HC Deb 02 February 1988 vol 126 cc931-7
Mr. Henderson

I beg to move amendment No. 7, in page 8, line 38, leave out 'Sections 2 to 6 above and the Schedules to'. We have had 20 sittings of the Bill in Committee in order to guarantee and protect our democracy and our parliamentary process. It is clear, from the way that clause 8(2) omits clause 1 from the clauses which are regulated, that this undermines our parliamentary process and therefore our democracy.

In moving amendment No. 7 we are trying to redress the damage that would be caused if our amendments are not accepted by the Government, because clause 1 relates to privatisation and is a eunuch clause. Superficially, clause 1 governs the transfer of powers from existing authorities to future authorities which will be privatised, but the Bill is not an enabling Bill; it circumvents. Water authorities, acting alone or with the Government, can circumvent Parliament in many ways.

Although clauses 2 to 6 regulate the conditions and circumstances in which water meters will be introduced, the Bill leaves completely unregulated the fundamental question of ownership, control and management of a water authority, and thereby circumvents Parliament in a number of ways. It does so by the extent to which water authorities can spend public money in publicising a sale to the private sector, a sale which I submit has no guaranteed improvement, interest or gain for the consumer. We know of pending litigation in this regard in relation to the Severn-Trent water authority.

In effect, water authorities can use public money to give away public assets with no or little safeguard for the public interest or for consumers. Water authorities can fatten themselves up for a sale which ultimately can only line the pockets of the private sector.

It also leaves unregulated the transfer of assets from a water authority to a newly privatised company. A water authority could sell the lucrative side of the business. It could sell reservoirs in which large investments had been made at public expense in recent years. It could sell main piping systems which had been installed, again at public expense in recent years. At the same time, it could retain the liabilities which are unsellable—the liabilities of old water mains systems or smaller piping systems, the kind of systems which in Committee we have referred to in relation to water in much of the Thames area. So the public sector could be left with the old Victorian liabilities while the private sector creamed off the public investment which has been put in to improve our water system.

As the Bill is currently constructed, clause 8 leaves unrestricted any potential changes in employment. Without reference to Parliament a water authority could completely restructure the labour force. People who had gained skills and experience, much of it at public expense in public training centres, could be cast aside. Contractors could be introduced, with all the cowboy practices and cut price wage levels. All of this, which I believe would seriously undermine the industry, could happen without reference to Parliament. A water authority could even make most of its staff redundant, at enormous cost to the public purse in redundancy payments, and at the same time introduce private contractors. All this would be designed to fatten up the industry for a future sale.

The Minister stated in Committee that it is not the Government's intention that the Bill should give enabling powers to water authorities to prepare for proposals other than those set down by the Government for the privatisation of the water and electricity industries." [Official Report, Standing Committee B, 12 November 1987; c. 79.] That may on the surface seem fair enough, but our point is that that definition is far too wide. If it is taken literally it allows the Government to go ahead without reference to Parliament and virtually to do anything in relation to the sale of the water industry or the electricity industry.

I believe that, regardless of what we might hear about mandates at general elections and prior notification of Government intentions, the public do not want to see their water industry sold off without further reference to their opinion. People still have some faith in the Parliament of this country because they believe that at least there is a chance to air their views. Our point in presenting this amendment is that if the Government do not accept it they are abrogating their commitment to democracy. I believe that Parliament should decide the future of the water industry. If after a debate in Parliament the arguments of the Opposition are lost, at least we have had a chance to refer to important issues and to reflect public opinion that agrees with our views. Likewise, the Government have the opportunity to build up their case.

We must remember that Parliament has built up protection for the water industry over many years. Victorian sewers did not suddenly appear; sewage in the streets did not suddenly disappear; or dirty water from our taps. We have a sensible system of disposing of dirty water and providing clean water only because in Victorian days and afterwards Parliament decided that that should happen. The legislation came from several political parties rather than one. They all thought that something should be done.

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People in this country are proud of our water system. If they travel abroad they say, "I am not having their water. It is not nearly so good as ours. I do not trust it and I will stick to bottled water." We all have experience of that attitude. Often, British people will not drink water even in Sweden where the water system is as good as ours. They do not believe that the water comes from a good system that has stood the test of time in the same way as the British system. That pride should be retained. It is offensive to that pride for the Government to decide to introduce a major change to the structure of the water industry without referring to Parliament.

Parliament should decide whether this country wants to retain an integrated water industry, with control of the disposal of dirty water and provision of clean water under one authority. The majority of water authorities have argued that that is an important factor in achieving high standards of efficiency in the industry. It was certainly the case until very recently that the chairmen of all the water authorities argued that case. I believe that factor underlies the reluctance of the chairmen of the water authorities to agree to divest any power to the National Rivers Authority. We must remember that all of those chairmen were appointed by the Government. They were not appointees of a previous Government, who were making a political point to the industry. The chairmen were appointed by the Government, who wished to introduce their ideology into the industry. Yet the chairmen say that it makes sense to have an integrated industry, not a divided one.

The industry could be broken up by an act of Government and not by an Act of Parliament under this so-called enabling Bill. After our argument and debate, it might be decided that it makes some sense to divide the responsibility for our water industry. I do not think that it will make sense. If the case is tested, people surely will accept that there should be one integrated structure for the industry. But it is proper for a division of responsibility to be decided by Parliament, and not by the Government at any particular time.

I have never been convinced that there was a strong case for the enabling Bill. If the Government wanted to pursue their case to sell the industry, they should have put forward their detailed proposals and made specific points about the National Rivers Authority rather than what we have seen in the White Paper. It says that the arrangements for the water industry might be this way or that way and there might be some advantage in this or that. It was incumbent on the Government to say that this was the kind of structure that they envisaged because it would be efficient and acceptable for the industry. We would like a public debate. After that public debate, they could have come forward with specific proposals on how to change the structure of the industry.

However, what has actually happened is that, because we have had this Bill, the Government can now prepare the way for effectively doing what they want with our water industry, without any further reference to Parliament, for up to two years from now. Much irreversible change and potential damage could be done to the industry during that period of time and that would be wrong.

Mr. Sydney Bidwell (Ealing, Southall)

Unlike the observation made earlier from the Conservative Benches, my hon. Friend's suggestion reflects the great deal of public fear, which could only become entrenched, especially about the reductions in the standards of water purification in the system that we have come to revere.

Mr. Henderson

I thank my hon. Friend for making that key point. That is another area in which hon. Members of all parties would recognise that there is a problem, even with our pride in our water supply. If our water supply now—good as it has been in the past — does not match the required European standards—and there is much evidence that it probably does not at this stage — money needs to be spent on the industry to ensure that we comply with those standards. I am glad that my hon. Friend raised that point because people who believe that that is the case do not know, if they agree to selling off the industry, whether a new privatised company would be prepared to accept that liability. After making a killing in the sell-off, the privatised company may end up being subsidised by Government to achieve the necessary reforms to which anyone with a sensible knowledge of public health standards would want to ensure that we adhere.

If the Bill is passed without our amendment, in effect, the public and Parliament would not have any control and would be excluded from the process of selling off and changing the structure of the industry. I was tempted to say "breaking up the industry" but I can live with the phraseology of "changing the structure of the industry".

The important point is that that would be an abnegation of our democracy. The Minister has shown that he is, at least in part, prepared to listen to some of the arguments that were put to him in Committee, so I hope that he will recognise that the amendment is fundamental and that he will understand its importance and say to the Secretary of State, "I think that we should accept this amendment to make sure that public control is returned to the people."

Mr. Dickens

I am pleased that Opposition Members are not pressing their amendment, so I do not want to antagonise them at this stage. However, there is an important point that they may not have thought about. Millions of people throughout the United Kingdom have what are described as "unadopted sewers", not because those sewers are actually unadopted but because of sloppy work by earlier councils, bad minute taking, and because they were not delineated on maps, which means that those people cannot prove to the satisfaction of the local authority that the sewers have been adopted.

If there is a breakage in any of those sewers, a bill of apportionment goes to each household out of the blue. These people are sitting on timebombs. I am talking about millions of people who will look to the privatisation of water Bill as perhaps providing them with some relief. It may be possible— I do not put it more strongly than that — for the Department, when it is negotiating, to encourage the water authorities to take on those sewers as part of the deal. That would be the very best, but, at the very worst, perhaps the Department could encourage the water authorities to come to some financial arrangement with those millions of people throughout the country whereby they could reach a financial settlement to free themselves from the timebombs on which they are sitting.

I know that Opposition Members hold sincere views, but I remind them that millions of people look to the water privatisation Bill as perhaps the only way of getting out of a great dilemma about old sewers that may not have been adopted. In most cases they have been adopted, but that cannot be proved.

Mr. Moynihan

The results of the sewerage law review are being considered by my colleagues in the Department. I can give the hon. Gentleman the undertaking that his comments have been well aired, Will be taken into account and that the outcome of those considerations will in part be reflected in the main Bill. I can assure the hon. Member that his points about the future shape of the water industry will be at the heart of the substantive legislation that will be prepared during the coming months and brought before Parliament in the autumn. The detailed consultation exercise, not least on the National Rivers Authority, will be critical.

The amendment is proposed to clause 8 which deals with the commencement and extent of the provisions of the Bill. When first presented to e House, subsection (2) provided that clauses 2 to 6 and the schedules to the Bill would come into force two months after Royal Assent. That provision was amended by me in Committee to make the coming into force of those provisions dependent upon an order or orders made by the Secretary of State through statutory instrument appointing a day or days for commencement. As I explained in Committee, the amendment served to give flexibility and to help the consumers and the undertakers. I offered various examples of the way in which we expected to use that flexibility. Our amendment allows the Secretary of State to delay the coming into force of that provision until undertakers have had sufficient opportunity to let their metered customers know about the new requirement. I explained in Committee that the Bill's other provisions, in particular clause 1, would come into force on Royal Assent. The Opposition amendment would mean instead that those other provisions would require an order, or orders, made by the Secretary of State to come into force.

We do not consider that this additional procedural requirement is either necessary or appropriate for the other provisions. We wish to see neither delay nor the prospect of delay between the enactment of the Bill and the availability to water authorities and the electricity supply industry of the express power provided to them by clause 1.

Once the will of Parliament has been expressed and Parliament has approved the Bill, the water authorities will wish to put the clause 1 power into use and make progress towards the new structure for the industry that we have proposed. The amendment seeks to introduce an unnecessary procedural hurdle into the work of preparation and it should be withdrawn. Despite having had a rather wide-ranging debate on an amendment which I followed with interest, I am not completely sure how closely it followed amendment No. 7.

Mr. Boyes

My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) has covered the amendment extremely well and left little for me to say. I can only reiterate that the proposals for privatisation in the Bill allow the authorities to do virtually anything. We argued at length in Committee about that. We are concerned about the undermining of democracy and the circumventing of Parliament—two key themes—in that the role of Parliament is continuously reduced by the activities of Ministers. Opposition Members are adamant that we shall ensure that the main enabling Ball is vigorously opposed.

The Minister has not explained why it is necessary to have an enabling Bill. I beg the Minister's indulgence to ask a further question about the relationship between the privatisation proposals and VAT. When the Minister answered the question from my hon. Friend the Member for Gateshead, East (Ms. Quin) he did not appear to realise that the European Court decision to which my hon. Friend referred related specifically to industrial users of water. The Minister should get hold of an article in The Independent on Tuesday 8 December 1987 in which there is a discussion of the Commission's general VAT rate and harmonisation measures. It refers to a 4 per cent. to 9 per cent. charge on water users. Presumably that applies to both industrial and domestic users. Water supply is included among the list of half a dozen possibilities for VAT, which also includes foodstuffs. The Minister may not wish to respond immediately; he may want to consider that point carefully. There is a clear distinction in this case. The Minister is honest and has never misled us and I accept that he gave his earlier reply with all integrity.

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Ms. Quin

The Government have given a commitment that they would not apply VAT to food, children's clothes or fuel. However, they have not given an assurance that they would not impose it on books, newspapers, periodicals or water charges, despite the case in the European Court. As I understand it, the European Commission's general proposals for VAT harmonisation include water charges, which would relate to industrial and domestic users.

Mr. Boyes

As the Minister is aware, my hon. Friend the Member for Gateshead, East is still a Member of the European Parliament and she follows Commission matters closely. We are trying to be helpful as well as trying to elicit information. If the Minister prefers to have a little time on this matter, it would be acceptable if he gave us a written reply. However, we disagree with his argument on amendment No. 7.

Mr. Moynihan

It would be foolish of a Minister to stand at the Dispatch Box and pre-empt any possible decision that the Chancellor of the Exchequer may take about the Budget. I would not wander down that road on any of the issues raised by the hon. Gentleman and that covers every aspect of the budgetary process. Opposition Members must be aware that I would not do that. However, the Commission's proceedings against the United Kingdom are relevant. I want to make it clear—and I repeat this point—that the case does not concern domestic supplies. It is only relevant for industry and I place that on the record.

Amendment negatived.

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