that more intensive agricultural production is to blame for increased nitrate levels. However, they make the point that they should not be penalised for increasing production when successive Governments have urged them to do so.
  As I have said, the NFU has offered to co-operate fully with the Government and the new water authorities to reduce nitrate levels, by a joint approach. There will need to be treatment by the water industry to deal with the problem, and changes in agricultural practice which have been introduced over the past five years to reduce the problem at source. It will be a major task for the new water companies and agriculture to consider ways forward.
  No doubt some changes will be based on the range of desk studies that were jointly commissioned by the Ministry of Agriculture, Fisheries and Food and the Department of the Environment in 10 varied localities. The Ministry believes that if farmers are obliged to restrict agricultural activities beyond what could be regarded as good agricultural practice they should be compensated. The Ministry has promised that the arrangements will be announced during the passage of the Bill. The matter is regarded with some interest and not a little anxiety.
  If the Bill receives a Second Reading, it will provide an improved service for people in the area that I represent. I do not believe that there is heartfelt support for the way in which water is provided at the moment. People consider that water authorities are not accountable. If they telephone them, they speak to an answerphone. They consider that the authorities have been altogether too lavish in the provision that they have made for themselves, whereas they should always have been concerned about the consumer and the uses of water, a commodity which, as I have tried to explain, deeply affects the economy of my constituency. I hope that the Bill will be successful this evening.
  7.54 pm
  Mr. Elliot Morley: The Bill opens a Pandora's box of issues relating to monopoly of supply, quality, the environment, rights of access, and, not least, consumer rights. It is worth remembering that the history of the delivery of safe, clean water in this country is with local authorities. Originally, the free-market system failed, and local authorities had to rationalise it and ensure quality of delivery. I have not heard any mention of the

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  fact that, in 1974, many local authorities passed on a great deal of valuable land to water authorities. I wonder whether those local authorities will get any share of the proceeds of the sale of land which many of them bought with their own ratepayers' money. Incidentally, many local authorities ran water services with considerable efficiency and at considerably lower cost than non-elected local authority quangos.
  The Bill boils down to the Government's constant claim that everything public is bad and everything private is good. That simplistic view is the root of the privatisation of major utilities such as water supplies. There is no evidence to support the claim. If we consider what has happened to privatisation projects, such as the contracting out of cleaning in education establishments, we find some spectacular failures, which are well charted in a Trades Union Congress publication entitled "Contractors' Failures".
  I noticed a letter in today's edition of The London Evening Standard—one of the Tory party's house papers —entitled "Gas, for the record." It is from Mrs. Donaldson of Huntsworth Mews, NW1—not a Socialist stronghold. She outlines a diary of events from 19 August to 25 November and all that she went through in getting a central heating boiler replaced. Her final paragraph, entitled "Conclusion", states that, since privatisation
  "Absolutely nothing has changed at British Gas!"
  That is a fair comment. I am not saying that British Gas is particularly inefficient—it was a fairly efficient organisation before privatisation—but things have not changed. It is certainly not my experience or that of that consumer that things in the private sector have got any better. However, there have been one or two changes in British Gas. For example, there has been a 47 per cent. increase in gas disconnections. British Gas has been referred to the Monopolies and Mergers Commission for abusing its monopoly powers. There have been one or two little changes since privatisation.
  British Telecom is not a great advertisement for the success or efficiency of a privatised utility. The Consumers Association, in its report, stated that the majority of business users who answered its questionnaire said that the quality of service had gone down since British Telecom was privatised, and that claim was backed up by the majority of domestic consumers. The claim that things are necessarily better in the private sector than they are in the public sector does not stand up to examination.
  How will consumers be affected when things such as water meters are inevitably brought in? There is no doubt that water price rises will be considerable. The Confederation of British Industry put the figure at about 30 per cent.
  Part of the problem with water privatisation is that it has suffered from completely artificial restraints. It is nonsense to say that it can raise more capital in the private sector than it could in the public sector. It has not done so, only because it has been refused permission to borrow privately, and it has suffered from artificial cash limits. In my constituency, investment in a multi-million pound food factory was jeopardised because there was some doubt whether the local water board could provide the infrastructure for effluent treatment. That factory could have been lost because of the artificial restraint imposed upon it by the Government. I suspect that industrial
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  consumers will find a considerable increase in effluent disposal and water charges. There is no great benefit to industrial or domestic consumers.
  One of the most objectionable things about water meters is that they will penalise those people with families on low incomes. Those people will be forced even further into the poverty trap because their water bill will increase considerably.
  There will also be problems for people who live in rural areas. The Bill will replace section 30 of the Water Act 1973 and allow the new privatised water companies to charge differential rates for providing water and sewerage services to the community. Under the new legislation, people who live in isolated villages and on farms will be asked to pay differential water rates when, under the existing leglislation, those costs are spread out evenly among all consumers. How will constituents in rural areas react when they find out that that applies to them?
  The environmental aspect of the issue is important to me. I am glad that my hon. Friend the Member for Alyn and Deeside (Mr. Jones) is present to hear my comments. Among the things that has given me a lifelong interest in natural history was a visit to Lake Vyrnwy with the Merseyside natural history association when I was a teenager. The fact that I had access to that site, which is managed as a nature reserve by the Royal Society for the Protection of Birds—one of 77 sites on water authority property—has had a lifelong effect on me. I am worried that other teenagers from inner cities will be denied that experience. Such access will be lost, because of the high charges that will be imposed by the water companies. Under their obligations in the Bill, they will have to maximise their profits by charging for leisure use of and access to their land.
  I welcome the setting up of the National Rivers Authority. That is a step in the right direction, but we could have had that without going through the whole privatisation process. However, I am concerned about funding arrangements. The NRA will be left with the state and will receive a grant from the Government. It will not be funded through a levy on the water authorities or through a share of their income. Therefore, it will be vulnerable to the cash limits imposed on the public sector by the Government. Will it have the resources to carry out its role in flood defence and drainage work? Will it be able to meet its obligations to conserve nature in water authority areas and to enforce the regulations laid down in the Bill? There is no obligation in the Bill for a report on environmental support and no obligation for the NRA to employ people responsible for conservation.
  There is also some doubt about the consultation arrangements—for example, in respect of the regional rivers authority advisory committee. It does not appear that people involved in conservation organisations will automatically be represented on that body. That problem must be resolved.
  Clause 7 is contradicted by the need to make a profit. It is all very well having a code of conduct, but that is undermined if a company's main obligation is simply to maximise its profits.
  I am also worried about the fact that many of the NRA's obligations can be contracted out. Some of them can even be contracted out to the water plcs. The water plcs may, therefore, win the contracts for the important monitoring work which will enforce the law but, at the

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  same time, undermine the NRA's position. The contracting-out might by won be people who cannot do it properly.
  I have an interest in wildlife and nature reserves on water authority property. I am an elected member of the council of the Royal Society for the Protection of Birds. Many hon. Members will have received briefs from organisations such as the Countryside Commission, the Ramblers Association and the Royal Society for Nature Conservation. Those responsible bodies reflect the opinion of millions of people in this country and express grave doubts about the legislation. They have made it clear that they do not believe that the Bill will be of advantage to the environment. The Royal Society for Nature Conservation's news release has the headline:
  "Water privatisation proposals are no charter for wildlife."
  The organisation makes it clear that the Bill does not go far enough and does not guarantee the protection of the natural environment or access to the areas involved.
  Areas such as mine, which are predominantly rural, have problems with nitrate pollution. We are concerned to know whether the privatised water authorities will make available investment to deal with that problem. We are also concerned that the privatised authorities will not make available the money for the enormous infrastructure replacement that is required in many parts of the country. The privatised water authorities will have to pay corporation tax, and, as I understand it, they will no longer be eligible for European regional development fund grants for infrastructure investment. This is a considerable loss in terms of subsidy.
  Many other issues in the Bill need to be clarified. I cannot forecast what the outcome will be, but it is safe to predict that the Bill will mean yet more looting of public assets, more speculators lining their pockets, the public paying higher prices for a service that was delivered efficiently and cheaply in the public sector and no guarantee of an increase in quality or an improvement in service to the consumer.
  8.6 pm
  Miss Emma Nicholson: Thank you very much for calling me in this most important debate, Madam Deputy Speaker. I was fortunate to serve on the enabling committee where I learned a great deal about water metering and an enormous amount about the water industry in Yorkshire. Perhaps I can take my revenge for a brief moment or two by talking about the water industry in the south-west.
  I apologise for missing a few hours of this important debate today. I was here yesterday. However, I arrived today about three quarters of an hour ago. I hope that hon. Members will forgive me when they learn that I have been celebrating my father's 87th birthday. My father is a former Member of this place. Hon. Members will guess that, for the past few hours, water has been measured more by its capacity not to dilute whisky too much than by its real importance.
  Water is the most important thing of all. Surprisingly enough, we can live without food for quite a few days, although one might not think so in this building where there are so many places to eat. However, we cannot live without water. I have spent quite a lot of time working in developing countries. One appreciates the crucial importance of water in life when one sees women walk for half a day to fill some wretched pot with a scrap of water
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  that we would use to wash up after a meal and when one knows that diarrhoeal diseases in children are cut by 50 per cent. by the simple means of teaching mothers to take water for their children to drink from above, not below, the place where they discharge human effluent. One also understands why projects involving camels, such as the farm project in Kenya, are important. It is because camels store water. That is why I value so highly the water industry's own charitable project for water overseas—Water Aid. Water matters to human beings and one can see that clearly when one works in developing countries.
  I wonder whether we can use all these important lessons about water in this country. Have we watched the Golden Horn being cleaned up? That vast area, which was so difficult to water, is fast becoming much cleaner. Have we taken these lessons on board in the United Kingdom? We are in a crowded island with increasing industrial pollution. A mistake by a foreman turning a tap the wrong way can kill off water quality in a river for several weeks. Farm effluent from raising cattle indoors, which can be equal to that produced from a small town, can, if there is a mistake, cause great damage to water quality in rivers. With intensive farming, have we looked closely enough at ways of providing the sort of water quality that we need? Under this flood of effluent from people, industry and farms, the quality of many of our rivers has declined in recent years, and we have to put it right.
  In my constituency we have a famous and beautiful river—I am sure that all hon. Members know it—the Torridge. It is famous because of Tarka. Last Christmas, hon. Members may have seen a programme on television called "Tarka's Troubled Waters." Mercifully, it was out of date by the time that it was shown. I was heavily criticised for saying that the Torridge had been badly polluted for many years, but was now being put right again and would soon be properly right.
  The improvement is the result of a major farming programme. Many farmers who use intensive methods throughout the United Kingdom do not realise the extent of the pollution that they have been causing. South-West Water in my area—and I am sure that equivalent water authorities in many other areas have been trying just as hard—has been running an effective farm pollution programme merely by going out and talking to farmers about pollution and helping them with finance to put it right. As a result, there were more brown trout in the 12 months from Boxing day last year than for many years. The quality of salmon fishing has also gone up.
  It can easily be said that these are minor interests and that only a few people want to go salmon fishing, because, although angling has the largest following of any sport in the United Kingdom, fly fishing is quite rare. However, in my area, as in others, we derive much of our drinking water from rivers. Therefore, we want the water to start off as clean as possible, so that it does not have to be put through massive cleansing programmes. Because of the success of that farming programme in our moorland hills, I was more than delighted to welcome the announcement by my right hon. Friend the Minister of Agriculture, Fisheries and Food about a week ago of the fact that he is putting £50 million into farm pollution programmes. That is really exciting. We are on the way, and I am pleased about it.
  I was even more pleased when South-West Water committed itself to full treatment of this river and of Bideford sewage in the estuary in which the river ends.

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  Therefore, we shall have a pure and gleaming Torridge before long, as I promised last year on television, and a cleaned up estuary. I welcome the visit that my hon. Friend the Under-Secretary is to make on 13 January. We shall be able to show him the progress that has been made. The river is not unique. There are others like it. We have to set our sights on cleaning them all.
  I shall also be taking my hon. Friend to see a small area called Lifton down. I bring this to his attention because the water supply there has been disgraceful. One might just as well have been living in the Sudan. If one turned on the tap, put in the plug and waited for a day, one would be lucky if the bath were half full. People have shown me water straight out of the tap that is almost a third sand, or something worse. Is it right that water should be like this in the United Kingdom, a developed country in the European Community, in this day and age? Bere Alston is a tiny village where a mother and baby have not been able to get fresh water in the middle of the day for hours at a time.
  Both these areas will have the proper amount of capital invested in them by South-West Water to ensure that these problems are solved. Should it have taken 15 years for Lifton down water to come right, 20 years for Bideford sewage and the Torridge river to be cleaned up, and seven years for Bere Alston to have its problems solved? The raising of standards is one of the reasons why I welcome this Bill so very strongly, as does South-West Water, whose chairman, Keith Court, has worked tirelessly to raise water quality in the south-west. He has carried out a remarkable job. I am delighted that he is in post and will be continuing as chairman of the new plc.
  What is necessary for the development of the infrastructure for water in my area, and I would guess in those of many other hon. Members, is intensive injections of capital. That is difficult to achieve when one is in competition for national funds against other great social needs, such as child care, health facilities, nurses' pay and the NHS. It is difficult to get the right amount of capital when social needs are so pressing. I believe that our new plcs will be able to make much faster progress in developing the infrastructure needed to get water quality up to the standards that we all quite properly demand when more options are open for finance once they are in the private sector.
  On top of that, it will be possible to spread financing over a longer period. The great difficulty of working within Government constraints of 12-month intervals is that it is easy to go for a stop-go policy and not think what that means. It means stop on 31 March and start again on 1 April. One is tied to annual budgets when working within the Government and public sector funding programmes.
  There are many good factors in the Bill. One of the best is that it demands new, higher standards for water quality within the United Kingdom, and I most strongly welcome that. We shall be shifting from expecting an average level of attainment in water quality to a higher standard of attainment in both the quality of water and its pressure —we are back to that half-empty bath—and to higher environmental objectives. We must willingly accept those environmental objectives. People are more and more conscious of the environment, and it is crucial that we respond to the desires and wishes of the general public.
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  Standards will be much tougher for the new public limited companies. They will be required to produce much higher standards on effluent levels, and we all want that. It will be hard for them if everything has to be perfect on day one. I know that my hon. and learned Friend the Minister will already have thought of the need to be practical and reasonable with the new plcs on such matters, or they will have pressures to which they simply cannot respond. That is a most important point that I ask my hon. and learned Friend to note.
  It is also important, although it may seem an unpalatable point to make at the moment, to have within the pricing structure of the plcs the opportunity to obtain a reasonable rate of return. These new regulations will create water quality standards in the United Kingdom that will be at least the equivalent of the highest in western Europe. The Bill will require and create sewage disposal standards that will match European directives. That is why I so greatly welcome it.
  I am conscious of the fears expressed by some hon. Members both yesterday and today about the need not to create a private monopoly in supply. However, I believe that the new inset competition and the pledge in the Bill that the plcs will operate in a "climate of effective competition" will be carried through and will create the necessary competition.
  The split must occur. I welcome the creation of the National Rivers Authority, because the water authorities will no longer be required to be both poacher and gamekeeper. It is beyond human endeavour to be required to fine oneself for breaking the law. People are just not made that way. It certainly has not been the way in which the water authorities have been made. It is right and proper that the National Rivers Authority, with proper people and financing, should be responsible for the quality of the rivers and that the plcs should provide the water and sewage treatment.
  I am conscious of the importance of safeguarding conservation and recreation. I note that in the Bill prior consultation is required before there is any development of sites of special scientific interest. In my constituency, there is a large part of a national park. I wonder whether the Minister would consider extending that need for prior consultation to national parks. That would reassure many people. The water authorities have built up an excellent relationship with the national parks, and I would not wish that relationship to do other than flourish under the new arrangements. I believe that that sort of reassurance is all that is required to maintain such a relationship.
  I warmly welcome the Bill.
  8.21 pm
  Mr. Martyn Jones: When I had a proper job, I worked for a major user of water—although the company would probably be reluctant to admit it—the brewing industry. In fact, the brewery in which I worked is the major water user in Wrexham and, bearing in mind the lack of industry in the area, it is probably the main user in Clwyd. It was often my task when working in the laboratory to check on effluent and it was always my responsibility to monitor incoming water.
  The supplier of the water is a private company set up by statute, which my hon. Friend the Member for Alyn and Deeside (Mr. Jones) referred to as a potential takeover target by, possibly, an overseas interest. It is an example of

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  the much-vaunted Victorian values that we are regaled with by the Government, because they saw fit to control such monopolies very tightly indeed by Act of Parliament.
  With this Bill, we will create private monopolies with no such controls. It is obvious even to the dullest person that the opportunity for competition in what is described in economic theory as a natural monopoly does not exist. With no upper constraint on prices, and the provision that extra costs incurred in maintaining standards of quality will be passed on to consumers, the consumer will pay, not the polluter.
  What will be created is analogous to providing local supermarkets that consumers are obliged to use. Consumers would have free access to the store but a tax would be levied on local residents to meet the costs incurred. How can there be any increase in service or consumer responsiveness when additional business yields additional cost but no additional revenue? That is dogma gone mad.
  How can the National Rivers Authority perform such a wide task? The task is obviously necessary. Indeed, if a chain of supermarkets were set up like the water utility public limited companies, there would be overwhelming public demand for control. That will only apply to the National Rivers Authority when things begin to go wrong, which is likely. Unscrupulous polluters will drive a coach and horses through such a body. Unscrupulous water utility plcs, which are potential and, indeed, actual polluters, could flout the provision of control. In fact, they will continue to be allowed to pollute anyway, because of the previous lack of investment. How long that continues will, of course, depend on how quickly investment can be attracted, which, in turn, will depend on how much profit can be generated by an increase in charges, which will go directly into private owners' hands.
  As well as having experience of the industrial use of water, I have a constituency interest, because large areas of my constituency are owned by water authorities and I have a large new reservoir, neither of which are inside a national park, and are, therefore potentially asset strippable by new owners. A long length of the Dee runs through my constituency and that attracts a large number of recreational users, such as anglers and canoeists. It is also the main aquafer from Bala, Clocaenog and Celyn to abstractions for Liverpool and Chester, as well as Wrexham and Deeside. The potential for conflict and chaos is enormous. There is no protection of access for anglers and ramblers. Plenty of potential exists for charging for those recreational activities, but little opportunity for the legitimate representation of the interests of those who use the river.
  The NRA will have no effective local management structure. In my constituency, the Dee is a special case as it is arguably at present the most controlled and regulated river system in Europe. The control of the flow is crucial to fishing interests. General targets for water utility plcs will not be good enough. The control of the flow must stay in the public sector and must be enforced for the benefit of local recreation as well as profit. Local management boards are needed to give the NRA teeth, or it will be an under-funded and ignored paper tiger.
  A conflict always exists between profit and service. Private non-monopolies resolve that by realising that service is necessary or competitors get the profit. Private
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  monopolies simply screw the customer, who has no choice. That is what will happen with water. It is political dogma taken to the point of fetishism.
  8.25 pm
  Mr. Tim Devlin: I am sure that the hon. Member for Glanford and Scunthorpe (Mr. Morley) did not mean to mislead the House when he claimed that the CBI said that price increases of 30 per cent. were expected. I consulted the parliamentary brief to which he referred and I saw the sentence:
  "However we have noted certain reports suggesting that privatisation may result in increases of up to 30 percent".
  That does not, in fact, emanate from the CBI.
  I have listened with interest to the speeches. My hon. Friend the Member for Warrington, South (Mr. Butler) talked about the quality of water in east London where I live during the week. I understand that water in that area has usually been drunk five times before it reaches the lips of an east Londoner. My hon. Friend the Member for Walthamstow (Mr. Summerson) commented on the river Skerne, which is in the north east. Having heard one northern Member talking about London and a London Member talking about the north, I was tempted to talk about somewhere in the south-west. However, my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) set out the worries of her constituency so well that I need not bother.
  Water supply and sewerage are the most important of our public services. I welcome the Bill because it is designed to provide better quality water than we presently enjoy and at the lowest price to the consumer. It will free the water service of Treasury controls and it will provide attractive share ownership possibilities for many in the industry and for the public.
  There is no doubt that the introduction of comparative competition in the water industry will provide greater incentives to our water providers to keep supplies clean. I do not for one moment accept that privately-owned water companies will be motivated solely by shareholders' profit, which has not proved to be the case with British Telecom or other industries that have moved into the private sector and where there have been significant service improvements.
  The new statutory water undertakings will only carry on the good work already done by the 29 privately-owned companies, which provide one quarter of the nation's water. In the north-east, where I come from, the Hartlepool water company provides a good example of how good, clean water can be provided by a privately-owned company. Last night the hon. Member for Copeland (Dr. Cunningham) said that these private water companies were "statutory water companies" and not private enterprise. I asked whether the Opposition would find it acceptable for a number of privately-owned companies, which had statutorily defined duties, to come into being. That question was never answered. However, I believe that we have heard the answer in today's debate.
  As usual, we have heard all manner of scaremongering and at times like this it well behoves the House to recall the scares put about when we abolished the metropolitan authorities or when we deregulated the buses. Part of my constituency is a large rural area which has a better—not worse—bus service as a result.
  I want to suggest one possible amendment that the Government might care to consider. When water quality

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  suffers due to some catastrophe, such as that recently suffered in the south-west to which my hon. Friend the Member for Cornwall, North (Mr. Neale) referred, or when the water supply is cut off, as it can be from time to time even in the best regulated system, rebates or even compensation payments should be made to customers.
  Customers are entitled to expect an extremely high level of performance from the new water service pies created by the Bill. Those plcs will be subject to the stricter pollution controls that will be imposed upon them by the National Rivers Authority. They will also have to respond to statutorily defined quality standards that will be higher than present. That will include directives on water availability, pressure, constancy of supply and response times to repair and billing inquiries. The customer must be able to notice those improvements and obviously there must be a reserve power in the hands of the Secretary of State to intervene when those plcs fail to reach the targets.
  I believe that the most effective pressure on water service pies would be a statutory method of automatic compensation or rebates when a company fails to meet standards or cuts off the water supply. That would be a simple, ready-at-hand scheme, so that a customer is ensured of receiving satisfaction without having to mess about and set in motion long-winded procedures.
  It should be noted that, where a water authority owns land in a national park—for instance, 37 per cent. of Northumbria Water's land is in the national parks—there is no question of that land being sold to property developers for despoliation. Land in national parks is guaranteed to be accessible to all by the legislation that established them. Rights of way continue irrespective of ownership and it is only sensible that the Bill includes safeguarding powers for water catchment areas. Therefore, let me speak to those outside these walls, for example, the Ramblers Association, whose concern I readily share. That measure of concern, however, is being unnecessarily aggravated and, if necessary, that concern can be cured by drafting amendments in Committee.
  We heard some amazing things earlier about sewage treatment and land being sold off. Here, for the first time in decades, is an opportunity for water service plcs to raise money from other than the Treasury to invest heavily in the sewers. That opportunity, however, is condemned by the Opposition. We are also being given an opportunity to ask water authorities what use they have made of taxpayers' money. If it is true that water authorities have prime sites and other surplus land and buildings that are not being put to the best use, why are they still in water authority ownership? Why have those assets not been sold off long ago so that the taxpayer can benefit from the capital received? The purpose of a water authority is to provide water, treat sewage and to check water pollution, not to own land for its own sake. Water service plcs should have no compunction, therefore, in disposing of land that is not connected directly to their primary purpose. Any land disposal will, of course, still be subject to the planning controls of the specific area.
  The House may be aware that my constituency includes a long stretch of the River Tees. We produce the best bottled drinking water that can be obtained in the United Kingdom—Northumbrian water. A private Bill will be introduced shortly to erect a Tees barrage. That will raise
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  the water level by 2·65 m throughout the length of my constituency. Undoubtedly that will have an effect, not only on the farming community but on those businesses that currently emit effluents into the river. My hon. and learned Friend the Minister should bear in mind that his Department deals with the environment as well as inner cities. The barrage is an inner-city initiative that will undoubtedly have serious effects on the surrounding countryside and on the environment. Can my hon. and learned Friend tell me whether a full environmental assessment will be undertaken on the River Tees before that barrage is erected? Otherwise the NRA will find itself saddled with a river that is half clean and half filthy. It will then have to pick up the bill, and the costs to the local consumer.
  The Opposition have erected a barrage against the Bill from which very little common sense has leaked. By contrast, the Government will erect a barrage on the River Tees that will open up a wave of new opportunities on Teesside in the next century.
  8.35 pm
  Mr. Eric Martlew: I must place on record my total opposition to the Bill. The idea of privatising the nation's water is something that must be spoken against. The Labour party must commit itself—let us use an old-fashioned word—to taking the water industry back into public ownership. There is no doubt about that.
  Opposition to the Bill is not apparent only on the Labour Benches, because there is opposition to it throughout the country. Given that there are so few Members on the Conservative Benches tonight, I suspect that there is also a lot of secret opposition within the Conservative party.
  A recent opinion poll showed that more than 80 per cent. of the population were against the privatisation of water. Why is there such massive opposition? The attempt to sell off the water industry has made consumers think about the service that they receive, and most of them are well satisfied. Today, 99 per cent. of British households are connected to the public water supply—they have water on tap—and 95 per cent. of households are connected to the public sewerage system. Therefore, when they turn on the tap they get clean water, and when they flush the toilet the sewage goes away.
  The British people know that the system works and, unlike their experience with British Telecom, they encounter few problems with it. It can take days to get a telephone line replaced, months to get a telephone installed, and one is extremely lucky to find a public telephone that works. In comparison with the privatised industries, people are pleased with the service that they receive from the water authorities and companies.
  The public are also against privatisation because of the pressing environmental problems. The pollution of our rivers, lakes and course lines have been mentioned by hon. Members on both sides of the House. We realise that massive sums of money are needed to put things right. The public do not believe that profit-hungry private water companies will be prepared to put in the money that is needed to solve the environmental problems. They are also well aware that the Conservative Government will not make those private water companies invest their money to solve those problems.

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  People are also against privatisation because they know from history that the privatisation of water does not work. They are aware that in the 19th century the private sector failed. If any hon. Member cares to look up 19th century copies of Hansard he will see that Act after Act was passed to force improvements in water standards. At that time people were dying from cholera and typhoid because the private sector would not put resources into the water industry.
  By 1913, 80 per cent. of all water was in local authority ownership, and that has remained the position. Privatisation did not work, and Governments of both Liberal and Conservative persuasions put water into public ownership. The position in my constituency was little different from the national one. It suffered epidemics of cholera and typhoid that killed many citizens. The local authority decided to spend ratepayers' money to provide an adequate sewerage system and a good water supply system, and that policy served the city well. It got rid of the city's health problems and allowed it to expand.
  In 1974, the citizens of Carlisle were not too enthusiastic about the proposal of the then Secretary of State for the Environment, the right hon. Member for Worcester (Mr. Walker), who is now the Secretary of State for Wales, to introduce the present water authorities. They had a cheap water system that worked, and they were not far away from the supply. We in Carlisle realised that if we went in with North West Water, our £10 million-worth of assets would go into the general pool and our rates would increase as we would be called upon to pay in part for the problems of Merseyside and Manchester. We accepted that, but we are not prepared to accept robbery of the £10 million. It was taken from the citizens of Carlisle, made available to the water authority and not paid for through taxation. It is now proposed to sell off the water authority, and the people of Carlisle consider that to be an act of robbery. They regard those who occupy the Conservative Benches as pirates. That is why there is opposition to the Bill.
  Last week I decided to visit the local sewage works in my constituency. Those who work there were quite surprised to be visited by a politician. It is not often that politicians visit and shake hands with workers at sewage plants. We visit hospitals and old folks homes, but not sewage works. Before the Third Reading, I recommend all hon. Members to visit what is the most important building in their constituencies. Without sewage works, the civilisation that we know cannot exist.
  During my visit. I asked questions about profitability and how it could be improved. I was told that it would be possible to cut labour costs. I was told that the men were not paid very well, but that wages could be cut slightly, which would increase profitability. I was told also that the work force could be reduced, although that would lead to an increase in pollution problems. It was explained that in the event of an overflow, and with insufficient staff, the rivers would become polluted. It would be possible to reduce the number of chemicals that are put on the sludge. The chemicals reduce the smell, and anyone who lives downwind from the sludge will consider that to be important. There is no profit to be gained from using chemicals, and so the number used could be reduced.
  I left the sewage works with the knowledge that we have an efficient system in my constituency. I know that £2 million was spent during the 1980s to update it.
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  Privatisation would lead only to a worsening of the system for those whom I represent. There is no doubt that sewage works must remain in the public sector.
  To whom does water belong? I was taught at school that it was a gift from God. We are all familiar with these lines:

  "We plough the fields, and scatter

  The good seed on the land,

  But it is fed and watered

  By God's almighty hand".

  Little did I realise that economists would seek to calculate the value of a raindrop. The Secretary of State is taking up one of Bing Crosby's old songs, "Pennies from Heaven". A value is being placed on a raindrop. It is being costed, and then raindrops will be given away to the private sector. In the City, stockbrokers and others are singing the Gene Kelly number, "Singing in the Rain". They are all to make a fortune out of it.
  The Government are altering the meaning of our songs and our sayings. No longer will we be able to say, "He spends money like water" when describing a spendthrift. That description will have exactly the opposite meaning. It will be the description of a Scrooge-like person with mean thoughts; in other words, someone like the Secretary of State for the Environment. There is one saying that brings together what the Government are about with water privatisation and with every piece of legislation that they have introduced. The Government
  "knows the price of everything and the value of nothing."
  8.44 pm
  Mr. Ian Gow: There is no need for the House to wonder what you were doing at this time last evening, Madam Deputy Speaker. You were then, as you are now, presiding over our affairs. I begin by commending to the House some of the words that you used from the Chair last evening. You said:
  "The hon. Member for Antrim, South (Mr. Forsythe) is perfectly in order to speak on the Bill. He is an hon. Member of this House."—[Official Report,7 December 1988; Vol. 143, c. 389.]
  At the beginning of the afternoon it seemed to be very much a debate for Welsh Members. I wondered whether I would be disqualified by reason of the fact that I am a Scotsman who represents an English constituency. The debate was begun this afternoon by my hon. Friend the Minister of State, Welsh Office, whose remarks were taken up by the shadow Secretary of State for Wales, the hon. Member for Alyn and Deeside (Mr. Jones). It is a day on which Members of the United Kingdom Parliament are entitled to speak, and that includes those who come from Scotland, to which the Bill relates only in small part, and including, as you reminded us, Madam Deputy Speaker, those who come from Northern Ireland, to which the Bill applies not at all.
  My hon. and learned Friend the Minister for Water and Planning will have reflected as he piloted the Local Government Finance Bill through the House, and as he starts piloting the Water Bill through the House, that the enormous benefits that he believes each measure will confer upon Her Majesty's subjects will be withheld deliberately from those who live in the part of the kingdom that is known as Northern Ireland. It is a matter of legitimate comment when debating the Bill's Second Reading that the benefits that it will bring are to be withheld from Northern Ireland.

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  I remember, Madam Deputy Speaker, as you will, the words of the Conservative party's general election manifesto. We have had a most agreeable debate and Opposition Members have made assertions, quite legitimately, that the Bill is unpopular. That is a proper claim to be made by Opposition Members. No one can say, however, that the introduction of the Bill was a surprise. Whatever legitimacy is conferred upon legislation that is introduced in a party manifesto—some may think it scant—it has certainly been conferred upon the Bill.
  I shall refer to the words that were approved by my right hon. Friend the Secretary of State when the Cabinet came to give its final approval to the manifesto on which the Conservative party fought and won the last general election. The manifesto stated:
  "The water supply and sewage functions of the water authorities will be transferred to the private sector."
  It was a clear sentence and a short one. It was shorter than many other sentences that appeared in the manifesto and was incapable of being misunderstood.
  The Bill is even longer than the Bill that became the Local Government Finance Act 1988. Although the Bill takes up hundreds of pages and must be in two parts because it is so large, it is implementing precisely the undertaking given in the manifesto.
  Nor has the proposal for the privatisation of the nine water authorities in England and the one in Wales been a hasty operation. It is nearly four years since the then Minister at the Department of the Environment informed the House that the Government were considering the privatisation of the water industry. There is even a precedent for what we are doing, to which reference has been made today.
  Nearly 25 per cent. of our fellow countrymen derive their fresh water from water companies which are privately owned. Everyone knows that those water authorities are subject to a strict legislative framework. They are different from all other companies. However, those 28 or 29 companies have one thing in common with private sector companies that are not like water companies. They are genuinely, fully and completely owned by the private sector. They are subject to control and to special rules, but in terms of ownership the 29 water companies are privately owned.
  Those who decided to invest in the private water companies, those who decided to subscribe to their loan stock or to their debentures, did so because they believed that they would get a proper rate of return on their investment. Opposition Members must realise that because the ownership of a water authority, or, as they will become, the ownership of a water company, is transferred from the public to the private sector there is no reason to believe that that change of ownership will mean that there is a commitment to lower standards or to standards necessarily better or worse than those that apply to the water authorities today.
  I believe that there are significant advantages in transferring the water authorities out of public and into private ownership. By making the transfer there will be genuine public ownership of a kind that does not exist today. I mean no discourtesy to my hon. and learned Friend the Minister or to my right hon. Friend the Secretary of State for the Environment, but I believe that their ownership, for that in effect is what it is, of the nine
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  water authorities and the ownership of my right hon. Friend the Secretary of State for Wales of the one water authority in Wales is harmful to the proper provision of fresh water and the proper collection of foul water.
  I thought that I might receive just a murmur of approval when I said that I had no confidence in the superior wisdom of my right hon. Friends and of my hon. and learned Friend. The House is aware that all the members of the nine water authorities are appointed either by my right hon. Friend the Secretary of State for the Environment or by my right hon. Friend the Minister of Agriculture, Fisheries and Food. Henceforth of course, after privatisation, that power of patronage, which has been one of the evil concomitants of nationalisation throughout the ages, will be removed, and not before time. My hon. and learned Friend and my hon. Friend the Economic Secretary to the Treasury, who is on the Treasury Bench now, are aware of that. They know that not one of the water authorities can embark on a programme of investment without the approval of the Treasury. They do not even need the consent of my hon. and learned Friend or of the Secretary of State.
  Mr. Eric S. Heffer: Will the hon. Gentleman give way?
  Mr. Gow: I always give way to the hon. Gentleman.
  Mr. Heffer: I am glad to hear that. The hon. Gentleman must be the only one who does.
  If the hon. Gentleman is so much against the water authorities being under the control of the state—and I accept that there is an argument for that, although I do not agree with him on this matter—would it not have been better to hand back many of the authorities to the local authorities? For many years I served on a water authority. I was an elected representative of the water authority of the Liverpool city council. We were responsible for the water that came to Liverpool. We were responsible for water coming from north Wales, and it used to get blown up from time to time. If we want to end patronage, why not put control back into the hands of local authorities? Not that that is necessarily the right thing to do at the moment, but it is better than handing it to private individuals, who will only want to gain for themselves and not have the interests of the people as a whole at heart.
  Mr. Gow: I do not have the hon. Gentleman's confidence in the ability of district councils to operate great enterprises.
  I have received one of those messages which in this place it is wise to obey, namely, that other hon. Members want to speak. Therefore, having received that message, I shall obey it.
  8.56 pm
  Mr. Alan W. Williams: I have listened intently to the speeches this evening, and I have read explanations in the newspapers over the past few weeks of the Government's proposals, but I have yet to find an argument that will persuade me that there is any validity in privatisation.
  Under a private monopoly there will be no choice for the consumer. By definition, there will be no competition in the supply of water. Prices must rise, because privatised companies will want to make a profit. By how much prices

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  will rise remains a matter for speculation. However, when we consider the profits of British Telecom, 20 per cent. of whose turnover is profit, I can only see higher water prices.
  The Government argue that privatisation somehow brings about efficiency. I cannot see any possible efficiency savings in Welsh Water. During the past 15 years it has experienced three reorganisations, and on each occasion it has cut staff. There is no fat left to cut in Welsh Water.
  I welcome the National Rivers Authority. The unsatisfactory situation whereby water authorities are both poacher and gamekeeper has long existed. However, dividing those responsibilities would have been possible within the public sector.
  I am worried that the NRA will not have the resources that it needs for the massive job that it has to do. Water pollution in Britain is a growing problem. In 1980–81 there were 11,467 incidents. Last year, 1987–88, there were 23,253—a doubling in the past seven years. That is the Government's record on water pollution. Last September we heard the Prime Minister championing environmental issues for the first time in 10 years, yet that is the Government's record—a doubling in the incidence of water pollution.
  I hope that the NRA will be able to do something about that. Only 288 of those 23,000 cases resulted in prosecutions last year—barely 1 per cent. Industrial companies were responsible for 61 per cent. of those offences. In Wales, in 1986, two thirds of industrial discharges broke the law for more than one fifth of the time. This is an area of our life in which there is little law enforcement. Therefore, the NRA has a massive job on hand.
  I hope that the Government will give the NRA the resources that it needs to tackle that job. I suspect that they will not. In the first place, the water companies will have an amnesty until 1992. Farmers have a non-statutory code of practice. Most important of all, neither individuals nor local authorities who are affected will be able to take water companies to court for such offences. Prosecutions will be left to the Secretary of State and the Director of Public Prosecutions. I fear that at the end of the day the NRA, which is a good concept in itself, will prove no tougher than the Police Complaints Authority.
  We desperately need major environmental improvements. According to the EC drinking water directives on nitrates, aluminium, lead and so on, Britain's water has above the maximum permitted concentrations. The cost of cleaning up our water supply is estimated at £5 billion or £6 billion.
  The problems of pollcyclic hydrocarbons, trichloroethylene and pesticides in the water have been referred to. Under the Government's legislation, toxic wastes can be dumped in Britain with little regulation, and it is only a matter of time before they too reach ground water, water courses and so on. The bills will amount to £10 billion or more.
  We have also heard a good deal about sewerage and sewage treatment. Most of our sewers were built in the last century and are in a state of collapse and need major investment. Rivers are regularly polluted by 20 per cent. of our sewage treatment works. According to an article in The Observer last Sunday, if we tighten up, as we should, the regulations governing sewage treatment, 80 per cent. not 20 per cent. of our works will be breaking the law.
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  Again, massive investment is needed to improve those figures and renew our sewers. We are talking, not of £10 billion, but of £20 billion of capital investment.
  A few weeks ago, in a television interview, the Minister talked about our water industry. He argued that £10 billion or £20 billion worth of investment could riot come from the public purse because the money was not there. What he was admitting was that, despite the Government's protestations on the environment, the water industry is not a high enough priority in their programme. That is what he was saying. The money is there. We have a Budget surplus to the tune of £10 billion this year and the funds could and should come from the public purse. I see no argument for privatisation. The money should have been made available and the Government's terrible neglect over the past 10 years has allowed the situation to deteriorate.
  No argument has been made by the Government to support the Bill. At the end of the day I abide by public opinion, and it is clear that at least 80 per cent. of public opinion is against the Bill. Yesterday we had a full day's debate in the Welsh Grand Committee, where the Queen's Speech was voted down by 26 votes to 10. I promise the House that if only Welsh Members had voted according to their consciences, the result would have been 51 votes to 7. If the matter is put to the Welsh people, I am certain that 90 per cent. of them will not want to see Welsh Water privatised.
  9.5 pm
  Mr. Keith Mans: I welcome public attention being concentrated on protecting the environment and, more specifically, the water industry. They have for many years been neglected topics, and the Government's measures have at least served to air them.
  One of the Bill's chief advantages is that it will allow water companies in the private sector to borrow on the commercial market when and where they need to do so. That compares favourably with the situation that has existed for many years, during which time the majority of water authorities have been in the public sector.
  I wish to repeat some of the points that were made in the Select Committee on the Environment report on rivers and estuaries. It is clear that one of the reasons why water standards have fallen over the last few years is the lack of investment for about the past two decades A good example is that when the Labour party came to power in 1964, the previous Conservative Government having invested £400 million annually on sewage disposal, the total almost immediately dropped below that figure. It rose again through the rest of the 1960s and early 1970s, but surprisingly it fell again from a peak in 1973–74 of £900 million, at 1985–86 prices, to £400 million by the end of that decade. Therefore, I regard with scepticism the remarks of Opposition Members about how successful investment in the public sector had been when Labour was in power. The evidence produced by the all-party Select Committee suggests otherwise. Since 1981 investment has continued to rise, and I am convinced that it will continue to do so in the private sector.
  As to the National Rivers Authority, one of the chief advantages of moving water companies into the private sector is that a regulatory device will remain in the public sector. I have no doubt that the NRA will be much better at regulating and controlling water companies than has been the case under the present arrangement, whereby

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  responsibility for ensuring water purity has been split between water authorities and the pollution inspectorate. It was a pity that in 1974 the old alkali inspectorate, which had a lot of authority in the water industry and did a good job, was altered by the new Labour Government when they assumed office. Many of the problems surrounding degenerating water standards had their beginnings in that Labour initiative, whereby the pollution inspectorate assumed greater responsibility.
  I am convinced that the increase in investment that has taken place over the past two or three years will continue when the companies are put into the private sector. I am equally convinced that to have the National Rivers Authority and the Director General of Water Services looking after the interests of the consumer and making certain that pollution is reduced in our rivers in the public sector will be a far better way to look after water in this country. I shall support the Bill tonight.
  9.11 pm
  Mrs. Ann Taylor: I do not want to take up all the points made by the hon. Member for Wyre (Mr. Mans), but we have checked the figures for capital expenditure of water authorities under Labour and Conservative Governments. It is a simple fact, on the Library's own figures, that capital expenditure between 1974 and 1975 averaged £1,254 million a year and in the period from 1979 to 1987–88, the last year for which figures are available, it averaged £922 million a year. Those are the figures that the Library provided today.
  Mr. Mans: The figures that I quoted were for sewage disposal works and sewage disposal and I made that clear.
  Mrs. Taylor: If the hon. Gentleman chooses to be selective in that way, he should compare his figures with the overall figures for investment during that period.
  We have had a two-day debate on the Bill, but even that has not been sufficient to explore all the anxieties of hon. Members and those of many groups outside the House examining the Bill. It has been a strange feature of the debate that the worries that were expressed by a wide range of bodies outside the House have been ignored by Conservative Members, despite the fact that many of the members of those groups live in rural areas that are represented by Conservative Members. Who would have thought that only Opposition Members would be prepared to voice the concerns of the Council for the Protection of Rural England, the Royal Society for the Protection of Birds, fish farmers, the Royal Society of Nature Conservation and even, in some circumstances, the National Farmers Union. No doubt the Whips have been hard at work to silence wets who are worried about water, but I warn the Government that they cannot ignore those fears and anxieties indefinitely. Seventy-five per cent. of public opinion is against the Bill and Tory Members will be under increasing pressure on the Bill. I hope that those Conservative Members who have expressed reservations in private will soon speak out publicly against the Bill.
  We should be clear at the outset about the Bill's intentions. The Secretary of State for the Environment, who is absent from the House at the moment, gave us his reasons for the Bill yesterday. He pointed out that the Bill creates the National Rivers Authority and a statutory
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  framework for setting river quality objectives and for updating sewerage law. All of that could have been done —and should have been done—without any proposal for privatisation. Clearly these provisions are in the Bill to try to make the sale of the water industry more acceptable to those groups who forced the Government to back down in 1986. Although they may favour the National Rivers Authority, they are not converted to the overall objectives of the Bill. If the Government are serious about independent controls—and we shall find that out when we try to strengthen the NRA in Committee—they could have introduced the provisions in a separate Bill before now and such a Bill would have gone through the House relatively quickly, with assistance from the Opposition.
  The Secretary of State for the Environment claimed again yesterday that in establishing the NRA he was responding to the Select Committee's recommendation that gamekeepers should not be poachers as well. If the Secretary of State is serious about that, why is he allowing and encouraging the National Rivers Authority's regulatory functions to be contracted out—often back to the water plcs, the very bodies that the NRA will be regulating? If the gamekeeper should not be a poacher as well, why should the gamekeeper be forced to contract out his policing role to the poachers? That is what the Minister of State admitted will happen in an interview that was published this morning in the Surveyor.
  One of our main concerns about the Bill is its impact on the consumer. Too often, the consumer gets a raw deal —literally so in some areas, including the Secretary of State's constituency where excreta has been found in the water supply. The Secretary of State's constituency faces other problems, too. The amount of aluminium in the water supply in his constituency exceeds the EEC directive level. Hon. Members will be aware, as I am sure the Secretary of State is aware, of the link between aluminium and senile dementia, which is of concern to everybody. That may explain the Secretary of State's absence. The Minister may deal with that point later.
  The Minister for Water and Planning (Mr. Michael Howard): The hon. Lady knows perfectly well—it was explained in advance to the Opposition Front Bench—that my right hon. Friend had to attend an official function this evening. The hon. Member for Copeland (Dr. Cunningham) knows that full well. It was known long before the date for this debate was fixed.
  Mrs. Taylor: My hon. Friend the Member for Copeland (Dr. Cunningham) has confirmed to me that he knew that, but I think that it demonstrates the Secretary of State's priorities.
  Mr. Howard: It was agreed by the Opposition Front Bench that, in all the circumstances, my right hon. Friend's absence would be acceptable. The hon. Member for Copeland nods his assent. It is utterly disgraceful that the hon. Lady, after such an assurance, should make that point in that way.
  Mrs. Taylor: I remind the House that the Secretary of State for Wales was also absent during the opening speeches of today's debate.
  We saw another example of the Secretary of State's priorities when he introduced the Bill yesterday. The consumer was at the bottom of the Secretary of State's list of reasons for the Bill. The consumer hardly rated a

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  mention in his speech. I am not surprised that the consumer came at the bottom of the Secretary of State's list because, in a way, he was being honest. Privatisation is not designed to protect the interests of the consumer, so it is not surprising that little regard is paid in the Bill to their interests.
  The Bill provides for regional advisory committees to be appointed by the National Rivers Authority. I hope that the Minister will assure us that the committees will include consumers and representatives from established environmental and conservation groups.
  The Minister of State, Welsh Office, boasted at the beginning of today's debate that the Bill provides for customer services committees. He is proud of that. He is satisfied with that protection. We are not. That provision does not satisfy us, nor does it satisfy those groups outside the House who are concerned about the interests of the consumer. The National Consumer Council says that the national river committees and the customer services committees will be neither independent nor sufficiently financed. The provision for customer services committees is laughable.
  The Bill states that customer service committees "may" —not will—be established. If they are established, there is no guarantee that customers will be represented on them; certainly not ordinary domestic customers. The Bill states that such committees should be made up of those with experience of the industry. They could be packed with business men with their own vested interests. Even if those committees are established, and even if ordinary domestic consumers get a few places on them, there is no provision that they must be consulted. As the Bill stands, the new water companies will be under no obligation to consult the consumers of their industry. We shall seek to amend that.
  The other area of concern for consumers is prices. There has already been a sign of what the consumer will face because statutory water companies have been advised to increase their prices to the maximum. The Secretary of State claimed yesterday that those price increases were for investment. That is simply not true. They are intended to fatten the reserves and, more importantly, to ensure that the base line for the calculation of prices, post-privatisation, will be as high as possible.
  There are other signs of more to come, and the message is always the same—maximise the cost to the consumer to ensure maximum return to the investor. We should not be surprised at that—after all, that is what private investors expect of their companies. The British Business School, which is not exactly a Labour party organisation, has identified three groups of people who have benefited from privatisation. The first is the short-term speculator, who has bought into the industries for a quick profit derived from the undervaluing of shares. The taxpayer is cheated to ensure benefit for short-term speculators.
  The second group is the City, which has benefited from the costs of flotation. Figures from Price Waterhouse show that the City has gained more than £660 million in fees alone, with more to come. The third group—the only other group to benefit from privatisation—comprises the top managers in the industries concerned, who have gained average pay increases of 78 per cent. in the first year of privatisation. Those who know about the industry have been bought off with promises of increased salaries, and all of those costs have to be met by the consumer.
  The consumer might not mind paying more, within reason, for quality or for environmental improvements
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  —but there are no guarantees in the Bill that such improvements will take place. The Bill gives the Secretary of State many powers. For example, clause 98 states that the Secretary of State may establish water quality standards. Clause 104 states that he may establish water protection zones. Only yesterday he said that that power would belong to the National Rivers Authority. Will the Minister tell us whether that will be one of the first amendments to the Bill? Was the Secretary of State giving that power to the NRA? Under the Bill, it belongs to the Secretary of State. Clause 108 states that the Secretary of State may establish codes of agricultural practice.
  What do those and other provisions really mean? They mean that the Secretary of State has the power to introduce stringent controls—but they also mean that he has the power not to introduce stringent controls. If this Secretary of State has a choice between introducing stringent environmental controls and protecting the profit of private water companies, I know which he will choose.
  That is only one of the choices facing the Minister. The other choice relates to the arrangements for the sale of the industry and the price that will be fixed. The Secretary of State has not yet told us what he intends to do about the debts of the water industry. Does he intend to write off all or a proportion of those debts at massive cost to the taxpayer? It is important that we know that if we are to know who will buy the industry, and why.
  If we compare the —5·2 billion debts of the industry with the profits, it is difficult to see where there is any incentive to invest. Will people queue up to invest in the sewers of Greater Manchester? Of course not, even though some of the most expensive functions will he transferred to the NRA to be funded by the taxpayer.
  Mr. Summerson: Has the hon. Lady not heard the old saying, "where there's muck there's brass"?
  Mrs. Taylor: I think that we all know whether the brass is due to go under this provision.
  We have a water industry which is run on commercial lines with the water authorities run by Tory appointees, all of whom are committed to the commercial approach. The only commercial improvement from privatisation mentioned by the Minister is access to loans on the private market, although the Chancellor of the Exchequer has said that the water authorities could not borrow more cheaply in the market than they do from the Government. That was before the increase in interest rates which have reached their current ridiculous height.
  Let us get to the real reason why investors will be buying into this industry. We all know why people will be looking at the water industry. It is because the total assets of the water authorities are so great that even they cannot quantify them. The private sector would simply like to get its hands on them. There are half a million acres of land, some of it in prime sites in London and other major cities and much of it in areas of outstanding natural beauty. There are examples in every region. The Secretary of State and the Minister of State say that we should not worry about what will happen to the land because we should rely on planning controls. Anyone who knows anything about what has happened to planning procedures knows that time after time under this Government the developer wins.
  More serious than that perhaps is the fact that water companies will have a large degree of control over the infrastructure necessary for future development. By laying

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  new water mains, increasing the size of water mains and providing new sewers, they can increase the value of land dramatically and then sell it. Or the conglomerates that might take over the water industry can allow their subsidiaries to reap the benefit of development.
  Before Conservative Members with construction interests become too excited about the backdoor means to development opportunities, they should be aware that the French are already one step ahead. They are buying into statutory water companies, not because they are happy with the regulated return allowed—they are not investing so much money for the 1 per cent. yield that they have so far received—but because they know of the opportunities for the future.
  The Secretary of State told us yesterday that the French would be able to teach the British water authorities a lesson—how helpful they would be. He almost welcomed their presence because they would be able to teach the water authorities how to diversify and provide cable television. Perhaps the chairman of Thames Water would like to diversify into cable television. However, consumers would prefer to have water companies that concentrate on providing a good water service.
  The French are buying into our water companies not just in order to have a base for profit out of water management—although they will happily accept that—but mainly to have a base for future asset stripping and to use the infrastructure power of the new companies to give work to their own construction subsidiaries. They are already operating in this way in many other parts of Europe. As the Secretary of State said, French companies have diversified. However, he did not tell us about all the ways in which they have done so. Many French water companies are already providing theme parks. Conservative Members may think that that is what is needed in the Lake District or in the Peak park or the Brecon Beacons, but we do not think so and I do not think that the general public want that either.
  There are other and perhaps more ominous overtones to the French history of diversification. Not only have French water companies diversified into construction companies and theme parks, but some have diversified into funeral undertakings. I shall not make the obvious comment about the link between that and the possible future quality of water, but it is rather alarming to hear that the funeral company subsidiary of Lyonnaise des Eaux has just decided to pay its employees on the payment-by-result method.
  We do not want French conglomerates running our water industry, nor do we want to be run by British conglomerates. Britain needs a publicly-owned water industry that is properly resourced and properly accountable. The Prime Minister is keen to emulate the Victorians, and I would have thought that the Secretary of State, if he were here, would do likewise. The Victorians concluded that the aims of private enterprise and the need for a clean and plentiful water supply were incompatible. In 1894 Joseph Chamberlain said:
  "It is difficult and indeed almost impossible to reconcile the rights and interests of the public to the claims of an individual company seeking as its natural and legitimate object the largest private gain."
  Yesterday the Government made it clear that the real object of the Bill was not to protect the environment but
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  to create viable and profitable companies. We seem to have learnt nothing in the 94 years since Joseph Chamberlain made his comment because we are contemplating whether we should again subject the country's water needs to market and competition forces. All those years ago even the Conservatives realised that the water industry was not safe in private hands. Who are the extremists now? I ask the House to vote against Second Reading.
  9.33 pm
  The Minister for Water and Planning (Mr. Michael Howard): The debate has lasted for almost 10 hours and detailed points have been raised to which I shall shortly reply. The most conspicuous feature of the long debate is the utter intellectual bankruptcy of the Opposition. Hour after hour Conservative Members have waited for some coherent explanation of the Opposition's attitude. We have waited patiently, we have waited attentively and we have waited in vain.
  The Labour party is the "Say no" party. It says no to change, to new ideas and to any constructive proposals designed to improve the condition of our people. The Labour party is the most sterile, destructive and negative Opposition that we have seen for generations. At no time have those characteristics been more apparent than in the past 10 hours of debate.
  Yesterday, we had from the hon. Member for Copeland (Dr. Cunningham) the routine rant that we have come to expect from him. He railed about the evils of the private sector. But until my right hon. Friend the Secretary of State intervened, he said nothing about the private sector water companies which presently supply one quarter of our drinking water, as we were reminded by my hon. Friend the Member for Eastbourne (Mr. Gow) in his elegant speech.
  It is, of course, hardly surprising that the hon. Member for Copeland should be rather wary about the private water companies. If the private sector is the menace to standards in the water industry that the hon. Gentleman suggested, why were they not taken into public ownership under any of the Labour Governments who have existed since the war?
  The hon. Gentleman has no answer to that. He prefers to forget that the private companies exist. He does not even know what they do. He suggested yesterday that they were not private enterprises, and that they simply act as agents for the regional water authorities.
  That is an astonishing statement for the hon. Gentleman to have made. It will not, of course, come as a surprise to my right hon. and hon. Friends, who know from long experience not to expect Opposition spokesmen to have any acquaintance with the facts or with the real world. But it came as a considerable surprise to the companies themselves which have a long and distinguished history of supplying drinking water in the private sector quite independently of the regional water authorities.
  Then the hon. Gentleman railed about price increases.
  Mrs. Ann Taylor: Before the Minister leaves the subject of private water companies, if he will not accept the word of my hon. Friend the Member for Copeland (Dr. Cunningham), will he accept the words of Jack Jeffrey, who was chair of the Water Companies Association, who remarked:

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  "We are subject to strict financial controls, especially on dividends, which make us very different from the water plcs which are being proposed by the Government."?
  Mr. Howard: I do not know what point the hon. Lady is addressing, but it is not the point made by the hon. Member for Copeland. The hon. Gentleman said that they were not private enterprise companies, and he was wrong. He said that they acted only as agents of the regional water authorities, and he was wrong about that, too.
  The hon. Gentleman railed about price increases. My right hon. Friend the Secretary of State dealt with that point in his speech yesterday. But what of the increase in the price of water of 42 per cent. in 1975–76? Did the hon. Gentleman not notice it at the time? Had he forgotten it?
  Last, but very far from least, the hon. Gentleman had the temerity to criticise the condition of our rivers and beaches. The hon. Gentleman knows very well that the main cause of our present problems lies in the record of the Labour Government—[Interruption.] The convolutions in which the hon. Gentleman engaged in a vain attempt to defend the indefensible were astonishing. The first thing the hon. Gentleman did yesterday, when he sought to explain the Labour Government's record, was to succumb to a bout of amnesia about the last year of office of the Labour Government. He tried to pretend that the last year of the Labour Government was 1977–78. It is in Hansard for all to see. I think we can all sympathise with the hon. Gentleman's desire to expunge from the record all trace of the year 1978–79 or, failing that, to hope that we will forget that Labour was in office during that disastrous year. But the hon. Gentlman will have to be just a little more sophisticated if he is to have much success in that endeavour.
  The hon. Gentleman was then faced with the decision of which deflator to use to bend the figures to his case. Should he use the GDP deflator or the public works deflator? He decided to use them both—one for one set of figures and the other for an entirely different set of figures. But that did not work either. The length to which the hon. Gentleman went to try to find some figures that he thought he could use illustrates better than anything the hollow weakness of the case that he was trying to defend.
  Dr. John Cunningham: I should be flattered that, in his speech, the hon. and learned Gentleman has referred only to my own speech. I take that as a compliment. As he and the Secretary of State find it difficult to face the truth, I say to him again that they are not my figures; they are the figures published in "Water Facts", and the statistics were calculated by the House of Commons Library. The hon. and learned Gentleman is trying to suggest that somehow Opposition Members have manipulated the figures. That is a manifest dishonesty.
  Mr. Howard: Perhaps the hon. Gentleman will tell the House whether he depends on the House Library to tell him what was the final year of the last Labour Government. That was just one of the things that he got wrong.
  Mrs. Ann Taylor: Will the hon. and learned Gentleman give way?
  Mr. Howard: No, I shall not give way—[Interruption.] I shall refer directly to the hon. Lady. We have just heard the hon. Lady's maiden Front-Bench speech on this
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  subject. I welcome her to her new responsibilities. She has certainly made an enthusiastic start, but, unfortunately—
  Mrs. Taylor rose—
  Mr. Howard: I shall give way to the hon. Lady in a moment.
  Unfortunately, in her desire to make an enthusiastic start, the hon. Lady has let her enthusiasm run away with her. On Monday, for example, the hon. Lady issued a press release. It was a mixture of mistakes, muddle and misrepresentation.
  I shall confine myself to one example. The hon. Lady alleged that, after privatisation, the water industry would not be able to spend money on protecting the environment because, for the first time, it would have to pay local authority rates. I shall quote the exact words that she used.
  "It is also likely"—
  the hon. Lady said—
  "that while the industry in public hands did not have to pay local authority rates, the private industry will."
  There is just one difficulty about that. The industry in public hands has been paying local authority rates. There will be no change after privatisation. The hon. Lady got that simple, elementary fact utterly and completely wrong.
  Mrs. Taylor rose—
  Mr. Howard: I shall give way to the hon. Lady if she wishes, but I hope that, on this occasion, she will not blame the House Library for that mistake.
  Mrs. Taylor: They do not pay rates, but they will after privatisation.
  Perhaps I may refer to the figures for investment in the last year of the Labour Government. The hon. and learned Gentleman was challenging our figures. I shall tell him about investment in water authorities in the last year of the Labour Government, 1978–79. Would the hon. and learned Gentleman prefer the figures for 1977–78? I shall give both. In 1977–78, investment in water authorities was £1,066 million. In 1978–79, it was £1,013 million. Investment did not reach either of those figures under a Conservative Government until 1987–88.
  Mr. Howard: We know what the figures show because we heard the speech yesterday—I shall return to it in due course—by the Chairman of the Select Committee on the Environment. That Committee reported, in terms which were supported and signed by the hon. Member for Bootle (Mr. Roberts), that, under the Labour Government, investment by the industry fell by one third in real terms and in sewerage by a half. Those are the facts of the matter.
  Following the press release by the hon. Member for Dewsbury (Mrs. Taylor) on Monday, which contained such an elementary mistake, I should like to make an offer to the hon. Lady. I want the debates in which she and I will be engaged in the next few months to be conducted on a sensible basis. I want to help the hon. Lady to get her facts right. If she sends a copy of her press releases to the Department of the Environment in advance, I shall make sure that the facts are properly checked and that she does not in future make the kind of mistake that she made on Monday.
  The Bill represents a giant step forward towards a better water environment. It is about the quality of the water that we drink, the purity of our rivers and the

  525
  cleanliness of our beaches. It is the key to those higher environmental standards of which others speak, but which we deliver.
  Of course, the measures in the Bill will secure for our people all the advantages that any privatisation brings—the advantages that have led so many other countries, governed by parties of many different political persuasions, to emulate our example. It will contribute to the spread of share ownership, it will give employees a real stake in their companies, and it will remove from this important segment of our economy the public sector shroud which conceals and disguises true accountability. It will open up for the industry all the opportunities and incentives for increased efficiency that only the private sector can provide, and it will free the industry from the constraints of competition for limited public sector resources with schools, hospitals, defence and all the other demands which must continue to be met by the taxpayer.
  It is that access to private sector capital which will, above all, enable higher environmental standards to be achieved. The hon. Member for Bootle suggested yesterday that we could somehow abolish all spending restraint while retaining the industry in the public sector. It would be interesting to know whether he had consulted his party's economic spokesmen before making that statement.
  Mr. Allan Roberts: Will the Minister explain how funds for river navigation, flood defences, sea defences and all the other major environmental concerns, which now rest with the water industry, but which will be given to the National Rivers Authority, will be released from the public sector borrowing requirement if they stay in the public sector? How will they be funded?
  Mr. Howard: They will be funded from the public sector. The reason for that is very simple—so simple that it has escaped the hon. Gentleman. The amounts to fund those activities are very much smaller than the amounts needed to finance the investment of the authorities themselves. If the step suggested by the hon. Gentleman yesterday was such an obvious and easy step to take, why was it not taken between 1974 and 1979 by the Labour Government, who presided over a cut in investment of one third overall and one half in sewerage services?
  It is, of course, true that the industry is a natural monopoly. We recognise that, but that does not mean that there will be no scope for competition. There will be competition between the various privatised concerns in the capital markets, there will be competition over supply to "inset areas" and there will be competition in the provision of various commercial interests.
  There will be the yardstick of competition between the companies themselves which will enable the Director General of Water Services, in setting the price at which the companies will be permitted to sell their water, to ensure that consumers benefit from improved efficiency. We are determined to ensure that the customer gets these benefits not only in the price that he pays for water but in the quality of service that he receives. Customers will be protected by enforcing the conditions of appointment of the companies, and there will be new customer service committees with a balanced membership representing consumer interests.
  526
  The Bill also provides for regulations to be made for a guaranteed standards scheme. These guarantees will cover such matters as resumption of water supplies after a supply failure or planned disconnection, prompt response to billing inquiries or reasonable written complaints and keeping appointments at the agreed time.
  My hon. Friend the Member for Stockton, South (Mr. Devlin) referred to the need for automatic payments to be made to domestic customers if guaranteed standards are not met. We agree, and I am happy to be able to announce that there will be such a scheme providing compensation for a breach of guaranteed standards. We envisage a payment of around £5 for each and every day, or for each and every occasion, as appropriate, on which a breach occurs. This would be a no-nonsense, no-quibble scheme to provide a spur to management for good commercial manners and quick recompense to customers for the inconvenience that they have suffered. It will be a new remedy for the customer. It will be in addition to existing legal rights. It will be but one of the many advantages that will accrue to the customer as a result of privatisation.
  If there has been a focus for the contributions to this debate, it has related to the environmental aspect of our proposals. That is as it should be, because concern for the protection and enhancement of our water environment lies at the heart of the Bill. It was my right hon. Friend the Secretary of State who last year saw the need to separate the regulatory functions of the water authorities from their water supply functions. Even Labour Members have been grudgingly obliged to concede the merits of the National Rivers Authority. The advisory committee, under the distinguished chairmanship of my right hon. and noble Friend Lord Crickhowell, has made an excellent start in identifying its responsibilities and putting in place the organisational framework within which these responsibilities will be discharged.
  My hon. Friends the Members for Devizes (Sir C. Morrison) and for Pudsey (Sir G. Shaw) expressed concern about the resources available for the NRA. They were right to say that, unless it gets the resources it needs, it will not succeed. We accept that. We are determined to ensure that it gets these resources and that it will succeed. That is the basis on which it is being established.
  My hon. Friend the Member for Cornwall, North (Mr. Neale), who has taken such a close interest on behalf of his constituents in recent events in his constituency, asked for a specific assurance that the Department will continue to monitor closely what is happening in his constituency. I am happy to give him that assurance. My hon. Friend the Member for Dorset, North (Mr. Baker) asked for a reassurance that the full rigours of the planning system would be maintained after privatisation, and I am happy to give my hon. Friend that assurance.
  My right hon. Friend the Member for Woking (Mr. Onslow) suggested that the regional fisheries advisory committees of the NRA should have the same executive responsibilities as the regional flood defence committees as anglers would contribute a great deal to the funds of the NRA. The answer to my right hon. Friend's worry is that matters will continue as they have. The regional flood defence committee will continue to exercise the executive functions that are now exercised by the land drainage committees, and the regional fisheries advisory committees will continue as advisory committees to the new authority.
  My right hon. Friend the Secretary of State has explained how we see this measure as the key to improved

  527
  environmental standards, but we should not allow the false picture of the present state of our water environment so sedulously painted by Labour Members to gain acceptance. They lost no opportunity to denigrate the state of our environment, but their charges, in this as in so many other cases, are very wide of the mark. They say that we have the dirtiest rivers in Europe. They are wrong. We have the highest standards of river quality in the European Community, with the exception of the Irish Republic and possibly Holland. They say that we have the dirtiest beaches in Europe, but they are wrong. We are making steady progress in cleaning our beaches. We are the only member of the European Community that has drawn up a clear and defined table and programme for securing compliance with the European bathing water directive.
  Mr. Paul Boateng: The hon. and learned Gentleman is going at a fine old lick, but could we have some intellectual content?
  Mr. Howard: If the hon. Gentleman is not interested in the state of our rivers or beaches, he is typical of the general attitude of the Opposition. I am dealing with the facts.
  Dr. Cunningham: As the Minister of State unusually is dealing with facts, perhaps he can deal with this one. If what he says about our position in Europe is true, why have we been singled out by the European Commission for more prosecutions in respect of drinking water quality and bathing water quality than all the other member states put together?
  Mr. Howard: That is not right either. That is another of the hon. Gentleman's errors. That is as wide of the mark as any of the other charges that the hon. Gentleman delights in peddling. The fact is that we are making substantial progress in improving our water environment and have reached far higher standards than most of the other countries in Europe.
  I shall give the hon. Member for Copeland some more facts. We have more of our households connected to a main sewerage system than has any other country in Europe. We have more of our sewage treated before disposal than has any other country in Europe. We have no need whatever to be ashamed of our record.
  However, I want to come to the record of the Opposition. It was identified in the clearest possible terms in the report of the Select Committee, chaired by my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), and supported and signed by the hon. Member for Bootle, who was a member of the Committee. The Committee said:
  "There are a number of reasons why water authority effluents fall short of the present consent standards. The most immediate reason is because from the mid-1970s until the early 1980s there was a steady drop in investment by the water authorities in sewerage and sewage disposal."
  The undisputed facts are that, when the Opposition were in power, investment by the water authorities fell by one third and investment in sewerage and sewage disposal fell by one half. Those are the facts. The Opposition like to convey the impression that those events took place in a far-off distant period of which they know nothing, but many of them were here. The hon. Member for Dewsbury was a Member of the House, albeit for a different constituency. Perhaps she would like to remind the House of the occasions when she rose during those years to
  528
  protest against those cuts and against the damage to the environment that they caused. The hon. Member for Copeland was here, too.
  Mrs. Ann Taylor rose—
  Mr. Howard: Perhaps the hon. Lady will answer the question that I posed to her.
  Mrs. Taylor: Before the Minister gets carried away, perhaps he would reflect on what he was not happy to discuss earlier: the actual levels of investment under a Labour Government compared with the actual levels of investment under a Conservative Government. The average level of investment under the last Labour Government between 1974 and 1979 was £1,254 million per year. The average investment under the Conservative Government has been £922 million per year. In no year since 1978–79 has investment under the Conservative Government reached the level of investment under the Labour Government. For the Minister to suggest that the problems faced by this industry today are the responsibility of the Labour Government is to ignore the fact that this Government have been in office for 10 of the last 14 years and that they have been—[Interruption.]
  The Parliamentary Secretary to the Treasury (Mr. David Waddington)rose in his place and claimed to move. That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 301, Noes 241.

  Divison No. 11]

  [9.59 pm

  AYES

  Alexander, Richard

  Clarke, Rt Hon K. (Rushcliffe)

  Amery, Rt Hon Julian

  Conway, Derek

  Arbuthnot, James

  Coombs, Anthony (Wyre F'rest)

  Arnold, Jacques (Gravesham)

  Coombs, Simon (Swindon)

  Arnold, Tom (Hazel Grove)

  Cope, Rt Hon John

  Ashby, David

  Cormack, Patrick

  Baker, Nicholas (Dorset N)

  Couchman, James

  Baldry, Tony

  Cran, James

  Banks, Robert (Harrogate)

  Currie, Mrs Edwina

  Bellingham, Henry

  Davies, Q. (Stamf'd & Spald'g)

  Bottomley, Peter

  Davis, David (Boothferry)

  Bowden, Gerald (Dulwich)

  Day, Stephen

  Bowis, John

  Devlin, Tim

  Braine, Rt Hon Sir Bernard

  Dicks, Terry

  Brandon-Bravo, Martin

  Dorrell, Stephen

  Bright, Graham

  Douglas-Hamilton, Lord James

  Brooke, Rt Hon Peter

  Dover, Den

  Brown, Michael (Brigg & Cl't's)

  Dunn, Bob

  Bruce, Ian (Dorset South)

  Durant, Tony

  Buck, Sir Antony

  Dykes, Hugh

  Budgen, Nicholas

  Emery, Sir Peter

  Burns, Simon

  Evans, David (Welwyn Hatf'd)

  Burt, Alistair

  Evennett, David

  Butcher, John

  Fallon, Michael

  Butler, Chris

  Favell, Tony

  Butterfill, John

  Field, Barry (Isle of Wight)

  Carlisle, John, (Luton N)

  Fookes, Miss Janet

  Carrington, Matthew

  Forman, Nigel

  Carttiss, Michael

  Forsyth, Michael (Stirling)

  Cash, William

  Forth, Eric

  Chalker, Rt Hon Mrs Lynda

  Fowler, Rt Hon Norman

  Chapman, Sydney

  Fox, Sir Marcus

  Chope, Christopher

  Franks, Cecil

  Churchill, Mr

  Freeman, Roger

  Clark, Hon Alan (Plym'th S'n)

  French, Douglas

  Clark, Dr Michael (Rochford)

  Fry, Peter

  Clark, Sir W. (Croydon S)

  Gale, Roger

  529

  Gardiner, George

  Luce, Rt Hon Richard

  Garel-Jones, Tristan

  Lyell, Sir Nicholas

  Gill, Christopher

  McCrindle, Robert

  Glyn, Dr Alan

  Macfarlane, Sir Neil

  Goodhart, Sir Philip

  MacKay, Andrew (E Berkshire)

  Goodlad, Alastair

  Maclean, David

  Goodson-Wickes, Dr Charles

  McLoughlin, Patrick

  Gorman, Mrs Teresa

  McNair-Wilson, Sir Michael

  Gorst, John

  McNair-Wilson, P. (New Forest)

  Gow, Ian

  Madel, David

  Gower, Sir Raymond

  Major, Rt Hon John

  Grant, Sir Anthony (CambsSW)

  Malins, Humfrey

  Greenway, Harry (Ealing N)

  Mans, Keith

  Greenway, John (Ryedale)

  Maples, John

  Gregory, Conal

  Marland, Paul

  Griffiths, Peter (Portsmouth N)

  Marlow, Tony

  Grist, Ian

  Marshall, John (Hendon S)

  Ground, Patrick

  Marshall, Michael (Arundel)

  Grylls, Michael

  Martin, David (Portsmouth S)

  Gummer, Rt Hon John Selwyn

  Mates, Michael

  Hamilton, Neil (Tatton)

  Maude, Hon Francis

  Hampson, Dr Keith

  Mawhinney, Dr Brian

  Hanley, Jeremy

  Mayhew, Rt Hon Sir Patrick

  Hannam, John

  Mellor, David

  Hargreaves, A. (B'ham H'll Gr')

  Miller, Sir Hal

  Hargreaves, Ken (Hyndburn)

  Mills, Iain

  Harris, David

  Miscampbell, Norman

  Haselhurst, Alan

  Mitchell, Andrew (Gedling)

  Hayhoe, Rt Hon Sir Barney

  Mitchell, Sir David

  Hayward, Robert

  Moate, Roger

  Heathcoat-Amory, David

  Monro, Sir Hector

  Heddle, John

  Montgomery, Sir Fergus

  Heseltine, Rt Hon Michael

  Moore, Rt Hon John

  Hicks, Mrs Maureen (Wolv' NE)

  Morris, M (N'hampton S)

  Hicks, Robert (Cornwall SE)

  Morrison, Sir Charles

  Higgins, Rt Hon Terence L.

  Moss, Malcolm

  Hill, James

  Moynihan, Hon Colin

  Hind, Kenneth

  Neale, Gerrard

  Hogg, Hon Douglas (Gr'th'm)

  Nelson, Anthony

  Holt, Richard

  Neubert, Michael

  Hordern, Sir Peter

  Newton, Rt Hon Tony

  Howard, Michael

  Nicholls, Patrick

  Howarth, G. (Cannock & B'wd)

  Nicholson, David (Taunton)

  Howell, Rt Hon David (G'dford)

  Nicholson, Emma (Devon West)

  Howell, Ralph (North Norfolk)

  Onslow, Rt Hon Cranley

  Hughes, Robert G. (Harrow W)

  Oppenheim, Phillip

  Hunt, David (Wirral W)

  Page, Richard

  Hunter, Andrew

  Paice, James

  Irvine, Michael

  Parkinson, Rt Hon Cecil

  Irving, Charles

  Patnick, Irvine

  Jack, Michael

  Patten, Chris (Bath)

  Jackson, Robert

  Patten, John (Oxford W)

  Janman, Tim

  Pattie, Rt Hon Sir Geoffrey

  Jessel, Toby

  Peacock, Mrs Elizabeth

  Johnson Smith, Sir Geoffrey

  Porter, David (Waveney)

  Jones, Gwilym (Cardiff N)

  Portillo, Michael

  Jones, Robert B (Herts W)

  Powell, William (Corby)

  Jopling, Rt Hon Michael

  Price, Sir David

  Key, Robert

  Raison, Rt Hon Timothy

  King, Roger (B'ham N'thfield)

  Redwood, John

  King, Rt Hon Tom (Bridgwater)

  Renton, Tim

  Kirkhope, Timothy

  Rhodes James, Robert

  Knapman, Roger

  Riddick, Graham

  Knight, Greg (Derby North)

  Ridley, Rt Hon Nicholas

  Knight, Dame Jill (Edgbaston)

  Ridsdale, Sir Julian

  Knowles, Michael

  Rifkind, Rt Hon Malcolm

  Knox, David

  Roberts, Wyn (Conwy)

  Lamont, Rt Hon Norman

  Roe, Mrs Marion

  Lang, Ian

  Rost, Peter

  Latham, Michael

  Rowe, Andrew

  Lawrence, Ivan

  Rumbold, Mrs Angela

  Lawson, Rt Hon Nigel

  Ryder, Richard

  Lee, John (Pendle)

  Sackville, Hon Tom

  Lennox-Boyd, Hon Mark

  Sainsbury, Hon Tom

  Lester, Jim (Broxtowe)

  Sayeed, Jonathan

  Lightbown, David

  Scott, Nicholas

  Lilley, Peter

  Shaw, David (Dover)

  Lloyd, Sir Ian (Havant)

  Shaw, Sir Giles (Pudsey)

  Lloyd, Peter (Fareham)

  Shaw, Sir Michael (Scarb')

  Lord, Michael

  Shelton, William (Streatham)

  530

  Shephard, Mrs G. (Norfolk SW)

  Tredinnick, David

  Shepherd, Colin (Hereford)

  Trippier, David

  Shersby, Michael

  Trotter, Neville

  Sims, Roger

  Twinn, Dr Ian

  Skeet, Sir Trevor

  Vaughan, Sir Gerard

  Smith, Tim (Beaconsfield)

  Viggers, Peter

  Soames, Hon Nicholas

  Waddington, Rt Hon David

  Speller, Tony

  Wakeham, Rt Hon John

  Spicer, Sir Jim (Dorset W)

  Waldegrave, Hon William

  Spicer, Michael (S Worcs)

  Walden, George

  Squire, Robin

  Walker, Bill (T'side North)

  Stanbrook, Ivor

  Walker, Rt Hon P. (W'cester)

  Stanley, Rt Hon Sir John

  Waller, Gary

  Steen, Anthony

  Ward, John

  Stern, Michael

  Wardle, Charles (Bexhill)

  Stevens, Lewis

  Warren, Kenneth

  Stewart, Allan (Eastwood)

  Watts, John

  Stewart, Andy (Sherwood)

  Wells, Bowen

  Stewart, Ian (Hertfordshire N)

  Wheeler, John

  Stradling Thomas, Sir John

  Whitney, Ray

  Sumberg, David

  Widdecombe, Ann

  Summerson, Hugo

  Wiggin, Jerry

  Tapsell, Sir Peter

  Wilkinson, John

  Taylor, John M (Solihull)

  Wilshire, David

  Taylor, Teddy (S'end E)

  Winterton, Mrs Ann

  Tebbit, Rt Hon Norman

  Wolfson, Mark

  Temple-Morris, Peter

  Wood, Timothy

  Thatcher, Rt Hon Margaret

  Woodcock, Mike

  Thompson, D. (Calder Valley)

  Yeo, Tim

  Thompson, Patrick (Norwich N)

  Young, Sir George (Acton)

  Thorne, Neil

  Younger, Rt Hon George

  Thornton, Malcolm

  Thurnham, Peter

  Tellers for the Ayes:

  Townend, John (Bridlington)

  Mr. Alan Howarth and

  Townsend, Cyril D. (B'heath)

  Mr. Kenneth Carlisle.

  Tracey, Richard

  NOES

  Abbott, Ms Diane

  Clarke, Tom (Monklands W)

  Adams, Allen (Paisley N)

  Clay, Bob

  Allen, Graham

  Clelland, David

  Alton, David

  Clwyd, Mrs Ann

  Anderson, Donald

  Cohen, Harry

  Archer, Rt Hon Peter

  Coleman, Donald

  Armstrong, Hilary

  Cook, Frank (Stockton N)

  Ashdown, Paddy

  Cook, Robin (Livingston)

  Ashley, Rt Hon Jack

  Corbett, Robin

  Ashton, Joe

  Corbyn, Jeremy

  Banks, Tony (Newham NW)

  Cousins, Jim

  Barnes, Harry (Derbyshire NE)

  Cox, Tom

  Barnes, Mrs Rosie (Greenwich)

  Crowther, Stan

  Barron, Kevin

  Cryer, Bob

  Battle, John

  Cummings, John

  Beckett, Margaret

  Cunliffe, Lawrence

  Beith, A. J.

  Cunningham, Dr John

  Bell, Stuart

  Dalyell, Tam

  Benn, Rt Hon Tony

  Darling, Alistair

  Bennett, A. F. (D'nt'n & R'dish)

  Davies, Rt Hon Denzil (Llanelli)

  Bermingham, Gerald

  Davies, Ron (Caerphilly)

  Bidwell, Sydney

  Davis, Terry (B'ham Hodge H'l)

  Blair, Tony

  Dewar, Donald

  Blunkett, David

  Dixon, Don

  Boateng, Paul

  Dobson, Frank

  Boyes, Roland

  Doran, Frank

  Bradley, Keith

  Douglas, Dick

  Bray, Dr Jeremy

  Duffy, A. E. P.

  Brown, Gordon (D'mline E)

  Dunnachie, Jimmy

  Brown, Nicholas (Newcastle E)

  Dunwoody, Hon Mrs Gwyneth

  Brown, Ron (Edinburgh Leith)

  Eadie, Alexander

  Bruce, Malcolm (Gordon)

  Eastham, Ken

  Buchan, Norman

  Evans, John (St Helens N)

  Buckley, George J.

  Ewing, Harry (Falkirk E)

  Caborn, Richard

  Fatchett, Derek

  Callaghan, Jim

  Fearn, Ronald

  Campbell, Menzies (Fife NE)

  Field, Frank (Birkenhead)

  Campbell, Ron (Blyth Valley)

  Field, Terry (L'pool B G'n)

  Campbell-Savours, D. N.

  Fisher, Mark

  Canavan, Dennis

  Flannery, Martin

  Cartwright, John

  Flynn, Paul

  Clark, Dr David (S Shields)

  Foot, Rt Hon Michael

  531

  Foster, Derek

  Michael, Alun

  Foulkes, George

  Michie, Bill (Sheffield Heeley)

  Fraser, John

  Michie, Mrs Ray (Arg'l & Bute)

  Fyfe, Maria

  Mitchell, Austin (G't Grimsby)

  Galbraith, Sam

  Molyneaux, Rt Hon James

  Galloway, George

  Moonie, Dr Lewis

  Garrett, John (Norwich South)

  Morgan, Rhodri

  Garrett, Ted (Wallsend)

  Morley, Elliott

  George, Bruce

  Morris, Rt Hon A. (W'shawe)

  Gilbert, Rt Hon Dr John

  Morris, Rt Hon J. (Aberavon)

  Godman, Dr Norman A.

  Mowlam, Marjorie

  Golding, Mrs Llin

  Mullin, Chris

  Gordon, Mildred

  Murphy, Paul

  Graham, Thomas

  Nellist, Dave

  Grant, Bernie (Tottenham)

  Oakes, Rt Hon Gordon

  Griffiths, Nigel (Edinburgh S)

  O'Brien, William

  Griffiths, Win (Bridgend)

  O'Neill, Martin

  Grocott, Bruce

  Orme, Rt Hon Stanley

  Hardy, Peter

  Owen, Rt Hon Dr David

  Healey, Rt Hon Denis

  Paisley, Rev Ian

  Heffer, Eric S.

  Parry, Robert

  Henderson, Doug

  Patchett, Terry

  Hinchliffe, David

  Pendry, Tom

  Hogg, N. (C'nauld & Kilsyth)

  Pike, Peter L.

  Holland, Stuart

  Powell, Ray (Ogmore)

  Home Robertson, John

  Prescott, John

  Hood, Jimmy

  Primarolo, Dawn

  Howarth, George (Knowsley N)

  Quin, Ms Joyce

  Howell, Rt Hon D. (S'heath)

  Radice, Giles

  Howells, Geraint

  Randall, Stuart

  Hoyle, Doug

  Redmond, Martin

  Hughes, John (Coventry NE)

  Rees, Rt Hon Merlyn

  Hughes, Robert (Aberdeen N)

  Reid, Dr John

  Hughes, Roy (Newport E)

  Richardson, Jo

  Hughes, Sean (Knowsley S)

  Roberts, Allan (Bootle)

  Hughes, Simon (Southwark)

  Robertson, George

  Illsley, Eric

  Robinson, Geoffrey

  Ingram, Adam

  Rogers, Allan

  Janner, Greville

  Rooker, Jeff

  John, Brynmor

  Ross, Ernie (Dundee W)

  Jones, Barry (Alyn & Deeside)

  Rowlands, Ted

  Jones, leuan (Ynys Môn)

  Ruddock, Joan

  Kaufman Rt Hon Gerald

  Salmond, Alex

  Kennedy, Charles

  Sedgemore, Brian

  Kinnock, Rt Hon Neil

  Sheerman, Barry

  Kirkwood, Archy

  Sheldon, Rt Hon Robert

  Lamond, James

  Shore, Rt Hon Peter

  Leadbitter, Ted

  Short, Clare

  Lestor, Joan (Eccles)

  Skinner, Dennis

  Lewis, Terry

  Smith, Andrew (Oxford E)

  Livingstone, Ken

  Smith, C. (Isl'ton & F'bury)

  Livsey, Richard

  Snape, Peter

  Lloyd, Tony (Stretford)

  Soley, Clive

  Lofthouse, Geoffrey

  Spearing, Nigel

  Loyden, Eddie

  Steinberg, Gerry

  McAllion, John

  Stott, Roger

  McAvoy, Thomas

  Strang, Gavin

  McCartney, Ian

  Straw, Jack

  Macdonald, Calum A.

  Taylor, Mrs Ann (Dewsbury)

  McFall, John

  Taylor, Matthew (Truro)

  McKay, Allen (Barnsley West)

  Thomas, Dr Dafydd Elis

  McKelvey, William

  Thompson, Jack (Wansbeck)

  McLeish, Henry

  Turner, Dennis

  Maclennan, Robert

  Vaz, Keith

  McNamara, Kevin

  Wall, Pat

  McTaggart, Bob

  Wallace, Jemes

  McWilliam, John

  Walley, Joan

  Madden, Max

  Wardell, Gareth (Gower)

  Mahon, Mrs Alice

  Wareing, Robert N.

  Marek, Dr John

  Welsh, Andrew (Angus E)

  Marshall, David (Shettleston)

  Welsh, Michael (Doncaster N)

  Marshall, Jim (Leicester S)

  Wigley, Dafydd

  Martin, Michael J. (Springburn)

  Williams, Rt Hon Alan

  Martlew, Eric

  Williams, Alan W. (Carm'then)

  Maxton, John

  Wilson, Brian

  Meacher, Michael

  Winnick, David

  Meale, Alan

  Wise, Mrs Audrey

  532

  Worthington, Tony

  Tellers for the Noes:

  Wray, Jimmy

  Mr. Frank Haynes and Mr. Martin Jones.

  Young, David (Bolton SE)

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

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.—[Mr. Dorrell.]

  Water Bill [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the Water Bill ('the Act'), it is expedient to authorise—

  (1) the payment out of money provided by Parliament of the following, namely—

  (a) grants by the Secretary of State to the National Rivers Authority;

  (b) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Water Services and any staff of the Director, any other sums payable under the Act to or in respect of a person who holds or has held office as the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act;

  (c) the remuneration of the chairman of a customer service committee, any travelling or other allowances payable under the Act to such a chairman, to other members of a customer service committee or to members of a sub-committee of such a committee, any other sums payable under the Act to or in respect of a person who holds or has held office as such a chairman or member and the expenses incurred by a customer service committee;

  (d) grants and loans by the Secretary of State to a water undertaker or sewerage undertaker in relation to which a special administration order has been made;

  (e) sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a special administration order made in relation to a water undertaker or sewerage undertaker;

  (f) expenses incurred by the Treasury or the Secretary of State in acquiring securities of a holding company of a water authority's successor company or rights to subscribe for any such securities;

  (g) compensation payable by the Secretary of State under the Act in respect of the exercise of functions in relation to trade effluent or in respect of loss or damage caused in connection with a power of entry;

  (h) grants in respect of compliance with directions given under the Act in the interests of national security;

  (i) sums required by the Secretary of State for making payments under the Act into any fund maintained for the purposes of any regulations under section 7 of the Superannuation Act 1972;

  (j) sums required by a Minister of the Crown for fulfilling guarantees given under the Act;

  (k) administrative expenses or charges incurred by any Minister of the Crown or Government department in consequence of the provisions of the Act;

  (l) increases attributable to the Act in the sums payable out of money so provided under any other Act;

  (2) the payment out of the National Loans Fund of any sums required by a Minister of the Crown by virtue of the Act for making loans, while it is wholly owned by the Crown, to a successor company of a water authority or to a holding company of such a company;

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  (3) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities of a water authority's successor company, or of a holding company of such a company, in respect of any loans as the Secretary of State may by order extinguish.—[Mr. Dorrell.]

  10.14 pm
  Mr. Matthew Taylor: After the debacle of the Government withdrawing their previous privatisation proposals in 1986, I had hoped that such proposals would never come back to the House in any form. I regret very much that they have.
  When we consider what the Government now say to justify their position—that this is a "green" Bill, that the NRA is the linchpin to what they are doing—it draws a wry smile from us, because those points were not made originally. [Interruption.]
  Mr. Bob Cryer: On a point of order, Mr. Speaker. I can hardly hear the hon. Member for Truro (Mr. Taylor), despite his being very close to me, because of Tory loungers and scroungers who are making such a noise.
  Mr. Speaker: Order. Will those hon. Members beyond the Bar either come into the House or go out into the Lobby?
  Mr. Cryer: Further to that point of order, Mr. Speaker. A Tory Member just shouted across the Chamber, "We do not want to hear you either." It appears that there could be a concerted attempt to drown out hon. Members, which is completely against the traditions of the House.
  Mr. Speaker: I did not hear such a comment. Let us get on with the debate.
  Mr. Taylor: I thank the hon. Member for Bradford, South (Mr. Cryer) for leaping to my defence. I have never been accused of having a quiet voice, so there will be a tussle if anyone tries to drown me out.
  Yesterday, the hon. Member for Devizes (Sir C. Morrison) wondered how the privatisation of water could lead to competition. Many privatisations have been justified on the ground that privatisation would bring with it the benefits of competition. In privatisation after privatisation we have been told that competition is the crucial element, but the hon. Gentleman said that there would not be competition in any normal sense of the word in this case. Indeed, Ministers have accepted that there will not be competition. That is hardly a surprise. We are dealing with a natural monopoly. No one could possibly think that there could be any competition in any real sense.
  Nevertheless, the Government have pressed ahead with the privatisation of water. In doing so, they reveal that competition is never one of the reasons for privatisation. In fact, they have pressed ahead with privatisation on occasion after occasion because privatisation is central to the Government's dogma. It is a matter of ideology. The Government are not looking at the merits of each case. Whatever the industry, whatever the circumstances, whatever the electorate think, the Government want to privatise whatever may be in state hands—or rather, in the community's hands.
  In three Thatcher Administrations, none of which has had the support of the majority of the electorate, 29 partly or wholly owned public companies have gone under the hammer. Ironically, as each Conservative Administration has gained less support at the general election polls,
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  privatisation issues have become not only more audacious but have centred on areas that are more and more deeply unpopular.
  We on these Benches are willing to say that in some cases a transfer to the private sector has been beneficial; for example, in Rolls-Royce and Jaguar. Our objection is not against privatisation per se, as we hear from the Labour Benches. Indeed, when the Front-Bench spokesman replied to the Second Reading debate they made clear the rather stale arguments over privatisation versus nationalisation.
  What we have said is that the individual merits of each particular case have been ignored, and the particular means of going about it have been ignored, simply to gain the maximum financial return for the Treasury and the maximum ideological advantage of privatisation. The Government have not considered what is best for each individual sector that has been privatised. Instead, there has been a blinkered ideological approach, blind to any wider considerations.
  Finally, we have the privatisation of water. People are now against the proposal by a margin of 5:1, yet the Government propose the privatisation of water. Boiled down, it is the ultimate triumph of dogma over democracy.
  Mr. Rob Hayward: Which of the 29 companies and organisations to which the hon. Gentleman referred does he propose to return to state ownership?
  Mr. Taylor: None of them. If the hon. Gentleman will listen, he will know that the essential problem is not privatisation or nationalisation, but whether either is the best thing for the industry in question.
  I do not believe that privatisation is best for the water industry. Also, one must also consider whether, in privatising, one is giving adequate power to consumers and meeting environmental concerns. In any privatisation, the first consideration should be the ordinary men and women of this country, whereas the Government's primary consideration has been maximising the return to the Treasury.
  Mr. Hayward: If the hon. Gentleman does not think that privatisation is best for water, one presumes that he proposes its renationalisation. In which other cases does he consider that privatisation has not been best for the public and which does he propose renationalising?
  Mr. Taylor: I shall not give way again to the hon. Gentleman, because he is not listening. If he is, he is incapable of understanding my argument. I shall spell it out again very simply for him.
  One ought not to privatise just because one believes that it is the right thing to do—as is the Government's practice, to privatise purely on ideological grounds. Instead, one should do one's best to maintain the industry and ensure that its customers are given the best possible service, while protecting the environment and meeting other areas of concern. On every occasion such considerations have come second best to the Treasury's desire to make a bigger financial return.
  I wish to move on, because the result of the Government's action in respect of water can be described in a single word.
  Mr. Speaker: Order. When the hon. Gentleman moves on, will he relate his remarks to the money resolution that is before the House?
  Mr. Taylor: Of course I will, Mr. Speaker.
  I move on to the cost falling on the consumer as a result of the Bill—a cost that is allowed for in part in the money resolution, in the provision that it makes to spend money as part of privatisation. Even more expense will fall on individual consumers when the Bill is passed. We must ask ourselves whether it should be allowed to pass.
  Looking back to 1986 when the Government last proposed privatisation, there was another difference—I have already mentioned the NRA—between their comments then and their comments now. Now we are hearing about the NRA and that this is a "green" Bill, but in 1986 we were being told that privatisation would lead to lower water prices. We do not hear that argument any more. On the contrary, the Government no longer claim that privatisation will keep bills down, but that it will increase them. All kinds of reasons are given for that, but the Government have ditched the idea of lower water charges. The only people who believe that passing this money resolution or any other relating to the Bill will benefit the consumer are the Government and their supporters. Nobody else, in the House or anywhere else, believes that.
  The House regularly allows money resolutions to go through on the nod, but I have no intention of allowing that to happen on this occasion. I say to the House that this is an opportunity to pause and reconsider whether this money resolution should be passed and whether the Bill should take effect. I say to right hon. and hon. Members who suggested earlier that there is public support for this measure that they are wrong, and that the House would be wrong to pass it. There is no general support for it in this Chamber or elsewhere. I remind Conservative Members that the Government do not have the money, because the resolution has not yet been passed.
  I represent an area where people are on low incomes, where some villages do not yet have their own sewerage systems, and where many beaches are polluted. It is they who will have to foot the bill for the improvements that are required. One example is the problem of sewage outfall on beaches. There are currently three projects in hand, all of which require substantial amounts of money. There is one project in Falmouth and Truro, one in Parr and St. Austell and one in Penzance and St. Ives. The Penzance and St. Ives project alone required a massive investment of £50 million, yet discharges will still go out to sea.
  Conservative Members want the money resolution to go through on the nod, but they are not so interested in spending money where it needs to be spent as they are in trying to make the Bill fit their own ideology.
  Mr. Patrick McLoughlin: May I draw the hon. Gentleman's attention to the fact that we are debating a money resolution, not various aspects of the Water Bill which, had he caught your eye, Mr. Speaker, he might have raised on Second Reading?
  Mr. Speaker: I have already drawn the hon. Gentleman's attention to the fact that he must relate his remarks to the money resolution, which is widely drawn.
  Mr. Taylor: That is right. The money resolution allows the Government to spend money on the provisions of the
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  Bill. The Bill is so appalling that we should not allow it to go through, as there are many other ways in which the money could be better spent.
  In the past, my own area has relied on the European regional development fund to pay for projects. There is great concern in my area—and I hope that the Minister will be able to answer my question now or on another occasion—that, if we allow the Bill and the associated money resolution to go through, a private company such as one of the new water companies will not receive funding from Europe. The work is essential to bring our beaches up to the European standard, and I hope that the Minister can assure the people of Cornwall that they will not be expected to meet all the costs of cleaning up the beaches, which are used by citizens of the United Kingdom and Europe, purely because the Government, by their ideological approach, are cutting off the potential to obtain money in other ways.
  Conservative Members have said that all this has nothing to do with the money resolution. They are really saying that they want the money resolution to go through on the nod. They do not mind money being spent as a result of the Bill, rather than on matters that are important to people, particularly in my part of the country.
  What will happen to some individuals? It is easy for the House to vote sums of money and to spend money that does not come out of the pockets of hon. Members to any large extent. The money that hon. Members receive comes mainly out of public funds, so, although hon. Members can easily pass this resolution on the nod, it is less easy for it to be accepted by some individuals who, after privatisation, may find that their water supplies are disconnected because they are unable to pay their water bills after the price increases that the Bill will bring about.
  I challenge the Minister to guarantee that the 9,000 disconnections last year will not be increased after privatisation. Will he guarantee to come to the House each year and tell us that there has been no increase in the number of disconnections following privatisation? We have seen the record of previous privatisations, particularly British Gas. I cannot let the money resolution go through without seeking such guarantees.
  I remind Conservative Members that none of them is on low incomes, so they are unlikely to find it difficult to pay their bills. None of them is ever likely to be faced with the problem of having the water supply to their house and family cut off. None of them is likely to face the difficulty of not having water to wash in and to clean with.
  Mr. Frank Haynes: Or of not having water for their swimming pools.
  Mr. Taylor: None of them is likely to suffer, but people up and down the country will suffer as a consequence of price increases after privatisation. That will happen if we allow to go through on the nod the money resolution to a Bill under which there is no real accountability. Real accountability cannot be achieved by privatisation and by putting the industry into the hands of public companies. It can be achieved only by placing directly elected representatives in charge of a public water supply that was designed and built at the expense of local ratepayers.
  We shall oppose the money resolution. It allows legislation that is daylight robbery to be passed Our grandfathers and fathers invested, through their local authorities, in the water industry. Privatisation will not

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  benefit local communities. It will benefit the Treasury, higher rate taxpayers and private shareholders. Local communities cannot afford, as Conservative Members can, to move around the country, pay their way and even fill their baths with Perrier water. Our constituents will be disconnected because they cannot afford to pay their bills. They will suffer from the pollution that is caused because public investment is no longer available. They will have to meet the real costs of the Bill.
  10.30 pm
  Mr. Bob Cryer: I am taking yet another opportunity to speak on a money resolution, but this is a particularly important one. Earlier today I was approached by a Conservative Whip who suggested that, by means of some device, the money resolution would be debated at 4 am. I assured him that if the Government used such a device I should be here to speak about it. I am not sure whether he was being jocular but, as with all Tory Whips, his manner was threatening. He disappeared, chastened, after my brief conversation with him.
  The money resolution is what was formerly called Supply. A ways and means resolution is to follow the money resolution, when we shall be able to discuss the ways and means by which revenue is to be provided to fulfil the supply need. The money resolution is subsumed in greater detail on pages xii and xiii of the explanatory and financial memorandum.
  The residual functions of the National Rivers Authority will, it is estimated, cost £290 million. Those functions are wide and important. Is the Minister able to give details of the calculations? There is to be Exchequer grant aid amounting to £71 million for the first full year of the National River Authority's operations. I presume that that will be in addition to the £290 million.
  There are reservations about the National Rivers Authority. They relate to its funding, naturally enough. the functions of the NRA are said to be as follows:
  "So far as the new NRA is concerned, we see this as an unnecessary addition to the hierarchy and contrary to the concept of integrated river basin management, which we believe is the best method of managing the whole water cycle. To divide the responsibilities would seem to be a retrograde step when so much effort was put into achieving a coherent policy, based on watershed borders, only 13 years ago.
  We see no justification for privatisation, which is certain to result in increased charges for consumers, nor are we convinced of the need for dividing responsibilities in the water cycles, inherent in the setting up of a National Rivers Authority."
  The Minister may ask me which green or Left-wing organisation produced that statement. I am sure that he is anxious to know that it was made by the Confederation of British Wool Textiles Ltd., which probably numbers among its ranks a large number of employers. It circulated a letter in October that expressed that view.
  Is the Minister able to provide information about the total expenditure and will he tell the House whether he is satisfied that that expenditure will meet the NRA's requirements, thereby reassuring the confederation?
  On page xiii the Bill states:
  "Net proceeds of sales of securities in the nominated holding company…and any dividend or interest payment on such securities…will be paid into the Consolidated Fund. Whilst a successor company and its nominated holding company are wholly owned by the Crown, clause 76"
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  —it says clause 76, but I assume that it should be clause 77—
  "allows the Treasury to issue sums out of the National Loans Fund to the Secretary of State to enable him to make loans to those companies."
  Clauses 77 and 78 govern the issue of those loans. In essence, repayments will be made as
  "the Secretary of State may from time to time direct."
  We should know a little more about what is in the Secretary of State's mind regarding issuing directions for repayment. For example, will he charge interest at current interest rates, which will be a very steep figure? Will he obtain repayment at a nominal rate? What figure does he have in mind?
  The national loans fund debt owed by the water companies will be extinguished by the issue of debentures. Most debentures are secured by either a fixed or an appropriate floating charge. As it involves a considerable sum—almost £4 billion—will those debentures be permanently in the ownership of the Treasury or will they be discharged over a period—and, if so, over what timescale?
  The economic regulation and consumer protection arrangements will involve increased expenditure. It is a relatively small amount compared with the large sums of money that we have been discussing. It is one of the cornerstones of the Government's protection measures, yet less than £4 million a year is to be available to finance a director and staff who will undertake the range of activities set out in the Bill.
  The Confederation of British Wool Textiles Ltd. questions whether the limitation of price increases by that mechanism is adequate. Does the Minister think that £3·7 million is adequate to finance such an important sector?
  The confederation said:
  "You should know at once that we find the Government's justification for this step"—
  that is, privatisation—
  "quite unconvincing. As a matter of principle, we do not believe that any public utility, providing services so fundamental and where consumers have no choice in using its services should be allowed to pass into private hands. Competition and the discipline of the market place are, we believe, the cornerstone of Government philosophy on privatisation but we have great difficulty in working out how our members can get their water from Severn and Trent or dispose of their effluent to North West Water Authorities—so where is the competition? We are not persuaded that the Government's proposals to ensure the reduction of controllable costs and the limitation of price increases to the consumer are adequate."
  I question whether £3·7 million is adequate to finance that sort of operation.
  There is a curious circumstance in clause 24, which is the contingency section. If any sewerage and water undertaking gets into financial difficulties it can prevent winding-up because there is a guarantee. The guarantee is covered in clause 24. Subsection (2) states:
  "The Secretary of State may, with the consent of the Treasury, guarantee, in such manner and on such conditions as he may think fit, the repayment of the principal of, the payment of interest on and the discharge of any other financial obligation in connection with any sum which is borrowed from any person by a company in relation to which a special administration order is in force at the time when the guarantee is given."
  The special administration order must be given, but that gives wide powers to the Secretary of State. It is true that he has to have the consent of the Treasury, but that means talking to a chum in the Cabinet. He will say,

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  "Look here, Nige"—this is a representation of the Cabinet and, naturally, I would call the Chancellor of the Exchequer an hon. Member in other circumstances—"there are a couple of water undertakings that we privatised in rather great difficulties. It has come as a shock to us all, but we have miscalculated. I am giving a special administration order. There are one or two of our chums involved too, Nige. They were decent contributors, you know, in 1987." What are the terms and conditions that will be laid down when we give them the money and ask them for repayment? The House should have some idea, lest anybody should imagine that that sort of conversation should pass between Cabinet Ministers.
  The terms and conditions that the Secretary of State thinks fit should not be subject to general rules imposed by the Treasury. We must ensure that the dealing is absolutely fair and square and at arm's length. This is a fall-back position and I am surprised that the Government think that it is needed, but it appears from the legislation that it is.
  The next matter of concern is national security. Clause 158 states:
  "The Secretary of State may, after consultation with a body to which this section applies, give to that body such directions of a general character as appear to the Secretary of State to be requisite or expedient in the interests of national security or for the purpose of mitigating the effects of any civil emergency which may occur."
  The financial relevance is that the Secretary of State can give grants subject to Treasury consent to meet his directions in the interests of national security. That may appear to be above board and straightforward, but clause 158(4) states:
  "The Secretary of State shall lay before each House of Parliament a copy of every direction given under this section unless he is of the opinion that disclosure of the direction is against the interests of national security or the commercial interests of any person."
  The Secretary of State can give a direction of a general character because he thinks that a civil emergency may occur and then he may say, "It's against commercial interests to reveal the sort of direction that I am giving and the payments which arise from that direction." The House should know a little more about the circumstances in which that would arise, particularly those circumstances in which the whole matter could be kept effectively secret. The Secretary of State will be giving money as a result of these directions. Is it possible that secret directions could be given which would result in payments which would never be revealed to this House? It is important that when we give powers, we ensure that there is accountability.
  If the Minister says, "I have these powers and commercial interests are involved", will a civil servant stamp the top of the page, "Commercial. In confidence"? Only rarely do Ministers determine the status of documents. Civil servants decide and they thrust papers on Ministers' desks.
  It is important that the Minister should give us an idea of the circumstances in which clause 158 will be exercised, particularly the way in which payments to meet those directions are accountable to this House, even when the secrecy measure is invoked.
  The other significant expenditure is the £800 million to protect the pensioners affected by the transfer under clause 160. I take the view, which I am sure is held by my hon. Friends, that when the water industry is taken back into public ownership we should protect pension funds. I have never believed in expropriation and people who are foolish
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  enough to buy water shares should be warned that in my view we should deal with them on the ground of hardship. We should send them to DHSS offices as other people suffering hardship are. Otherwise, we should make sure that this public asset is returned to the people who presently own it—all the people of Britain.
  It is daylight robbery for the Government to abstract this public asset from the 55 million people who live in our country and sell it to a few of their cronies who have acquired money in a variety of ways—some of them highly disreputable—in the City. Pension funds should receive adequate consideration and I have quoted the amount that will be required to do that. I shall now deal with money that is not mentioned in the memorandum.
  I have had correspondence with the Minister about the re-laying of old pipes on private land and in private houses. I am talking not about estates but about terraced or back-to-back houses in constituencies such as mine. Bradford is an old industrial city and many of its houses were built in Victorian times. Many of them are in decent condition because much care and affection has been given to them by their owners. Some of them may not be in good condition because of lack of care by some—though not all —landlords.
  I would have welcomed in the money resolution provision for grant. I know that the Water Act 1945 allows the water authorities at present constituted only to provide and maintain pipes up to the border of the curtilage of the property. With back-to-back or terraced houses there is a problem. People at the front get the full water pressure but when the water pipe going round the back is within the curtilage of two private houses, the householder in the back-to-back group gets the worst water pressure. That means that people cannot have washing machines because they will not operate and cannot have a bath when their neighbour is having a bath.
  The Minister will say that the Water Act 1945 provides a limitation. Since this is such a big change in the statutory provisions, will he consider in Committee financial provisions so that the water authorities can allow for pensioners and other elderly people who entered these houses in their youth and bought them over a period of time? If they have old pipes the water authority will say, "You have a leaking pipe. Give us £550 and we will repair it, and we will need another £200 for resurfacing." That is more than many pensioners or people on low incomes can afford. There is no provision in the DHSS and local authorities do not make provision for such improvements, even by way of grants. There should be provision for older industrial cities such as Bradford, Leeds, perhaps Doncaster, Sheffield and others. I speak from knowledge and from representations made to me by people in my constituency. The Minister should consider that.
  This labyrinthine legislation—this massive legislation —has two main parts. I cannot remember another Bill with two such huge chunks. Perhaps there is some authority in the Bill that will allow the Minister to direct the authorities to provide the assistance that I have mentioned. If that is so, it is the one tiny part of the Bill that I shall welcome. I should be pleased if the Minister could guide me to such a part. If he cannot, I would like an assurance that he will do something about the matters that I have mentioned.
  10.50 pm
  The Parliamentary Under-Secretary of State for the Environment (Mr. Colin Moynihan): I have a very short time in which to respond to many important points, so I hope that the hon. Member for Bradford, South (Mr. Cryer) will forgive me if I try rapidly to answer as many as possible of the issues that he has brought to the attention of the House.
  The comments made by the hon. Member for Truro (Mr. Taylor) may have been heartfelt, but I regret that none of them was relevant to the money resolution. We are glad to hear that the Social and Liberal Democratic party would not bring the statutory water authorities into public ownership—unlike the commitment given by the Labour party last night, if the Labour party were to come to power again. That serious and important issue has arisen as a result of the debate. The hon. Gentleman referred to all the costs associated with the plcs, such as the importance of upgrading sewage treatment works. That is a matter for the plcs, which will have access to the money markets—access which they do not have at present. That does not come within the money resolution, nor does the debate about European funds.
  I draw the hon. Gentleman's attention to my concluding speech at the half-way point of the debate late yesterday evening when I made a statement on disconnections. I hope that that statement will assist and satisfy him that we are conscious of the importance of an effective disconnections policy, but again I regret that that does not come within the ambit of the money resolution.
  All right hon. and hon. Members on both sides of the House respect and admire the hon. Member for Bradford, South for raising matters on the money resolution. It is important that they are listened to and treated seriously. I hope that I can follow up those aspects which I do not cover in the few remaining minutes by writing to the hon. Gentleman.
  The hon. Member for Bradford, South rightly referred to the National Rivers Authority and the grants to it by the Secretary of State. Paragraph 17 to schedule 1 enables the Secretary of State, with the approval of the Treasury, to make grants to the NRA of such amounts, and on such terms, as he considers appropriate. He must, of course, Comptroller and Auditor-General with an account for each financial year of any grant paid and the Comptroller and Auditor-General must then certify and report on that account. As the hon. Gentleman knows, copies of the account and of the Comptroller and Auditor-General's report must be laid before both Houses of Parliament.
  The grant-making power will enable grant-in-aid to meet the deficit on the NRA's operations. Although the NRA will be encouraged to maximise its income from direct charges, a deficit will arise largely because the environmental service charge will not be levied after 1989–90. Grant-in-aid is considered a more appropriate method of paying for services which are of benefit to the whole community. Grant will also be required to meet the NRA's administration costs and the costs of increased work on pollution control and research.
  The public expenditure provisions anticipate grant-in-aid of £40 million in 1989–90, £71 million in 1990–91 and £65 million in 1991–92 when income from discharge consents increases. I emphasise that because it is important for the hon. Gentleman and the House to know that
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  detailed consideration will be given to the nature of discharge consents and the charging methods applicable to them. They will represent a substantial form of income to the National Rivers Authority, but it is important for the Committee appointed to consider the Bill to look in detail at the provisions. Obviously, that income deducted from the overall amount is the relevant figure, and that will be far clearer as the NRA sets the appropriate framework for discharge costs.
  The hon. Gentleman mentioned a figure of £71 million grant-in-aid from a turnover of £290 million. It is not intended to be additional, but the difference between the two will be raised through the charging procedure. I am sorry that I cannot provide him with a detailed figure of the difference for 1990–91, but, to be absolutely accurate, we need to look very closely at the charging method for discharge consents. As soon as that is available and discussed in Committee we shall be able to draw the precise figures that the hon. Gentleman is seeking.
  The payment out of the national loans fund of any sums required by a Minister of the Crown or by virtue of the Act for making loans, while it is wholly owned by the Crown, to a successor company of a water authority or to a holding company of such a company, arises under clause 78. The power to make loans is provided for the period between vesting and flotation, in which the successor company and its nominated holding company might need access to public sector funds. The loan would be made to the nominated holding company, except in the unlikely event that the successor company had not yet become a subsidiary of it. Clause 85 sets limits on the borrowing of the group of companies to which a successor company and its nominating company belong.
  In the remaining minutes, I shall address my remarks to the important issue of payments to existing pension funds. As the hon. Gentleman knows, the water authorities participate in the local government superannuation scheme. It is a statutory pension scheme governed by the Local Government Superannuation Regulations 1986, made under section 7 of the Superannuation Act 1972. Pensions payable under the Local Government Superannuation Regulations are official pensions within the meaning of the Pensions (Increase) Act 1971. Pensions of water authority employees are, therefore, index-linked in accordance with statute.
  The cost of basic pensions is fully funded, but the cost of pension increases is met not from the superannuation funds but on an emerging cost basis. The administering authority makes the payments and, in general, is reimbursed by the last employing authority. The fund from which basic pensions are paid is the water authority superannuation fund, currently administered by the Severn-Trent water authority on behalf of all participants.
  The Government intend that, after the transfer date, the National Rivers Authority will be the administering body for that part of the WASF which remains after the transfer payments described. The NRA will also be made a scheduled body, so that its staff will be able to continue in the LGSS to which I have referred.
  I shall briefly mention the issue that the hon. Gentleman raised with regard to clause 4—the Director General of Water Services. The hon. Gentleman concentrated on the £3·7 million—an important figure. Let me try to clarify precisely how we have arrived at it and give some background information to the House.

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  As the hon. Gentleman knows, clause 4 provides for the appointment by the Secretary of State of an independent Director General of Water Services. Clause 4 also applies the provisions of schedule 3, which empowers the director general to appoint staff who will form the water services office, subject to the Treasury's approval, and for the payment from public funds of the expenses of the Director and his staff.
  The director general, who will have a position similar to those of the present Directors General of Telecommunications and Gas Supply, will be responsible for monitoring the activities and performance of companies appointed as water and sewerage undertakers, and, where necessary, enforcing the conditions in their licences. The director general will have a duty to ensure that customers are protected from unjustified increases in price or reductions in service, while ensuring that companies are able to finance the proper carrying out of their statutory functions. The director general will also exercise a wide range of statutory adjudicatory functions and will establish and maintain up to 10 regional customer service committees to represent consumers' interests locally.
  The director general will be supported by a new Government Department in the carrying out of his statutory responsibilities, and this will be similar to the Office of Telecommunications and the Office of Gas Supply and is likely initially to have a staff of 80. For instance, Ofgas has about 30. Approximately 50 will be based in a headquarters, probably outside south-east England, and the remainder will be in local offices servicing the regional customer service committees.
  The running costs of the water services office and of the customer services committees for the first full year of operation have been estimated at £3·7 million. The breakdown of that we estimate to be £2·7 million for the water services office and £1 million for the committees. The expenditure should be reimbursed to the Exchequer through the payment by water and sewerage undertakers of their licence fees. Therefore, no net public expenditure should be required.
  As I am in my last minute, I hope that the hon. Gentleman will be satisfied if I write to him on the important specific points about the special administrator, referred to in clause 24. I hope that I have managed to satisfy the hon. Gentleman on the other points, save one —grants for national security. With the permission of the House and of the hon. Gentleman, I shall write to him on that point as well.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the Water Bill ('the Act'), it is expedient to authorise—

  (1) the payment out of money provided by Parliament of the following, namely—

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  (a) grants by the Secretary of State to the National Rivers Authority;

  (b) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Water Services and any staff of the Director, any other sums payable under the Act to or in respect of a person who holds or has held office as the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act;

  (c) the remuneration of the chairman of a customer service committee, any travelling or other allowances payable under the Act to such a chairman, to other members of a customer service committee or to members of a sub-committee, any other sums payable under the Act to or in respect of a person who holds or has held office as such a chairman or member and the expenses incurred by a customer service committee;

  (d) grants and loans by the Secretary of State to a water undertaker or sewerage undertaker in relation to which a special administration order has been made;

  (e) sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a special adminstration order made in relation to a water undertaker or sewerage undertaker;

  (f) expenses incurred by the Treasury or the Secretary of State in acquiring securities of a holding company of a water authority 's successor company or rights to subscribe for any such securities;

  (g) compensation payable by the Secretary of State under the Act in respect of the exercise of functions in relation to trade effluent or in respect of loss or damage caused in connection with a power of entry;

  (h) grants in respect of compliance with directions given under the Act in the interests of national security;

  (i) sums required by the Secretary of State for making payments under the Act into any fund maintained for the purposes of any regulations under section 7 of the Superannuation Act 1972;

  (j) sums required by a Minister of the Crown for fulfilling guarantees given under the Act;

  (k) administrative expenses or charges incurred by any Minister of the Crown or Government department in consequence of the provisions of the Act;

  (l) increases attributable to the Act in the sums payable out of money so provided under any other Act;

  (2) the payment out of the National Loans Fund of any sums required by a Minister of the Crown by virtue of the Act for making loans, while it is wholly owned by the Crown, to a successor company of a water authority or to a holding company of such a company;

  (3) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities of a water authority's successor company, or of a holding company of such a company, in respect of any loans as the Secretary of State may by order extinguish.

  Water Bill [Money]

    WATER BILL [WAYS AND MEANS]
    Resolved,
    That, for the purposes of any Act resulting from the Water Bill, it is expedient to authorise—

    (1) the inclusion in appointments of water undertakers or sewerage undertakers made under that Act of conditions requiring the rendering of payments to the Secretary of State;

    (2) the payment of sums into the Consolidated Fund or the National Loans Fund.—[Mr. Maclean.]

  PETITION

    Leicester (Police Officers)
    10.59 pm
    Mr. Keith Vaz: I wish to present a petition on bahalf of Mr. Mike Preston, Mr. Andrew Palmer, Mrs. Mary Draycott and 9,997 other people, including myself, living in the outer areas of my constituency, in the electoral wards of West Humberstone, Humberstone, Thurncourt, Evington and Coleman, who are deeply concerned about the high levels of crime in the city of Leicester and the need for more police officers in the city.
    The petition supports the application by the chief constable of Leicestershire, Michael Hirst, for more police officers and is presented after a year-long campaign for additional officers in the knowledge that the Home Secretary will shortly be announcing his allocation of officers for 1989–90.
    The petitioners and I also believe that it is essential to the future of good policing in the outer estates that the Uppingham road police station be opened for a 24-hour period each day and night, and every day and night, so that our citizens, especially the elderly, can be secure.
    I hope that the Home Secretary will heed the demands of what amounts to one seventh of my entire constituency and allocate us the additional officers.
    To lie upon the Table.

  A27 (Noise Levels)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Maclean.]
  11 pm
  Mr. Anthony Nelson: I welcome this opportunity to raise a serious environmental problem in my constituency—the noise emanating from the new A27 trunk road from Chichester to Havant. The quality of noise as much as its excessive level is quite intolerable for my many constituents living near this stretch of road. It is on their behalf that I speak today.
  Every new road brings its reliefs and its problems. This new section of the A27 trunk road was sorely needed and long awaited. The deaths, injuries and traffic congestion along the old route were the source of outcry for many years. Many residents, especially the very young and elderly, in communities along the route were frightened to cross the road. Drivers went in fear of their lives and in certainty of traffic congestion.
  When, after long delay and seemingly interminable public inquiries, the new road went ahead, there was great relief in those communities and along the south coast. I know that that view is shared by many hon. Members representing constituencies adjoining my own. Only this evening, I was talking to my hon. Friend the Member for Havant (Sir I. Lloyd) whom I see in his place, and my hon. Friend the Member for Arundel (Mr. Marshall), both of whom have taken a close interest in this matter because of the relevance to their own constituents.
  My hon. Friend the Minister came down to open the new section of road on 19 August this year and we thank him for doing so. He will remember the very warm reception that he received on that occasion. However, few appreciated at that time, least of all myself, driving up the new road for the first time in a rather elderly car with him, just how noisy the new road would be when modern traffic in the volume and speed that it adopts used it to full effect, but, unfortunately, our worst fears have been exceeded.
  I have with me some 200 or more letters from my constituents, complaining in strong terms about the noise and calling for resurfacing or remedial measures to be taken. This is the catalogue of human distress. This is the file of distress that my constituents have suffered and about which they have written to me in such graphic terms over the past couple of months. Many of them are reasonable people, not given to extremism or complaining lightly, but they feel that the noise, while expected to some extent, has proved to be excessive and quite unbearable. Many of them describe the roar to which they are constantly subjected as similar to that from an aircraft runway, especially when heavy goods vehicles pass by, as they frequently do.
  Many are unable to enjoy their gardens or peace and quiet inside their homes. Many cannot sleep at night. Many have suffered a reduction in the market value of their homes, even though most neither wish nor intend to sell and leave the area. For many of my constituents, the quality of their life has changed materially, and for the worse, since this new section of road opened. In short, their peace has been shattered. They look to my hon. Friend to alleviate this problem urgently and to find the funds necessary.

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  I take from this file a couple of letters which are indicative of the representations that I have received every day from my constituents and about which they have been to see me. I quote first from a letter from Mr. Nightingale of Cemetery lane, Woodmancote, Emsworth. He says:
  "Living at the above address, I would like to point out that the peace and quiet of my home, garden, and environments have been destroyed by the noise from the new A27 trunk road, which passes at 80 metres distance from my bungalow. I very much hope that something can be done to alleviate the noise problem and thus relieve my suffering. I would also like to point out that when the wind is blowing in my direction, I can actually smell the fumes and exhaust from the road."
  Mr. Cyril Baker writes to me from Scant road in Hambrook, saying:
  "Being an O.A.P. and property owner, thus a rate payer, I am writing to you regarding the constant noise created since the opening of the new A27 Trunk Road which passes through the field opposite the front of my property. Not only has the value of my property depreciated but as my bedroom is in the front of the bungalow I find it impossible to sleep. Even in my back garden I can no longer enjoy peace and quiet. Your co-operation regarding this matter would be appreciated."
  Richard Stafford from West Ashling writes to me:
  "I know you are trying to remedy the intrusion that the 'roar' of this road has brought to the peace and quiet of these parts. Please persuade the Department to do something. We must live ½ mile away and the whine continues day and night; life for the people closer must be intolerable."
  Mrs. Sheila Frampton, writing from Fraser gardens in Southbourne, says;
  "I write to express extreme unhappiness with the noise levels of the above. The unceasing traffic noise is both distressing and irritating. It is an ever-present noise even more obvious at 3 a.m. than it is at 3 p.m."
  My constituents are obviously distressed, and I make no apology for reading out what they have said to me, because this is indicative of the real distress that is caused to individuals' lives—people's homes, the quiet and privacy of their environment, which they enjoy and for which they have paid a great deal of money. I believe that my hon. Friend—I hope that he will accept this obligation —will reply in sympathetic terms and offer some redress or alleviation of their plight.
  I first raised the question of the type of road surface and the noise implications with my hon. Friend some years ago, following representations from a number of constituents who were apprehensive about the use of the concrete surface. As always, my hon. Friend was courteous and assiduous in his reply. On 15 July 1987, he said to me:
  "as far as road surface noise is concerned our general experience has been that surfaces of brushed concrete do not produce noisier roads than bituminous surfaces designed to give traffic the same level of skid resistance."
  I have to tell my hon. Friend that neither I nor my constituents believe this to be the case. I have been to hear for myself the noise and disturbance with which my constituents are being asked to put up.
  I have visited residents and communities along the new route, with local councillors and representatives of the new A27 action steering group, which consists of residents associations of Fishbourne, Hanbrook, Woodmancote, Lumley and Emsworth. In my view, the noise results from excessive grooving or depths of brushing in the concrete road surface. It is not the noise emanating from the engines of vehicles but the noise of the tyres on the rough surface, which so permeates the countryside and so disturbs my constituents.
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  Interestingly, the noise varies greatly with the wind direction and the weather conditions. For some of my constituents, on occasion it can hardly be heard at all, and on others, it is distinct and permeates not only their properties but the structure of their buildings. There are some instances where properties on stretches of road where there is a great deal of curvature have a combination of noise effects that is extremely disturbing, I have visited some of my constituents in some of these homes. Although the noise varies with wind direction, it can be heard over suprising distances.
  I stood close to the A27 dual carriageway at Havant, which carries the same volume of traffic, but is surfaced in asphalt, and the noise level there is insignificant in comparison. Similarly, when driving along the road, the surface is noticeably quieter when on the asphalt sections over bridges and culverts.
  I understand from my correspondence with my hon. Friend that the Department of Transport's specification for the surface finish of brushed concrete provides that the average texture depth shall not be less than 0·75 mm. as determined by what is known as a sand patch test. I believe that that is a somewhat archaic method, given the new laser facilities for assessing surface depths, but it is the one that is used and, presumably, it is regarded by the authorities as being reliable. That minimum surface depth is to ensure that there is sufficient skid resistance. From inspecting the road myself, it is apparent that the texture depth is much deeper in places and the unevenness in some parts appears to be similar to mini potholes.
  The A27 action group has today delivered to me its own measurements of the surface texture depth. Those measurements were taken by an assiduous constituent at daybreak on a Sunday three weeks ago, while his wife kept a lookout for passing traffic. That was somewhat beyond the call of duty, but it has been helpful to the debate. By using the same sand patch test method, he found that the mean surface texture depth was some 30 per cent. more than the present guidelines advise and, in the worse cases, was some 60 per cent. more.
  In his letter to me of 18 November 1988, my hon. Friend the Minister, said that on this scheme the sand patch test results varied generally from 0·9 mm to 1·9 mm, with an average result of 1·3 mm. Even that is nearly double the minimum specification and in my judgment is much deeper on some parts of the road. Those parts of the road where it is much deeper give rise to noise and permeating noise, which is quite intolerable for my constituents.
  I ask my hon. Friend whether there is a maximum texture depth specified and, if not, why not? That is of importance not just in my area, but throughout the country where new roads are being built.
  Mr. Michael Marshall: My hon. Friend will accept that he is doing a great service, not just for his constituency, but nationally. He will know, of course, of the new plans for the A27 at Crossbush and at Arundel. I hope that my hon. Friend will urge our hon. Friend the Minister to assure us that the point that he is making will apply to the new extensions of the road allied to his own schemes and, especially, in the selection of tarmac rather than concrete as a principle.
  Mr. Nelson: I am obliged to my hon. Friend, because I believe that he supports the point that I am trying to make.

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  It does have relevance to other parts of the country as well as to my constituency. There is great concern that perhaps economies—reasonably and understandably being sought in the roads programme—may have an adverse impact on the environment and noise. Crossbush, which we discussed before this debate, is an important example. Therefore, I believe that other communities will be listening with great interest to my hon. Friend's reply.
  The planning inspector's report on this road back in 1984, at paragraph 79.03, said:
  "In order not to introduce more noise than is necessary into the lives of affected communities. I request that a major factor in the choice of road surface for this route should be its property to generate the minimum amount of traffic noise."
  To which the Secretaries of State responded on 12 June 1985 in paragraph 42 that
  "this will be taken fully into account during the contract letting procedures."
  I ask my hon. Friend to explain whether that was taken into account in awarding the contract and, if so, how.
  My hon. Friend the Minister wrote to me on 4 November 1988 asserting that
  "if this new road had been constructed with asphalt surfacing in accordance with the Department's current specification, it would not have produced a significantly lower traffic noise level."
  I contest now, as I did then, this assertion, especially as the grooving in the concrete is at least twice the depth of the minimum specification.
  The Minister went on to say:
  "the usual competitive arrangements allow for either concrete or bituminous construction to be accepted, with contracts awarded on the basis of the lowest cost for a particular job."
  All well and good, but what was the difference in the cost between surfacing the road in concrete or tarmacadam? Indeed was a quotation for bituminous construction even invited? This raises significant questions. Tenders should not be sought on the basis of price only. Does the Department make a point of inviting tenders for different types of surfacing in view of the implications of the different building materials involved?
  Most of my constituents who are affected consider that the only satisfactory conclusion is the resurfacing of the road with asphalt. My hon. Friend ruled this out last month because, in his words, the Government
  "could not justify the very substantial cost that would be involved."
  What cost would be involved, and how would this relate to the difference between the original tenders for concrete and for bituminous surfaces? I have been told that the road was budgeted originally at £30 million. Apparently the contract price was about £19 million, although the actual cost was a little higher. Will my hon. Friend confirm or deny these figures? It is important that he does that because it might demonstrate whether the job has been done on the cheap, but at the expense of quality and quietude.
  Last month I suggested to the Minister that, if it were technically feasible, the textured depth of the road should be "sandpapered" down, but he replied on 18 November that his Department was not aware of any machine that could plane concrete to a tolerance as fine as, say, 0·5 mm. But such a fine tolerance is not required. Any improvement or reduction in the highly grooved surface would bring a significant attenuation of noise.
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  The Minister also appears to place great reliance on the natural action of traffic as an abrasive in removing the high ridges within "a reasonable period". But what is "reasonable" and what degree of reduction in noise can be anticipated? My view is that it will take much longer than a year.
  It has been said that the noise from the new road surface will be reduced by 40 per cent. in the first year. But what does that 40 per cent. reduction mean? Sound intensity is measured on a logarithmic scale, so a reduction of sound intensity by 40 per cent. would mean that the measured sound level would be reduced by only about three dB(A). The chairman of Chichester district council, Mrs. Jean Illius, recently sent me the test findings of environmental health officers at two locations north of the road, in Hambrook and Woodmancote.
  The findings of 65 dB(A) and 65·5 dB(A) respectively were at or above the predicted noise levels provided by the Department of Transport at the commencement of the scheme and predicted for the year 2003. But as the volume of traffic is expected to rise significantly in the next 15 years, it is reasonable to assume that the actual noise levels for the year 2003 will be greater than predicted. While I welcome my hon. Friend's decision to undertake a reassessment of traffic noise levels, may I be told what action he will take if his original predictions are shown to have been exceeded?
  The Minister has told me that the Department of Transport could contemplate only work such as further bunds or barriers, but my impression is that these would provide little relief, even to nearby houses. Surprisingly, the trees along the route provide little or no sound cushion. Unless there is a considerable depth of densely planted trees, the attenuation provided is negligible.
  What redress or compensation is available to my constituents? Will the Minister look again at the question of resurfacing or planning works if the results of his tests show, as I believe they will, that the noise is excessive? Also, in view of the recent tragic death of a 15-year-old boy while trying to cross the road, in the constituency of my hon. Friend the Member for Havant, I hope that he will consider the aspects of access to the road and safety along its route.
  Will my hon. Friend confirm that in part I of the Land Compensation Act 1973, claims for compensation may be made for loss of value of property because of noise and other adverse physical factors? My constituents should be informed that claims may be made from 20 August 1989, one year before the road opening, and that anyone selling before then should register a claim with the Department of Transport after exchange of contracts but before completion. Claim forms are available from the Department's south-east regional office in Dorking.
  From what I know of my hon. Friend the Minister, I know that these words will not have fallen on deaf ears. I and my constituents look to him to make a constructive and positive response.
  11.20 pm
  The Minister for Roads and Traffic (Mr. Peter Bottomley): I shall say some specific things first and then deal with more general issues, which is the reverse of normal procedure. My hon. Friend the Member for Chichester (Mr. Nelson) referred to safety, and my hon. Friend the Member for Havant (Sir I. Lloyd) has written

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  to me about it. We are considering the improvement of fencing along the road as a matter of urgency. My hon. Friend the Member for Chichester talked about lighting. Hampshire county council has accepted that it is its responsibility to maintain the lighting in the tunnel, and it will give the matter urgent attention. Noise is important, but, as my hon. Friend says, it is safety first.
  Anyone listening to my hon. Friend would have understood how hard he has worked on these issues, the detail that he has gone into and the close links that he has had with his constituents and the constituents of others who are affected by the issue. I acknowledge the way in which he brought into the debate my hon. Friend the Member for Arundel (Mr. Marshall). If I spent all the money that is available to me on extra facilities for existing road proposals, I must say to my hon. Friend the Member for Arundel that it would not be possible to bring Crossbush into the programme as soon as I would wish.
  My hon. Friend the Member for Chichester has raised an environmental issue. Liberal Members are entirely absent from the Chamber. That is their position after a speech by the hon. Member for Truro (Mr. Taylor) on a water authority, during a debate on the money resolution, that had nothing to do with the question before the House. That shows how the Liberals treat local and national issues. My hon. Friend has introduced a national issue, and I know, Mr. Deputy Speaker, that that is one of the reasons why you are chairing our proceedings.
  My hon. Friend the Member for Chichester knows that, in the light of the concern which he and his constituents have raised, we have asked the consultants to reassess traffic and noise levels. The reassessment will take account of traffic flows, recorded in the three months since the road opened, and the road surface texture, using the new 1988 version of the report entitled "Calculation of Road Traffic Noise". If the original forecasts of noise levels are found to be significantly exceeded by the measured results and the forecasts which were built upon them, we shall consider whether additional protective measures can be justified. We hope to have the results early next year.
  It is too soon to draw firm conclusions either on the results of the new forecasts or on whatever measures might be taken—I do not want to raise my hon. Friend's hopes too high by offering him promises late at night and not delivering in the morning—but it does appear that noise levels are between 2 and 3 dB(A) higher than forecast. As my hon. Friend spelt out in his physics lesson, that is an appreciable difference. Of course, it is the same difference upwards as it would be downwards. We should not rubbish the effects of reductions or of increases in noise. At the least, if it is confirmed that noise levels are 2 or 3 dB(A) higher than those predicted, that would result in additional houses being offered secondary glazing.
  My hon. Friend the Member for Chichester was slightly unfair to mounds. If someone is within about 100 yd of a mound or bund, there is an appreciable difference. The closer that someone is to the bund or mound, the greater the difference. Trees on their own do not affect the noise level. They have a psychological effect, however, because they cut off the sight of traffic. It is often the combination of the sight of traffic and the sound of it that makes life difficult to bear for those who have lived previously in an area that was quiet. We all know that in areas of the sort that are represented by those of my hon. Friends who are in the Chamber this evening—I am sure that my hon. Friend the Member for Loughborough (Mr. Dorrell) will
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  confirm this from his constituency experience—that when a road is built where people are already living, it can disturb them greatly. If a house is built following the construction of the road, people will move in and cheerfully put up with more noise than if the noise follows them.
  I understand the local concern. It would not be possible to resurface the road. The cost difference requested by my hon. Friend is £1·3 million, and that is an appreciable sum. If we have 30 to 40 completed road schemes a year and we were able to save £1·3 million on each, we could bring relief to many more communities. I am not saying that my hon. Friend's constituents must make sacrifices so that others may be bypassed. There is a responsibility to bring the environmental relief that this section of the A27 has brought to the many people who live on the existing road and we need to get value for money. Also, if we specified the type of surface, we would find that either the bitumen or the concrete suppliers would start to practice more monopoly pricing. We would lose a strong element of competition. There would be a loss not of £1·3 million, but of £2 million or £3 million on a surfacing contract. One of the reasons why we get value for money is that we allow competition.
  My hon. Friend referred to the inspector's report and to the decision letter when previous Secretaries of State said that they would take that into account. The information that, at any given level of steering resistance, roads have the same level of noise is based on scientific research. It does not state that a concrete grooving will always be achieved precisely as intended. My hon. Friend raised that point. He was rather hopeful about taking off any high ridges that may exist. It is important to ensure that we have the right skidding resistance. We were talking about trying to cut off peaks, if there are any, without affecting the skidding resistance of the road. We intend to spend £9 million in each of the next four years and £2 million a year thereafter to monitor the skidding resistance of our roads to see whether resurfacing work is inadequate. We expect that that small amount of money will produce a return of £5·50 for every £1 we spend in terms of accidents prevented. It is important to bear that in mind after my earlier points about casualty reductions.
  I obviously cannot say that on every occasion that asphalt is used it comes up to the intended specification. Extra safety and extra noise must be balanced. There may be signs that traffic is wearing out some of the ridges in a reasonable time. However, that cannot be claimed to reduce the noise by 2 or 3 dB(A). The likely figure is 1 dB(A) and that would not be noticeable to the general public, although it would be noticeable to noise meters.
  If successive ridges have created extra decibels, my hon. Friend should not be concerned about that. It may turn out that since the road was designed and the calculations were made, continued economic growth, the increase in he number of cars and the growth in general movement in the south-east and on the south coast in particular, may have been more of a cause of that. That would provide a new basis for the forecast for the design, which may bring about some of the changes in compensation arrangements.
  My hon. Friend asked me to confirm the section 1 compensation arrangements. He described them correctly. People who are selling before the year is up after the opening of the road, should register the claim between the exchange of contracts and completion. If they have any doubts, they can refer them to my hon. Friend. to the

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  Department, or to a surveyor, who can act as their agent. Those who are still in possession of their homes a year after the opening of the road can make a claim. We shall go in for extensive local publicity, so that no one loses the chance to claim for a reduction in value of his home because of noise or other relevant factors.
  My hon. Friend paid tribute to the importance of the new road. Although I said in my speech at the opening of the road—which was a cheerful occasion—that those who were experiencing noise for the first time would find it unpleasant—I cannot remember whether I used a stronger word than that—most of us understand that it is not nice to have to accept noise from a new road. Nor is it nice for local people living in the settlements along the old road to
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  have to put up with the traffic. Clearly, the traffic on the new road is travelling faster, and that will lead to an increase in noise. It may be generally better that that should be so, but we must always recognise that progress has its penalties.
  The constituents who sent 200 letters to my Department, some of which I have seen, and the letters that my hon. Friend held earlier, show that there is a problem. So far as the Department is able, it will try to solve it. However, I do not want to make any extravagant promises. Even with the increase of 20 to 40 per cent. in the next two years in road spending, we must watch out for the money while trying to be fair. When we receive the noise report, the new forecast will be presented in public. I hope that that will help my hon. Friend and his constituents.
  Question put and agreed to.
  Adjourned accordingly at half-past Eleven o'clock.