HC Deb 04 April 1989 vol 150 cc89-166

Amendments made: No. 8, in page 339, line 33, column 3, leave out '5,' and insert '1 to'.

No. 38, in page 346, leave out lines 26 to 30.—[Mr. Ridley.]

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, and Prince of Wales's consent, on behalf of the Duchy of Cornwall, signified.]

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

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

Out of the three days for the remaining stages of this Bill, the Opposition have chosen to use a quarter of the time on the Third Reading. On this occasion I think they were right: they completely failed to fault the Bill in Committee and the details were found to be correct. My hon. Friends, the two Ministers of State and the two Under-Secretaries of State, totally dominated the argument throughout the Committee stage. On Third Reading, we come back to the big issue of principle: the advantages of privatising the water supply and sewerage industries.

We had scare stories and diversionary tactics galore—everything from turnstiles on national park walks to my alleged row with my right hon. Friend the Prime Minister; from our proposals for price control for water companies that were alleged to be leading to huge monopoly price rises, to the cost of environmental improvements that the hon. Member for Copeland (Dr. Cunningham) alleged was due to privatisation. They were all nonsense—fictitious fig leaves to disguise the real reason for opposing the Bill: which is the lingering spirit of clause 4, the Labour party's antagonism to private enterprise, the pain and despair at seeing the Socialist state not only demolished but debunked in argument.

The hon. Member for Dewsbury (Mrs. Taylor) gave the game away a fortnight ago today when I intervened to ask her, if she wanted to see a major clean-up of our rivers, why she opposed the Bill? She did not have an answer, she fumbled and could only repeat her opposition to privatisation. The Committee stage has proved that there is no reason for opposing this Bill, other than the emotional one that somehow water is different, that it is vital to life, and is provided by the Almighty. I shall therefore spend a few minutes discussing that incontrovertible observation.

Yes, water is vital to life; but so is food, and housing and clothing, and many other things, too. Yet nobody suggests we should emulate the Russian system of collective farming and state food shops, which is the way the public sector provides for that staple of life which is food. Primitive man privatised food supplies, and so does civilised man. I will not attempt to answer for Ashdown man who has taken no part in the debates.

Nor do I recommend the Socialist clothing shops to those aspiring countrymen of ours who clearly prefer Marks and Spencer. Nor do I recommend the Socialist provision of state housing. Even the Labour party knows that people prefer home ownership. But clothing and housing are staples of life, far better provided—does anyone disagree?—by the private sector.

So what is so special about water? It is a natural monopoly, yes, but that is catered for in the regulatory arrangements that we are making. I would remind the House that it is not the water itself which we are proposing to privatise, but the impounding, piping, pumping, treatment, maintenance and billing of it—the industrial activity essential for its provision. Morever, we mortals dirty it. It has to be taken from our houses and purified, treated, pumped, piped and finally disposed of. Listening to Opposition Members, I sometimes think that they believe that it is the Tories who create sewage. I plead guilty to the fact that Tories do create 44 per cent. of it—our latest opinion poll rating—but that means that 40 per cent. is Labour, 12 per cent. Liberal/SDP and 4 per cent. do not know.

Mr. Paul Boateng (Brent, South)

Will the Secretary of State reflect on the fact that 96 per cent. of those who took part in a recent opinion poll on water privatisation and who assist in the production of sewage were against his Government's proposals?

Mr. Ridley

I cannot accept that figure. The poll that I have quoted is the one the hon. Gentleman should bear in mind, instead of making such an unfelicitous intervention.

The fact is that 42,000 people are employed in the provision of our water and sewerage services. Unfortunately, the Almighty does not pay their wages; nor does He provide the capital for the massive increase in environmental standards which this Bill will usher in. That is why water is not free, and never can be.

The question is, how can this massive human enterprise be best motivated; and how can this large amount of other people's savings best be harnessed to the improvement works that everyone wants to see?

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. Friend accept that many of us agree with him that we dislike state monopolies, which is why many of us voted for much of the privatisation that has taken place throughout this Government's period in office? If I dislike state monopolies, which in the end are controlled by the State, why should I like private monopolies that in the end are often against the public interest? What is so good about a private monopoly and what is so awful about a state monopoly, as with water where people have nowhere else to go to, as there is only one supplier?

Mr. Ridley

I do not know whether my hon. Friend supported the Government when they privatised the airports, British Telecom and British Gas——

Mr. Beaumont-Dark


Mr. Ridley

Those are all monopolies, too.

Mr. Beaumont-Dark

They are not.

Mr. Ridley

They are. There is no way of coming to London without going to Heathrow or Gatwick, which are both under the same ownership.

These are the questions that are relevant to the Bill and which the Opposition shirk. I shall give them the answers. The whole country knows that people work more effectively if there is every opportunity for them to better themselves by better performance. In the private sector, water managers, foremen and employers will profit from success, and I hope that they will own shares which will then rise in value as these people succeed. In the private sector, capital which is borrowed from the market or from shareholders will be invested with all the efficiency and skill that those who are responsible to their shareholders have to demonstrate. Moreover, that capital will not be rationed as it is in public sector industries: it will be allocated by the market, if a water company can show a proper rate of return.

We all know what happens with capital rationing in the state sector. Under the Opposition, capital spending was cut by a third, and investment in sewerage within that by a half. That is the albatross of which the Labour party will never be able to rid itself in these debates, and it continues powerfully to make the case for privatisation.

Mr. Nigel Spearing (Newham, South)

Talking of capital and shares, will the right hon. Gentleman confirm something with which I charged him on Second Reading and which I believe still stands? This capital will be available for diversification virtually without limitation. It will be open to the worldwide capital market, and the water companies can be controlled, bought and sold on that market without the control of the Government. Will the Minister confirm that that is true?

Mr. Ridley

I was talking about loan capital, but I presume that the hon. Gentleman is referring to equity. I very much hope that the world loan markets will be available. That will mean that we can obtain the cheapest loan money for the environmental improvements that are required.

As to shares limitations, the hon. Gentleman knows perfectly well what we have said will be the position in relation to golden shares. He also knows perfectly well what we have said will be our policy towards mergers and monopolies. That policy was discussed in Committee, and I believe it to be right.

The hon. Member for Copeland (Dr. Cunningham) said a fortnight ago: I am willing to set out all the answers to all those questions in a speech which I shall be making in a few weeks time. He is waiting until the debate is over before telling us his policy. I agree that these things will cost money, and a great deal of money, and that the British people will need to pay. I also believe, that, overwhelmingly, they are willing to pay. It is not necessary to sell off the nation's water resources to achieve these objectives."—[Official Report, 21 March 1989; Vol. 149, c.969.] I agree with the first part, but it is necessary to sell off the nation's water resources to achieve these objectives.

The truth is, as Labour proved for us when in power, that the person who regulates an industry must be separate and different from the person who provides the service—hence the National Rivers Authority, which will be able to ensure proper standards without financial penalty to itself. It provides a far more satisfactory framework for setting national standards for the industry than has even been achieved while the industry has been owned by the public sector.

The Opposition have only to look at the proposals for customer service standards and price control, and for quality of drinking water, and at the framework for setting and achieving higher standards for river and coastal water. Those standards were never set, let alone achieved, when they were in office.

As a result of the Bill, standards will, for the first time, be clear, public, objective and measurable. The industry will have no option but to comply with them, because to do otherwise can lead to fines and, in the last analysis, to loss of appointment. When compliance cannot be achieved immediately, there will be a clear and explicit understanding of the steps to be taken to achieve compliance. The Bill is the biggest step forward for the environment since the time when the Opposition were only a gleam in Keir Hardie's eye. The creation of the NRA and the privatisation of the utilities is the only way to secure the environmental improvements to water quality and to the beaches and rivers that we all want. This will be coupled with a system of price regulation which will protect the consumer from exploitation by the monopoly.

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

The Minister has spoken of the great price benefits for consumers of privatisation. Will he explain why the existing private statutory water companis have increased their prices by so much and attributed the increase to privatisation? Will he explain how it can be that his former hon. Friend Lord Elliott of Morpeth has told me in a letter that one of the three reasons for the 18.5 per cent. increase by the Newcastle and Gateshead water company is privatisation legislation, because it will change its financial regime from that of a statutory company to that of a plc? Surely the noble Lord is telling the truth?

Mr. Ridley

I do not accept for one moment that the reason for the increase in water companies' charges, which averages 22 per cent., is necessarily right and justified—I do not have the bill. Secondly, I am certain the increases have nothing to do with privatisation——

Mr. Beith

The companies say that they have.

Mr. Ridley

Without the powers in the Bill enabling the director general to examine the books and to set a limit on price rises, and to check that they are due to environmental improvements, how can anyone possibly say whether these prices rises were justified?

Secondly, there is no way in which the privately owned statutory water companies can be privatised, so the increases cannot be due to privatisation, whatever the noble Lord says.

Thirdly, it is true that the existing structure of control of dividends and of that which can be put to reserve has starved those private companies of equity capital and forcing them to rely far too much on loan capital. On the basis of that analysis, they have been failing to renew their assets and get their acts right. They would inevitably have to make changes as a result of moving to a proper balance sheet structure.

Dr. John Cunningham (Copeland)

Does the Secretary of State recall holding up the statutory water companies as paragons of virtue on Second Reading and describing them as examples of how the water industry should be managed, operated and run? Why, now that this has all blown up in his face, are the companies overwhelmingly, if not universally, blaming the Bill for large increases in water prices? Is he calling them dishonest? What has happened?

Mr. Ridley

What the hon. Gentleman said was not true; he should consult Hansard before making those accusations. I did not hold up the companies as paragons of financial virtue. I said that they had supplied water in the private sector to 25 per cent. of the population for many decades, and the hon. Gentleman had never noticed or objected.

Secondly, I made it clear that the environmental improvements and the change in capital structures required for this massive investment would apply to all water companies as well as the water authorities. I have never disguised for one moment that the effect of the environmental improvements which the whole House wants will be an increase in prices.

Mr. Allan Roberts

Will the Secretary of State give way?

Mr. Ridley

I have just given way to the hon. Gentleman's hon. Friend, but I shall give way for the last time.

Mr. Roberts

On what environmental improvements will the statutory water companies spend such large amounts after privatisation which they are not spending money on now—bearing in mind that they will still have no responsibility for sewage?

Mr. Ridley

I cannot tell the hon. Gentleman until the Director General of Water Supplies is in place—the hon. Gentleman voted against part II, which sets up the office of director general. How can anybody know how to regulate a price if there are not the powers to obtain the necessary information?

The attitude of the hon. Gentleman is absurd. He might like to know that the Director General of Water Services, whose appointment I announced today, will do more to promote efficiency and customer interest than was ever achieved when this monopoly was in the public sector.

So why do the Opposition oppose it? That is the question which the Opposition cannot answer and I will tell them why they cannot answer it. It is because at least one half of the Labour party have painfully, unhappily, belatedly come to realise that we are right. I quote from the second leak of the Labour party's policy in The Times of yesterday: Under proposals which will be fought by left-wing unions and politicians only British Telecom, of all the utilities privatised by the Conservatives, would be taken back into public ownership under a Labour government. [Interruption.] Wait for it; the hon. Gentleman has a gem coming here.

Instead, the gas, water and electricity industries would be subjected to a tighter regulatory framework than at present imposed on gas and Telecom. Plans to take permanent government stakes in strategic companies have also been shelved. Since this Bill contains that tighter regulatory framework which they seek, the Opposition have conceded the principle both of part I and of part II of the Bill. There is nothing left for them to stand on. I rest my case there. There is no longer any reason for Labour Members to stay even until 10 o'clock. The Opposition are not going to vote against this—but I hope that my hon. Friends will stay on until 10 o'clock, just in case. I am happy to assure hon. Gentlemen that their own party policy, which I am sorry that they have not been told about, utterly supports the Bill. I therefore commend it to the House.

6.34 pm
Dr. Cunningham

The Secretary of State began with what appeared to be a joke when he described what had been happening in the Water Bill Committee for the last four months. He is either a victim of the Minister for Water and Planning's doctoring of the reports from the Department of the Environment or he simply has not been reading the newspapers during that time. If he blissfully believes that his ministerial colleagues have won all the arguments and convinced the British public of the effectiveness of his proposals he is living in cloud-cuckooland. Judging by the remainder of his speech, that is exactly where he has been for the last four months.

The Bill has been under scrutiny in debate since last December. It remains largely unchanged—that at least is true—but our fundamental criticisms remain, and public antipathy to the proposals continues to increase. The issues have been widely reported in the media and there has been huge public interest in our discussions. The response of the public, the press and the media generally has been overwhelmingly and heavily critical of the right hon. Gentleman's Bill. The Bill remains fundamentally weak, confused and, indeed, incoherent, and the ideas that he had cobbled together fell apart during examination in Committee.

That is not surprising. The Secretary of State began by trying to hide a bad idea by claiming bogus environmental advantages for his Bill, but those bogus claims sank in a sea of his own confusion.

Let us take the right hon. Gentleman's treatment of the pollution issue as a case in point. He said in parliamentary answers that he did not hold centrally information about pollution of our beaches. He could not tell us, he said, how many sewerage works discharged untreated raw sewage into the sea. The Secretary of State for Wales told us that the information was held centrally and he could provide it. That was on 14 March. On 22 March, the Secretary of State was able to tell the House that about 14 per cent. of sewage from England and Wales was discharged into the seas untreated. Miraculously, in two weeks, this information, which he said was not held centrally, had suddenly appeared.

Mr. Ridley


Dr. Cunningham

In a moment. I am referring to the right hon. Gentleman's comments in column 1081 of the Official Report of Wednesday 22 March. The Prime Minister, in the meantime, goes on television and tells the British public that no untreated sewage is discharged into the seas around Britain.

Here we have the kind of confusion about these issues that is rampant in the Government. The Secretary of State for Wales contradicts the Secretary of State for the Environment; the Secretary of State for the Environment contradicts himself; and the Prime Minister contradicts everybody.

Mr. Ridley

The hon. Gentleman has made an awful mess of this one. The first question that he asked was how many outfalls there were in England. We do not have that information. Some of them are tiny. They do not have that information in Wales. That is the first point. When the hon. Gentleman asked a sensible question to which I had the answer—the 14 per cent.—I gave it to him immediately. He must not get mixed up between the two things.

Dr. Cunningham

The Secretary of State is further confused, because it was not I who asked the second question; it was another hon. Member. It is passing strange that the Secretary of State says that he does not know how many outfalls pass untreated sewage into the sea, but he can give a percentage figure of how much sewage goes untreated into the sea. How does he arrive at the calculation? How has he come to that conclusion?

The Secretary of State caused further confusion when he publicly abandoned his statutory duty to protect the environment by promising, on the record, that the cosseted private monopolies he wants to create would have immunity from prosecution if they polluted the water environment. The Secretary of State has tried to disguise the scale and nature of the problems by hiding the truth, as I have shown by the example I have just given. One week he cannot tell us the facts and the next week, when it suits his purpose, he has some facts.

Let us come to the issue of the land assets, which has been such a bone of contention throughout our discussions. We know that the potential development and sale of 500,000 acres of land is one of the sweeteners which the Secretary of State is pushing towards the City and purchasers. The Minister for Water and Planning made that clear in his letter of 6 February to Mr. Jack Jeffery of the statutory water companies, when he said that the water companies, after privatisation, should offset costs by "proceeds of asset sales"—in other words, by selling their land.

What is happening now, in anticipation of all this? I have here a copy of an advertisement by the Mid Southern water company explaining its reasons for increasing charges to its consumers. It says quite candidly that it had been seeking planning permission for some of its land and with such permission could have raised £1 million, which could have been used to offset price increases. Unhappily for the company—but happily for us and for the environment—planning permission was refused.

When we debated all these matters in committee we were told by the Under-Secretary and the Minister for Water and Planning on several occasions that there were some "good arguments here". The Secretary of State replied to these matters recently when he was in Thirlmere in Cumbria in the Lake district. He claimed in his statement that his proposals would protect our national heritage. A newspaper report said: The Council for National Parks said yesterday that Mr. Ridley's measures simply did not go far enough to be effective. While we are delighted that the water authorities will have to consult the National Parks, there is no requirement for them to take any notice whatever of what the parks say". That is the limit of the safeguard about which the right hon. Gentleman has been boasting. The chairman of the council for the Protection of Rural England, Mr. David Astor, described the decision to leave the consultation over planning and development with private monopoly companies as "incredible". He said that it was opening the floodgates for unprecedented abuse and distortion. Mr. Astor was speaking about planning and land development. That is the kind of confusion that the right hon. Gentleman is causing by his proposals for selling much of the national park areas.

Mr. Boswell

Will the hon. Gentleman tell us whether the private water undertakings will be able to take no notice of planning determinations by the national park authority? Secondly, in what respect are the safeguards offered by my right hon. Friend any less effective than those currently available to control the activities of public water undertakings?

Dr. Cunningham

The very fact of passing the undertakings into private monopoly hands is enough to emphasise that point. Of course private water undertakings will not be able to ignore the decisions of planning authorities. I spend much time talking to people who manage national parks because my constituency is in such a park. If the hon. Gentleman talked to such people he would know that the pressure on national parks is huge and in some cases is overwhelming the authorities. They feel that controls and oversight should be strengthened and not weakened as proposed in the Bill.

Mr. David Ashby (Leicestershire, North-West)

Will the hon. Gentleman give way?

Dr. Cunningham


Those arguments have been advanced not just by Opposition parties but by influential and well-informed organisations such as the Royal Society for the Protection of Birds, the Council for the Protection of Rural England, the National Trust, the Countryside Commission and the Ramblers Association. They all express concern similar to ours and it has all been contemptuously dismissed by Tory Members who just ploughed on and voted down amendment after amendment. All major attempts to strengthen environmental safeguards and to protect our heritage have been rejected by the Government and their supporters in Committee. Privatisation is at best irrelevant to enhanced environmental protection and at worst positively disastrous and damaging.

The Bill and Conservative intentions are a betrayal of water consumers, of every family and household in England and Wales. The Secretary of State says that consumers will be safeguarded and has been dismissive of statements by chairmen of statutory water companies. The West Kent water company was one of the first in the field with a price increase of 42 per cent. In its statement to consumers it says that half the price increase—21p in the pound—was to meet privatisation requirements.

The Eastbourne statutory water company issued a notice on 27 February. The chairman's statement said: The year 1988 has been significant for the effect of the Government's Policy of 'Privatisation' of the Water Industry and the very considerable increase in the work load placed on our staff, together with the considerable additional burden of employing consultants, the cost of which is having to be met by our consumers, and which is likely to continue for some time. This additional cost is responsible for at least half of the increase in our charges from 1st January, 1989 and also partially responsible for the very considerable reduction in the surplus for 1988 compared with 1987. What is depressing is that I cannot foresee any worthwhile advantage to our consumers emanating from these Government proposals. This year those consumers face an increase of 43 per cent. in their water charges as a result, in large measure, of the Secretary of State's proposals.

The chairman of the Eastbourne statutory water company continued: I have never disguised my opinion that Privatisation is completely unsuitable for the Water Industry and I am extremely disillusioned by the Government's disadvantageous treatment of Statutory Water Companies, particularly in preventing them achieving PLC status until well after the Water Authorities. Civil Service and Government protestations of their intention to provide 'a level playing field' are totally hypocritical. The playing field is just about as level as the North Face of the Eiger. In December, the people running these organisations were being lauded in the Chamber as examples of the way in which the industry could and should be run.

What of Baroness Oppenheim-Barnes, a former Conservative Minister? Is she to be believed when the chairmen of statutory water companies are no longer to be believed? In a letter to me in February announcing the publication of a National Consumer Council book entitled "In the absence of competition", she said: As you will see my Council believes that the proposed regulatory framework for both water and electricity falls short of what is actually required. The book says: If the consumer interest is to be protected in the water industry, some kind of national body for water consumers is essential. We moved such an amendment in Committee but it was rejected by Ministers and Government Back Benchers. The book goes on: The proposals appear to be so complex as to raise serious doubts as to their viability. The National Consumer Council criticises and condemns the right hon. Gentleman's proposals. The document of his own departmental working group, a copy of which I have here and which is headed "Department of the Environment, 3 March 1989"—the report of the joint privatisation regulation group; civil servants in the Department of the Environment—shows what is happening.

Page 2 says that the aim is to provide that the private monopolies are permitted to earn a reasonable return, the secondary duty to consumers means that lower rather than higher 'Ks' should always be set. The secondary duty and not the primary duty is to consumers. That is what the right hon. Gentleman's civil servants area saying in private and it is quite different from what the right hon. Gentleman says in public.

Mr. Nicholas Baker (Dorset, North)

The hon. Gentleman quoted the words of Mr. C. P. G. Turner, the chairman of the Eastbourne statutory water company. From what he read out, I understood Mr. Turner to be saying that he as the chairman of a statutory water company envied privatised water authorities and wanted his company to be in that position. He seemed to be envying the private companies and that is exactly contrary to the hon. Gentleman's point. Instead of dealing with the opinions of other people, will the hon. Gentleman tell us the position of the Labour party on this matter?

Dr. Cunningham

I will happily send the hon. Member for Dorset, North (Mr. Baker) a copy of the whole statement of the chairman of the Eastbourne water company and he can consider it for himself.

On page 3 of the internal document of the Secretary of State's Department, we read: On the basis of these figures, a real return for water and sewerage undertakers … of the order of 8 per cent. would seem appropriate. Ministers are preparing to guarantee private monopolies a return of 8 per cent. That contrasts starkly with what the right hon. Gentleman says about local authorities running their direct labour organisations where he recommends a rate of return of 5 per cent. So it is 5 per cent. for local authorities' direct labour organisations while he is planning to arrange for 8 per cent. for private water monopolies. This is an interesting document. It gives a very different picture of events and discussions in private in the Department from what we had in Committee. It goes on to discuss cost pass through. Cost pass through is a little water pipe, a conduit of its own, which bypasses all the controls set to protect the consumer so that the cosseted private enterprise monopoly will be able to cost pass through straight to the consumer.

What does cost pass through mean? It is a euphemism for uncontrolled price increases which consumers will be unable to avoid. That is what is going on behind the scenes. The Secretary of State may deny it, but here Is a copy of a document from his Department dated 3 March 1989 and headed: "A framework and procedures for K-setting".

The Minister for Water and Planning (Mr. Michael Howard)

Why is the hon. Gentleman seeking to mislead the House? If he has studied the provisions of the Bill he ought to know that cost pass through is subject to the control of the Director General of Water Services, and that it is designed to deal only with unforeseeable matters, such as new regulatory requirements. Does., the hon. Gentleman think that the companies should he in a position to meet the new regulatory requirements or not?

Dr. Cunningham

Of course they ought to be in a position to meet them. They will have to meet them. They will have no choice. At least, that is what the European Commission believes. I am not sure that the Secretary of State believes that from what he has been saying and the way he has been behaving.

What we need to know from the Government and from the Minister for Water and Planning, who will have the opportunity to tell us when he replies to the debate, is exactly how consumers will be protected from cost pass through. There is nothing in the Bill about it. There is no statutory safeguard in the legislation to protect consumers from cost pass through. Cost pass through will be used to cover a multitude of sins to enable private monopolies to load price increases on to consumers. That is what is proposed.

Mr. Howard

I know that the hon. Gentleman could not attend the Committee frequently. Has he heard of the Director General of Water Services? If he had heard of the Director General of Water Services he would know that the cost pass through provisions are subject to regulation by the Director General of Water Services. Will the hon. Gentleman accept that?

Dr. Cunningham

I do not accept that. It is indicative of the depths to which the Minister stoops when he is in trouble. He knows that I attended the overwhelming majority of Committee sittings. He also knows that his right hon. Friend had not got the guts to go on the Committee at all. If we are trading attendances and attention to these matters, I can tell the Minister that his right hon. Friend the Secretary of State is nowhere in that argument because he did not even go on to the Committee. If that is the kind of argument that the Minister wants to have over the Dispatch Box, he is welcome to it. There was not a single attendance at the Committee by the Secretary of State.

Mr. Howard

He was not a member.

Dr. Cunningham

That is right; he was not a member. He refused to put himself up to be cross-examined about the mess. That is the record of the Secretary of State.

Mr. Ridley


Dr. Cunningham

In view of all this, it is a pity that the Secretary of State has not departed, as I understood he was to do, from these proceedings to attend the christening of his grandson, which certainly I would have understood. His performance and that of the Minister of Water and Planning have not done much to enlighten the House or the public about this mess of legislation.

Mr. Ridley

I just wish to ask the hon. Gentleman if he would kindly reply to my hon. and learned Friend's question about whether he understood that the Director General of Water Services is enabled to deny cost pass through if he thinks that it is not justified. Will the hon. Gentleman withdraw his failure to understand the Bill, because he has got it wrong?

Dr. Cunningham

I do not withdraw anything. I do not accept that as the legislation stands, consumers will be adequately protected from cost pass through, and neither do Baroness Oppenheim-Barnes and many other people who are interested in the protection of consumers, as has been made abundantly clear over the last few weeks.

Major differences of opinion between the Government and the European Commission also remain over exemption from pollution law, water quality standards, timetables for essential investment and the scale of such investment. It is in Britain that the confused, inefficient and dogmatic Tory proposals will be rejected, if not in their Lordships' House or in the City, ultimately at elections. Obdurate Tory insistence on making water supply and sewage disposal an issue of private profit is anathema to the majority of British people.

Samuel Johnson, the 18th century satirist, had a very apt description for the Government and for Tory Back Benchers in his work, "The Vanity of Human Wishes": How rarely reason guides the stubborn choice, rules the bold hand, or prompts the suppliant voice; How nations sink, by darling schemes oppressed. This idea is one of the Prime Minister's darling schemes and the British people will certainly be oppressed by it. The Government will ultimately sink and these proposals will sink with them.

I have been asked about our position and a leak in The Times which was news to me and was not the matter that I have been involved in discussing. I do not believe the quoted leak in The Times. I reiterate what I have said throughout the proceedings: water is the country's largest national and natural monopoly. It is the people's most fundamental resource, on which their health and well-being depend. We in the Labour party believe that this natural resource and the assets of the water industry should be publicly owned and controlled. They should be managed openly and efficiently in the public interest, and management should be democratically accountable at regional and national level. Unlike the Tories, we do not believe that an essential resource such as water should be managed and sold for private gain. For us, public health and hygiene are not matters which can be dealt with by market forces. We know that the overwhelming majority of the British people share our values and views in this matter. That is why we will vote against the Bill.

Several hon. Members


Mr. Speaker

Order. In view of the large number of right hon. and hon. Members who wish to participate in the debate, I ask for brief contributions.

6.59 pm
Mr. Cranley Onslow (Woking)

I will do my utmost to obey your injunction, Mr. Speaker. That excuses me from saying very much about the speech made by the hon. Member for Copeland (Dr. Cunningham) except to make two points. First, in my experience in the House or in Committee, bad temper is not a substitute for good argument. Secondly, it does not appear to me to follow, although it may follow for the hon. Member for Copeland, that there must be public ownership for public control. The hon. Gentleman should think a little more about the subject before he outlines Labour party policy on such matters in future.

I support the Bill, and I believe that most of my constituents do the same. My constituents have been fortunate enough over a great many years to draw their drinking water from private suppliers and I have never had any complaints about that. Given that the much vaunted percentage increases about which we have heard so much this evening will still keep the average household's water cost to about the same as the cost of a national daily newspaper each day, keeping things in proportion, I do not believe that there will be as many complaints about costs as we have been led to believe, particularly in view of the powers to control prices in future which are rightly embodied in the Bill.

I confess that I have received complaints about the drains, as have many of my colleagues. In my constituency complaints are directed against the Thames water authority, which is not a privately owned body. That authority is currently polluting the River Wey in my constituency in a most deplorable way. The local angling association shares my view about that.

In general I have no doubt that the fight against pollution will be made easier and more effective by the Bill. The duty to fight pollution will unmistakably be present, as will the money. The Treasury will not be able to stop that money, there will be no unseemly wrangles in the Star Chamber and the IMF will be unable to prevent the necessary investment in water quality as it did during the days of the late unlamented Labour Government. That is an important distinction which we should not cease to emphasise. The plcs will be able to raise the funds that they need and in a few years we stand the excellent chance of having many more rivers to be proud of once again. That would not have happened if the Government had not introduced this Bill.

We must never forget human frailty, and we can never forecast it. It will remain possible, under this Bill or under any other legislation, for accidents, neglect or greed to create pollution in future just as they have done in the past. That means that the powers of inspection and enforcement which will be invested in the NRA will be absolutely vital. In its use of those powers, the NRA will have the support and active co-operation of anglers throughout the country, who, after all, spend more time than anyone else on river banks and are much the best inspectors of water quality in our rivers.

I am also glad to know that the public right to prosecute will remain in law. If that right is to be used properly, the law must be effective and help the public enforce their rights in addition to enforcement by the NRA.

My hon. and learned Friend the Minister for Water and Planning felt that my amendment No. 86 to clause 143 was unnecessary. He has written to several of my hon. Friends explaining his views. In his letter he states: The Bill as drafted already meets the requirements which the amendment seeks to achieve because—and I do not deny this— it will be open to anyone to bring a prosecution over the pollution of 'controlled waters' … including prosecutions for breaches of the conditions attached to consents granted by the National Rivers Authority for the discharge of trade and sewage effluent … Second, the NRA as the body statutorily responsible for effluent discharge consents will have to use its powers under the clauses … to enter premises and sample effluent discharges in a systematic manner to ensure that the conditions of the consents are being met. Where a sample suggests that a consent requirement is being breached in a manner which could give grounds for prosecution, we would normally expect the NRA to start taking formal samples in accordance with Clause 143. But since the circumstances of each case will vary, it would be inappropriate to deny the Authority discretion as to whether this is appropriate in a particular case, and as to the number of occasions on which the taking of a formal sample is necessary. For that reason we could not support the particular amendment … But the Authority will have a clear obligation to take such number of formal samples as permits full and effective enforcement of the legislation, and the Secretary of State will have the power — to direct the Authority on how to discharge this obligation. So far, so good. However, in my capacity as a member of the council of the Angler's Co-operative Association which has initiated several prosecutions in this area, I must say that we are by no means convinced that my hon. Friend the Minister is right.

Under the Control of Pollution Act 1974, provision was made to establish public registers of discharge analyses. The relevant section of that Act was implemented in July 1985, as my hon. Friend the Minister no doubt remembers. Since then, the Angler's Co-operative Association has used information from the registers to prosecute water authorities on three occasions. The authorities concerned were Thames and Anglian. On one of the occasions the Thames water authority was prosecuted on eight separate charges, to which it pleaded guilty, and on each of which it was fined £1,000. The outcome of the other cases was much the same.

At the moment, the ACA would like to take a similar action against a fish farmer on the Hampshire Avon. I believe the proprietors are the Radnor estates and the farm is in the constituency of my hon. Friend the Member for Salisbury (Mr. Key). I hope I will have his support when I make this point.

The public register shows that that fish farm is at times in breach of conditions. However, the Wessex water authority declines to prosecute the polluter. The ACA cannot prosecute because the samples taken by the water authority are only for monitoring purposes. Therefore, for that purpose, the register is not worth the paper that it is written on. We cannot launch a common law action because it would be necessary to trespass to obtain formal samples.

The Government claim that the right of private individuals to prosecute will remain. However, that right must be effective. In future, samples will be taken by the NRA and their validity may be challenged. However, more to the point, the NRA may lack the will to prosecute, as has been the case with the Wessex water authority.

Mr. Robert Key (Salisbury)

My right hon. Friend knows that for many years we have both been keen to ensure the quality of the Hampshire Avon. If we look at this question very carefully, it seems to me that under the new arrangements the vital difference is that the evidence under the formal NRA sampling exercise can be subpoenaed by a third party. In those circumstances, the Angler's Co-operative Association could undertake a private prosecution under this Bill.

Mr. Onslow

I hope that my hon. Friend the Minister can confirm that my hon. Friend is right. However, the important point is to take the samples. That is the necessary step towards a successful prosecution. My amendment sought to place a duty on the authority to take the samples.

The situation is one where the anglers have their doubts about such matters. Lawyers, no doubt, see everything with greater certainty. However, the people who will be taking the samples will be the same people as today, and there is to our minds little guarantee, given that the NRA will have a discretion, that we can necessarily rely on getting samples of quality and type necessary for a successful prosecution. Whatever view other people may take of the chances of success at law, the ACA is not in the business of frivolous litigation and goes to court only when it has the evidence which will make it possible to win and it is confident that it will win. I should be grateful if my hon. Friend would touch on that point in his reply.

The Central Council for Physical Recreation also has reservations, and I expect my hon. Friend will have seen a letter sent to his hon. Friend the Member for Lewisham, East (Mr. Moynihan) by the CCPR on 22 March about the code of practice. Without going into that at length, I hope that my hon. Friend will be able to give the House some assurance on how the Secretary of State intends to ensure that water undertakers comply with the code of practice and the maintenance of existing recreations, which some people fear may be at risk. Of course, if we cannot get assurances tonight because of lack of time, there will be an opportunity to return to these matters in another place, and perhaps then the Government will explain why they found my amendment No. 80 so unattractive the other night.

I find it difficult to believe that the NRA does not want to be responsive or flexible and is not prepared to have the opportunity to delegate some of its powers, and I find it odd that there should be resistance to this from the Department without our necessarily being told what the view of the NRA is. In this legislation we are creating an important body, and we should spell out the duties we expect it to perform in this area, and on the question of abstraction, which also causes concern.

I am anxious, as I said, to be brief, and I have little more to say except to question the realism of the statements made by the hon. Member for Copeland about the assets of the water authorities and the extent to which they might be turned to private profit. I do not believe there is a prospect of mass asset-stripping or great areas of land being sold at a profit. However, I believe there is one asset nobody has so far identified which is capable of being exploited and which we should all wish to see exploited, and that is the physical access this industry enjoys to every property which it serves. That access does not, it seems to me, have to be used either to pipe water in or to pipe sewage out.

There is little doubt in my mind that an asset of that kind could be used in other ways of profit and value to the community. It is not impossible that it could be used in such a way as to provide competition in information business technology with British Telecom, and I think we might very well see new owners, enterprising people, taking an opportunity which has been available to our own companies for far too long without being noticed—though I suspect the French have noticed it. I hope entrepreneurs in our own country will take it up and that it will be used to the value of the customers of the water industry.

I have no doubt that this is a necessary Bill, and I believe that it should have the support of the House and of the country.

7.15 pm
Mr. Livsey

The Water Bill is the ultimate folly of a Government hell-bent on imposing their dogmatic will on a long-suffering British public. The time has long since passed when we can appeal with any sense of reason to members of the Government, whose misuse of their parliamentary majority is now virtually complete.

What does this Bill do? Part II replaces the 10 public monopolies in England and Wales with 10 private monopolies, the plcs, and they will indeed be ring-fenced in their own areas; in part I of the Bill a National Rivers Authority will be created, which will remain in the public sector. That is the basis of the Bill. The water so essential for life itself will not remain a public utility, even though the Government's Victorian predecessors thought that was right. Indeed, it was the Government's predecessors in my party who put the water industry into the public sector in the first place. Water, indeed, is essential for life itself, which makes it a natural public utility, yet it is not to remain a public utility.

Mr. John Marshall (Hendon, South)

The hon. Gentleman implies that public ownership of water is necessary for the health of the nation and many other factors. Can he explain how people in other countries survive and prosper with private sector water?

Mr. Livsey

Taking the example of France, the price of water is four times higher in some parts of France than in others, and I cannot see that the people there entirely benefit from that situation.

Of course, the reasons why water should clearly remain in the public sector involve the health and social conditions of the people of this country. They should have clean, wholesome and affordable drinking water. Surely these are the basic objectives. The only tenable fallback position, if one could justify it, is the model of the current statutory water companies which presently operate in 25 per cent. of the water industry. They are closely controlled in the public interest and produce affordable water through ploughing back profits to help keep consumers' bills down.

Mr. Ashby


Mr. Livsey

However, the Government have chosen to dismember them and to turn them into plcs instead, already with pre-privatisation increases of 30 to 50 per cent. in the price of water.

The environmental impact of privatisation will affect clean drinking water standards, the disposal of sewage, the cleanliness of beaches and continued access to the half million acres which the present water authorities own.

The Government's reasons for privatising water seem to rest on the following ideological formula. They say that the NRA will control pollution and improve standards; that private investment will bring more money into the industry to clean up drinking water and sewage disposal; that the industry will be freed; that more people will own shares; that the City wishes to invest in the industry, and that the industry will be better regulated.

The facts are that the NRA could be involved just as well as an environmental protection agency if water remained in the public sector. The problem is that the NRA will be under-funded. Indeed, a privatised water industry will only be attractive to the City and to investors if it is made financially attractive, and the only way of doing that is to make consumers pay more for their water than if the industry remained in the public sector. The soundest estimates indicate the price of water will double by 1992.

The other part of the equation is that valuable public assets, such as land, will have to be sold and access charged for. The taxpayer and the consumer will, of course, pay for this. Even if this is done, the City is unlikely to find water an attractive investment, because up to £6 billion will be required to clean up the industry; the maximum sale price is unlikely to be more than £10 billion, so what kind of deal is that for the City? The argument that the industry will be freed by disposing of its debt could equally apply if the water authorities' debts were written off now while the industry remained in the public sector. Our water bills would be a lot cheaper if that were done.

A Director General of Water Services, for regulation purposes, could just as easily have been installed if the industry remained in the public sector, so that argument is demolished too. The thesis that more people will own shares does not reflect recent experience, where it has been shown that most shares still tend to end up in the hands of relatively few people.

The Government have turned water privatisation on its head. They have decided, come what may, to privatise water and have then dug up convenient reasons to try to justify the unjustifiable.

Mr. Nicholas Baker

The hon. Gentleman made the interesting point that it was not necessary to privatise the water companies and he implied that it was perfectly possible for NRA to police water authorities maintained in the public sector. Has that proposition any basis in fact? Can the hon. Gentleman name any other area in our society where public bodies can adequately police each other? Is it not a fact that such bodies in the public sector get together cosily and the customer suffers in the end?

Mr. Livsey

The present pollution inspectorate of the water industry would fill the niche that the hon. Gentleman is describing.

The Secretary of State for Wales has said that he would like to see Welsh people owning Welsh Water shares. We would like to see that too. However, there is no sign that that will happen. On 21 March a grand three-helicopter tour of Wales was undertaken by representatives of such well-known Welsh banking forms as Smith Newcourt, Kleinwort Benson, Salamon Brothers, Alexander Lang and Scrimgeour, Cazenove and Company, Citicorp, County NatWest, Shrive Lehman and Company, Phillips and Drew and, just to sweeten the pill, the Cardiff stockbroking firm of Lyddon and Company.

Given the Secretary of State's penchant for public relations, it is strange that such an exercise by Welsh Water was not the subject of headlines in the Welsh media. Perhaps the subject was just a little too sensitive at that time since the Bill was being debated in the House at that moment. I hope that the bankers enjoyed the scenery—97,000 acres represents quite a lot of Wales and quite a lot of Welsh real estate. We know, too, that computers in Scottish banks are already programmed to print Water plc shares. What kind of pre-emption is that? The Bill has not yet completed its progress through the House.

The Government want the Bill to be a truimph of dogma over common sense. We know that water will become unaffordable for many of the poorest in society after privatisation. There is no way that the Government can deny that. There were 9,000 disconnections last year and there will surely be more in the future.

According to the opinion polls, water privatisation is opposed by 75 per cent. or more of the British people, including many Conservative supporters. Make no mistake about it, water privatisation will damage our health. Water privatisation will annexe public assets and give the taxpayers' investment to the wealthy. It will produce a private monopoly with no competition—inexcusable even by Tory standards.

Water privatisation will damage the environment and double the price of consumers' water, hitting the poorest in society. It will cost £842 million just to privatise water and the British people will pay that bill. It will be a poor investment because of its liabilities. Water privatisation will remove the last vestiges of local government democratic representation in the water industry. There will be no public accountability.

Water privatisation is a rotten measure by a Government who have gone several privatisations too far. They will surely pay the political price in the ballot box. God gave the water to the people and the Government are taking it away from them.

7.24 pm
Sir Giles Shaw (Pudsey)

I do not want to follow the example of the Eisteddfod contribution of the hon. Member for Brecon and Radnor (Mr. Livsey), but I am prepared to tell my hon. and learned Friend the Minister for Water and Planning that I support the Bill and I have five reasons for doing so.

First, I must pay tribute to the history of the water industry through its many years of municipal undertaking. That is a proud heritage for those of us who represent northern seats where the fine reservoirs produced on the back of the woollen industry are still some of the greatest architectrural achievements of the 19th century. Municipal leadership was a fine contributor to the effectiveness of the British water industry for the first 50 or so years of this century.

There has been a dramatic change, because local authorities and local government have changed. The disappearance of the many utilities in favour of the mega-utilities and local government reorganisation made a fundamental difference to the municipal contact between water supply and the authorities. With that came high-pressure politics of a different kind and a substantial period of neglect for the water utilities. Water had to take its place among municipal priorities, and it was a pretty lowly place as one sees from the total neglect of the reassessment and renewal of assets.

With the development of local government reorganisation came the reorganisation of the water authorities as we have them today. I confess that I remain firmly of the view that the scale of the water authorities as presently constituted is a perfectly effective way of managing water resources. They have the geographical spread to enable the supplies to be most effectively managed. They measure the water cycle as their base. They provide services way beyond the reach of a local authority, even a large one. It is no use in Yorkshire looking back to municipalising the water industry on the basis of the three-county structure and the fourth county of Humberside and a little bit of Cleveland—all of which are within the catchment of the Yorkshire water authority. Municipalisation is not available as an alternative for discussion in the House, although it has played a major part in the handling of the water industry.

Water authorities are within the responsibility of the Department of the Environment, and the Secretary of State has powers to determine their capital allowances, pricing policies and most of the strategies and priorities that the individual authorities would wish to adopt. But we must never forget that they are 10 very different authorities. They are different geographically. They have different resource problems and resource management. They have a different pattern of demand and very different problems of foul water and sewage treatment. They have different demands and patterns of drainage.

That means that they inevitably have different capital demands. They have different priorities and rates of development. All depend on the whim of Government: expenditure and Government control. It is that single fact which brings me to my first reason for believing that the Bill is right. Until the authorities get outwith the control of Government, they will not be able to manage and develop their assets on a long-term basis without intervention.

The case can be made for central control. In replying to an earlier debate, the hon. Member for Bootle (Mr. Roberts) made it clear that the next Labour Government would take the authorities back into what he loosely termed social ownership public control. But the case for bringing them back into public control by the Government is even thinner than that for going back to municipal control. Surely the water industry must now be recognised for what it is—a modern, effective, well-managed range of public utilities. It is a capital-intensive industry, operating scientifically controlled systems for the distribution of pure water, with a complicated computerised system for cleansing foul water by biological and chemical processes. In addition, it has a high standard of efficiency.

When one thinks that the water industry has had to contend with a rapid growth in demand not only from the ownership of houses and of the developments that that brings but from changes in industrial technologies that require huge uses of water, one would have to be remarkably complacent to argue that the water industry has sold the country short. It has not. It has managed to keep pace with domestic demand created by the washing machine, the car wash, and all the other demands made on the public water supply by domestic consumption, for a daily cost that currently averages 29p to 30p per household, not per person. For that cost to be regarded in 1989 as a significant impost for an amenity that, as the hon. Member for Brecon and Radnor was so keen to argue, is essential, irreplaceable and God-given, is absurd. A cost of lop per day for each individual is far from high. No one can deny that the water industry has made that possible by its policy of developing new technologies and new effort.

The major argument for privatisation is that it will allow a major service industry that has long outlived its municipal founders and has outgrown its need for central Government constraints to take its place in the private sector. That is the main reason for the Bill, and it is why the Bill deserves, and will have, my support. I do not believe that the statutory water company is a relevant model to the scale of the water authorities, their regional basis, and the range of services that they currently provide. They are not a model for what a locally based statutory company can do. It must differ radically in its management skills and experience, and in the range of the assets that it can produce.

Mr. Nicholas Baker

My hon. Friend refers to the great record of water authorities in coping with increased demand arising from developments in certain parts of the country. Does he agree that a connection charge, which is now subject to discussion, would benefit privatised water companies in providing a good service to the consumer and ensure equity between existing consumers and the developers of new housing estates, which would be highly desirable and a fair innovation?

Sir Giles Shaw

I entirely support my hon. Friend. I was glad to note that in a recent speech my hon. and learned Friend the Minister for Water and Planning said that he was still looking for a way of putting such a provision into the Bill. I wish him well. I hope that he will not be put off by the fact that it will be difficult and that officials say that it is impossible. Good political leadership of the kind that I am sure my hon. and learned Friend can provide should see such a measure put in the Bill.

The second reason for privatisation is that it will allow the regional quality of water authorities to develop when they become plcs, providing an important opportunity for regionalisation to take a lead. The regions have their different needs and priorities, and I welcome the prospect of strong regional shareholdings in the regional plcs. I should like to see not only preferential treatment given in the flotation plans to employees and customers, as I am sure is my hon. and learned Friend's view, but a proportion of the stock made available only to regional investing markets, such as Birmingham, Newcastle and Leeds, so that we may ensure that there will be a placement of stock to the benefit of local institutions and companies. Until now, far too little attention has been paid in privatisation to the regional markets. We are presented with a classic opportunity to put that right.

Mr. Simon Hughes (Southwark and Bermondsey)

The hon. Gentleman ignores the fact that proper representation of regional interests currently exists but with the Bill as it stands the probability is that, in future, the regions well represented will be foreign and not British. Is that not a valid criticism, and one which argues in favour of the current arrangement being retained?

Sir Giles Shaw

The hon. Gentleman will understand that there is a golden share, which is designed to prevent the development that he mentions. However, I agree with him in principle. I am not one who believes that the Battle of Britain was won on the motto "Per ardua ad Perrier". We should do what we can, by strengthening regional shareholdings, for example, to make it very difficult for French investors to obtain shareholdings in this country.

Ten separate regional businesses will be established, offering a unique and imaginative opportunity that I trust the Government will prosecute vigorously, so ensuring that at least one aspect of water privatisation will have much more public acceptability than at present.

The third reason for privatisation is that it will allow British water management and technology to compete across the world. It is an amazingly large market. In my brief time at the Department of the Environment, I took the first British water mission overseas. We went to the French Cameroons.

Mr. Robin Maxwell-Hyslop (Tiverton)

And drank the water there?

Sir Giles Shaw

I recall that the president resigned the first day that I was there.

The French Cameroons desperately needed new technology, because its cities failed to comprehend that most of their population lived below the water level. The overseas market for British technology can be released only after the industry's privatisation. That is exactly what should be done. If we accept EC standards, as we are required to do, it should be recognised that our water industry has developed against a history of fast-flowing rivers for the transportation of drinking water as well as for the disposal of sewage and of foul water. The way in which continental standards are to be applied seems to ignore our particular aquatic advantages, which we seek to retain.

The fourth reason for privatisation is that it fits extremely well into the Government's policies for its third term of office. Our first term was dedicated to containing inflation, restoring sensible economic policies, and releasing industry and commerce so that it could expand on the basis of competitive quality and price. Managements were given the power to manage, and unions were made accountable to their own members. In our second term, we took great advantage of the public sector by returning it to the private sector, and in industry and in housing there was a massive increase in capital ownership. We have substantially spread the benefits of ownership, and with that has come a greatly reduced demand for tax revenue. Now is the time, in the Government's third term, to tackle major social issues such as health, education, social provision and the environment.

The Government's environmental policies are epitomised by the Water Bill. Only now can we afford evironmental policies of that kind. The environment is one of the most expensive areas in which to legislate and in which to create change. The water environment in particular requires the massive release of resources and an unshackling from the controls that have been applied at a municipal or central Government level in the past. There will be changes in respect of conservation, access and sporting uses, and there will have to be better provision and more flexible policies.

There will undoubtedly be increased costs, in terms not only of the investment that is still required but of ensuring higher standards of river quality, drinking water quality, and of amenities. At a current daily cost of 29p to 30p per household, we are not paying enough for the range of services that we enjoy. I shall be very happy to see increases in water charges, if they bring with them the scale of benefits that. I am sure that a new and environmentally sensitive policy will bring.

For something that is as important as water, we should be asking how its price per head compares with the other amenities that the British consumer enjoys. Is 10p per head per day enough? Is that a reasonable price to pay for four or five gallons of water per head? Should it be 12p or 15p? In relation to the cost of other amenities that the consumer currently enjoys, water is excessively cheap. [HON. MEMBERS: "Oh!"] Hon. Gentlemen may roar, and they are entitled to do that, but there is no doubt that water in this country is cheap and that we are perfectly entitled to say that, given the controls being placed on price by the National Rivers Authority and the director general, some increases will be essential and that we should not try to destroy those increases when they are proposed.

My fifth and final reason is that this has been a commitment that the Government have undertaken for a considerable time. We made it an election commitment the last time we went to the country. It is something which has been worked on for a long time. I am confident that now is the right time to proceed. But if we have confidence in the Bill, I am bound to say that we look to the Government for a further demonstration of their own confidence in the industry.

For example, I am not satisfied with merely a 51 per cent. hold on water privatisation. Why cannot it be 100 per cent., particularly as we now have provision for golden shares and so on? Why cannot 100 per cent. of the water equity be made available? Why confine it to 51 per cent.?

We must also ensure that in the way in which the National Rivers Authority and the director general control the private sector water companies there is a fair relationship between the two. I hope very much that the NRA will not be a large, central, bureaucratic body but will break down into regional authorities and that this regional representation will have a much closer link with the water plcs than is perhaps envisaged in the Bill. If that comes about, as we look to water privatisation being fulfilled, there will be a genuine meeting in the regions between the controllers and companies to see that both get a fair share of the hearing that is necessary before controls are implemented to the disadvantage of either.

All in all, water privatisation is a sensible measure. The Bill is a sensible way of taking it, and I wish it well.

Several Hon. Members


Mr. Deputy Speaker (Mr. Harold Walker)

Order. I remind the House that Mr. Speaker has appealed for brief speeches.

7.41 pm
Mr. Tom Pendry (Stalybridge and Hyde)

I will adhere to Mr. Speaker's request for brevity. As one who represents a north-west constituency and is sponsored by the National Union of Public Employees, which has many thousands of members employed in the water industry, I share the view of my hon. Friend the Member for Copeland (Dr. Cunningham) that the Bill ensures that the people have to pay a high price for Tory dogma, because the Bill is part of an ideological crusade and has nothing whatever to do with water quality or efficiency.

After all, this labour-intensive industry has a pretty good productivity record. Productivity has risen by over 33 per cent. in the past decade, yet the cost to the consumer is, on average, six times cheaper than in West Germany and four times cheaper than in France.

Unlike the Member for Pudsey (Sir G. Shaw) I take great pride in the fact that we produce cheaper water. I hope that the Pudsey Times will pick up that bit of his speech to make it clear that he is in favour of higher prices for water. The water industry even exceeded the target rate of return on assets set by the Government last year by a factor of one third.

This is, therefore, an efficient industry, staffed by workers who care for it. So why must the Government meddle with it, force prices up, reduce pollution safeguards and introduce diseconomies of scale by more than doubling the number of water and sewerage authorities? On top of this is the attack on the workers in the industry themselves. I give one clear example—and I hope that the Minister of State is listening.

I was given an assurance in a written answer from the Under Secretary of State that workers would have the right to a pension scheme with the same benefits and contributions as at present. The Under-Secretary of State said: existing employees will have the right to remain in a pension scheme with the same benefits, and requiring the same contributions, as the Local Government Superannuation Scheme, of which they are members. Any provisions necessary to secure this position will be included in the legislation to privatise the water authorities."—[Official Report, 16 November 1987; Vol. 122, c. 417.] What do we find in the Bill? Water employees will be able either to keep their existing pension scheme when they move into a new private company or join a new and so-called "improved" scheme. The catch is that the old scheme will have its index-linked benefit removed and the new scheme will not replace it. For the Government to have refused to guarantee the pension benefits accumulated over decades by NUPE and other members is a disgrace. The Minister clearly misled me, the House and, more important, thousands of workers in the industry with that reply in November 1987. Perhaps the Minister, who is now looking to his officials, will tell us why he misled us all on that occasion.

It is clear what sort of water industry we shall be faced with, should this Bill be enacted. It will be one that skimps and muddles through at the expense, not only of consumers, but of water workers as well, because it is clear that the £250 million saved from index-linking will be used to sweeten privatisation.

The changes will be worst of all in the area that some of my colleagues and I represent in the north-west. My region has not only the oldest and most decrepit infrastructure in the country but by far the largest landholding. My constituents will doubly lose out, from a lack of investment and a loss of open land. Of the 150,000 acres of water company land, a substantial proportion is in or next to my own constituency. New, profit-motivated water companies will be under pressure to dispose of land which is declared non-operational. I have no doubt that as soon as water is privatised we shall see vast tracts of unspoilt land declared non-operational and sold for a large profit, a profit which will not be passed on to our constituents by way of cheaper water bills.

The Government claim that recreation will be safeguarded in this Bill, not least by the National Rivers Authority. This is the same National Rivers Authority that the Secretary of State has said should employ as few people as possible. How on earth can a small body with its hands tied keep tabs on pollution discharges, on water quality and on recreational use throughout the country?

It is not, perhaps, surprising that the Under-Secretary of State, the hon. Member for Lewisham, East (Mr. Moynihan) is connected with the Bill. After all, he is doing his level best to demolish our national sport of soccer with his ridiculous Football Spectators Bill. As has already been stated in Committee, I would not be surprised, if he has his way, to see turnstiles installed on country walks, cliffs fenced off for use by climbers with ID cards and reservoirs surrounded by barbed wire to stop people fishing. He really ought to listen to his former friends at the Central Council for Physical Recreation. They are particularly worried that their demands for statutory safeguards for recreation have been ignored, particularly in regard to the fate of the 190 reservoirs used for fishing and water sports. The Minister responsible for sport should be ashamed that he was unable to persuade his unsporting boss or bosses of the merits of the CCPR case.

The other place, however, may well come to our rescue, not for the first time, to stop this potentially damaging Bill becoming law. I believe that there is a case to be heard as to whether this Bill is hybrid. I hope that the Government will give considerable thought to that possibility, as will, I am sure, the House of Lords.

My own council of Tameside is investigating a possible loophole in the Bill. My authority has certain historic rights through the ownership of the lordship of the manor of Mottram in Longdendale, an area containing much water authority land. The ownership of this manor and its rights can be traced back to Henry VIII; the rights, which were reserved indefinitely in 1922, include fishing, grazing, wood collection and even turf cutting on the land. These historic rights, bequeathed to the people of the aera, surely cannot be usurped by a private water company. The land was originally removed from a Sir William Stanley, a knight of the area, who was found guilty of high treason. As one who does not believe in capital punishment, I would draw back from suggesting that the Secretary of State and his Ministers should encounter the same fate as Sir William for their part in this treasonable Bill, but they should and will get their come-uppance from the electorate. The Prime Minister, judging from her public utterances on the way in which this measure has been promoted by her Ministers, is only too well aware of that probability.

The Bill will continue to be opposed by Opposition Members as the dangerous, damaging nonsense that it is. More importantly, as every poll shows, it will be opposed by the millions of our electors who believe that water is essential to life itself and must remain a public service.

7.50 pm
Mr. Beaumont-Dark

This Bill is the most recent in a long line of privatisation measures. I agree with privatisation as a philosophy. I think that it is nonsense for the state to own assets for the sake of owning them. That becomes an ideology only when the assets can be sold and used for better purposes. Privatisation of, for instance, British Airways, British Telecom and the Trustee Savings Bank—and in due course, I hope, British Rail and British Coal—is, in my view, acceptable and fair. The sensible criterion applied to all our privatisations so far has been the existence of another source of supply—the existence of competition—and clearly competition will exist following the privatisations of British Coal and British Rail.

I did not understand the Minister—I often do not understand him, although I am sure that that is my loss—when he said that British Gas was a monopoly. Heating can be provided by oil, electricity or even Calor gas. The reason why I have voted for privatisation until now is that I dislike state monopolies, quite apart from not liking the state to tell anyone what he should or should not do. If I dislike state monopolies because they stand astride people's lives, I dislike private monopolies even more. Private sector involvement helps efficiency where there is competition, because a private person needs to make a profit to make investment in the service worth while.

Ministers speak of erecting walls. In the City, Chinese walls were proposed. I do not doubt Ministers' good faith, but private companies will attempt to climb such walls and even to demolish them, and in the main they will succeed. That is the spirit of the animal of free enterprise, and there is nothing wrong with it when competition is there to hold it in check.

With respect to the hon. Member for Brecon and Radnor (Mr. Livsey), it is not a good argument to say that water comes from Heaven. Unfortunately it does, usually on bank holidays, but that is not an argument for it remaining in the public domain. Water, as we all know, must be treated, and it costs hundreds of millions of pounds before it reaches our tanks. If state monopolies are to be feared, I tremble before private monopolies. That is why I believe that the Government are wrong, although I have supported them on every privatisation issue until now.

Let me say in all seriousness that the water in Birmingham is not the Government's to sell. Back in the mid-1800s, Joe Chamberlain borrowed tens of millions of pounds because Birmingham's water was foetid, as was most water. By 1850 Birmingham had more direct sewerage and cleaner water than that great empire of the sun in Japan has today. Birmingham's ratepayers were put in hock so that the people could have good water. All the water that we have—in the Elan valley, and everywhere else in Wales—was paid for out of Birmingham ratepayers' money, freely negotiated.

I was chairman of finance when we were discussing what we would do when the Severn-Trent water authority was set up. It was agreed that we would go along with it, but that it would remain under local government control. Now, however, that agreement has been swept aside unilaterally, because we all know that Governments can do what they——

Mr. Ashby

Has my hon. Friend compared the colour of Birmingham's water with that of the water in, for example, London? Has he observed that the water in Birmingham is brown, and has been for about 120 years? That water is in the public sector. Is not the reason the lack of necessary investment over the years, and is that not why this Bill is such a good Bill? Has my hon. Friend not considered the people of Birmingham?

Mr. Beaumont-Dark

With the greatest respect, the only reason that I can think of for my hon. Friend's argument that Birmingham's water is brown is that he puts too much whisky in his water. It is patent nonsense. My hon. Friend may get away with conning juries, but he could not get away with conning the people of Birmingham in that way.

We agreed that, as long as it remained under proper control, we would go into the Severn-Trent. Now we are going to sell it off because the Government insist. Quite rightly, if they can get Bills through the House, Governments can do what they will. We feel, however, that much of the money invested at the expense of Birmingham ratepayers needs to be spent to combat some of the problems experienced by Birmingham, as by other cities. If the Government wish to be honest to people, they should recognise that—if cost inflation is taken into account—Birmingham is being robbed of over £500 million of ratepayers' money. That is an incontrovertible fact. This concern is not the Government's to sell. If they insist in bludgeoning such a Bill through the House, they should at least be honourable enough—as I know that they will be in the end—to ensure that Birmingham people at least get back what they invested.

I believe that the Bill is fundamentally flawed. It will be not only flawed but dishonoured if, having broken unilaterally an agreement reached in fairness, we proceed in this way. If the Birmingham ratepayers, who looked after Birmingham's people properly for more than 140 years, find that what we did in honour has been dishonoured by a subsequent Government, I do not think that they will understand—and nor will anyone else who appreciates the ethics of business.

8 pm

Mr. Gareth Wardell (Gower)

This House is known throughout the world as the mother of parliaments. As Members, we cherish the example and traditions of our democracy that for centuries Britain has spread throughout the world. Yet today we are debating a Bill which is opposed by at least three quarters of the people of this country.

The polls show that at least three out of every four people oppose this sell-off of water, and nothing that the Government have said, from the time the proposals contained in the measure were first announced, has changed the public's position over the unsoundness of the step that is now being taken.

If the Government had any concern for the wishes of the people, the Bill would have been abandoned long ago. Instead, as the hon. Member for Brecon and Radnor (Mr. Livsey) pointed out, complacent in their majority in the House, they have chosen to abandon their responsibility for large sectors of public health and environmental protection inherent in the water industry.

Increasing water pollution in Britain is one of the major concerns of those of us who care about our environment and that of future generations. It is one of those few areas of environmental concern where we can, as a nation, clean up our own backyard without reference to, or co-operation with, other countries. Yet despite their professed concern, the Government have chosen to wash their hands of the responsibility for halting and reducing the gross pollution of our rivers and seas.

No matter how much the Government wriggle and postulate about public spending 15 or 20 years ago, it is a fact that, when the Government introduced external financial limits on the water industry in 1981 and subsequently, they deprived water authorities of the wherewithal to invest adequately in schemes to cope with the pressures of pollution of rivers and seas.

Britain's rivers, the first in the world to be polluted by effluent from sprawling towns and industries during the industrial revolution, governed only by laissez-faire light-handedness, were the first to be cleaned up by public spending and investment. Now they are being fouled again at an unprecedented rate.

About one tenth of our rivers have degenerated to class 3 and 4, being polluted or unable to sustain marine life. The number of cases of river pollution in England and Wales increased last year to 23,000, nearly double the 1982 figure. Obviously, when one third of the nation's drinking water is extracted from those rivers, there is an increased risk to public health, either from the water or from the additives that are put into it to make it safe to drink. Obviously, there is a danger to fish stocks and marine life. Obviously, our environmental heritage and facilities for water-based recreations are being limited.

The Government have responded by increasingly limiting the amount that local authorities can spend to deal with the problem. The Government have reduced their pollution inspectorate, cut funds and opportunities for research and failed to legislate to ensure that polluters pay for their actions.

Now that the EEC has stepped in and said that they must find £1.6 billion to obtain minimum standards of pollution control, the Government have designed a way of selling off that responsibility. The Government can find £10 billion to repay some of the national debt. They cannot—no, they will not—find £1.6 billion of investment to halt the decline in water quality that they have overseen.

This sell-off of responsibility will be subsidised by all of us. An industry independently valued at £27 billion will be disposed of for between £5 billion and £7 billion. What a gesture. How sweet it must be to operate on such a grand scale. On our behalf, a £20 billion discount is being given—that on behalf of 75 per cent. of the electorate who oppose it.

It is a pity that the grand scale obscures little, nitty-gritty problems that are inherent in the Bill and that would cost little to put right. They would certainly not cost billions of pounds. I refer, for example, to unadopted and unadoptable sewers.

Because the water authority criteria for adopting sewers, laid down in 1974, were allowed to differ from building regulation requirements; because developers were quick to maximise profit and slow to improve standards; and because local authorities were not empowered to enforce section 18 agreements on developers in planning permissions, hundreds of thousands of householders are left today with sewers serving their properties which are not, and which can never be, adopted, for example because pipes are too small or because they cross private land. Those householders face increasing costs to repair and maintain those sewers.

The Government were set for a blanket adoption of those sewers in the Bill, but they changed their mind. Now they appear to be saying that householders should have known about the problem and that, if they did not, their solicitor was negligent in not informing them. I gather that I should now advise my constituents—2,500 of them in one district authority alone in the area—that they should sue their solicitor. It promises to be interesting.

But the Government, set on their grand sell-off, have their mind on higher things. One is the NRA, which the Government claim is their passport to the greatness of the greens. The Government have established the NRA to monitor river and coastal pollution. It is ironic that they should have established it at a time when they will not have to provide the money to run it.

We are told that the NRA will monitor pollution and ensure that the polluter pays. I fail to see how that will be brought about. The legal maximum penalties for polluters, such as industry and farmers, are inadequate to the point of ridicule. Water authorities are virtually exempt from prosecution. Yet one in five of Britain's sewage works is breaking the law by discharging sub-standard waste into rivers. Untreated sewage leaks into rivers from 5,000 recorded sites. Storm overflows are exempt from all controls, yet in periods of heavy rainfall they deposit tons of untreated waste and sewage into seas and rivers.

The Bill allows water plcs to maintain indefinitely their privilege of non-prosecution. Water authorities do not prosecute themselves. Once the Bill becomes law, the NRA will not be able to prosecute. The Government say that the water industry pollutes too often and on such a large scale that it would be unreasonable to expect it to stop. So much for the powers of the NRA. The NRA will be unable to do anything, other than complain, about this form of pollution.

It is reasonable for the public to expect that, when shareholders grab control of the water industry—when water charges increase to make up for the lack of past investment—those shareholders should have definite responsibilities for ending this scale of pollution.

I am cynical about this whole Bill. My cynicism derives from many many factors, but I will mention just one. For many years after the issue of the EC directive on bathing waters in 1976, the Department of the Environment defined a bathing beach in such a way that, in Wales for example, there was not a single bathing beach to which that directive could apply. My cynicism continues. Responsibility, as opposed to ideology, is not prominent in the Government's vocabulary, but it is understood that responsibility—or lack of it—is what this Bill is about. That is why three in four people oppose it. That is why we call on the Government, even now, to abandon these proposals and to allow common sense and the public interest to prevail.

8.11 pm
Mr. Robin Maxwell-Hyslop (Tiverton)

At the last election I declared my opposition to proposals to nationalise—and I mean nationalise—the water and sewage disposal industry. We have heard a lot about privatisation, but it may be that some of my hon. Friends do not realise that this is the largest nationalisation measure that any Conservative Government will ever have passed.

When the question of privatising water was first mooted several years ago, I kept pointing out in the House that, unlike any of the other industries that were to be privatised—industries whose equity was vested in Ministers of the Crown—this one was not owned by the Government. This Bill, first of all, nationalises the entire water and sewage disposal industry, so all my colleagues who vote for the Third Reading tonight will be voting for the largest nationalisation measure ever offered to the House by any Conservative Government—and it is well that they should realise that. I certainly shall not be voting for it.

Privatisation only follows prior nationalisation under this measure. When I say that, it is not vested in any Minister. As has been pointed out already, in the representative case it was paid for in the first place by local authorities, or by combinations of local authorities, which raised the money by means of loans, and serviced those loans and repaid them by charges on the ratepayers—not just on the users of water and sewers. That was when the systems were owned by local authorities.

Of course, it is not true, as some facile hon. Members would have us believe, that water is in free supply—it most certainly is not. The cost of impounding it, the cost of pumping it, the cost of the distribution system, the cost of renewing old, inadequate and rotten distribution and sewerage systems, are immense, so a lot of investment is required to replace the rotten water supply systems and the inadequate and rotten sewerage systems. But we do not have to have this Bill in order to get the external financing limits that are necessary to do that. We do not have to have this Bill, lock, stock and barrel, in order to have a National Rivers Authority, with its functions; we could perfectly easily have had a Bill separating the functions of policing and inspection from the functions of supply and distribution. That arrangement would most certainly have had me in the Division Lobby voting for it. It would have been an entirely sensible thing to do.

The greatest single benign characteristic of the Water Act 1973 was that it brought together the supply of water and the disposal of water after it had been used. The previous absurdity was that some authorities poured effluent, more or less—very often less, rather than more—purified, into rivers, and lower down the system other authorities extracted the water in order to supply it as allegedly fresh water. Of course it made sense to amalgamate those two functions. Unfortunately, what the 1973 Act did was make the poacher and the gamekeeper the same person—and that arrangement has never worked.

Anyone who lived through the torment of the pollution of the fresh water supply in north Cornwall, for instance, will know what I mean. I do not believe that the South West water authority prosecuted itself, although, quite rightly, it prosecutes others for polluting the public water supply. The NRA, if it is to be other than a laughing stock, will have to have ministerial sanction—not only sanction, but encouragement—to prosecute the water and sewerage authorities if they do not reach the necessary standards of purity. But how separate will the gamekeeper be from the poacher? In many areas the gamekeeper will not have his own laboratory for testing the water supply and the effluent, and will have to use the poacher's laboratory.

Mr. Boateng

We should have had the hon. Member on the Committee.

Mr. Maxwell-Hyslop

If I had been on the Committee the Bill might not have come out of it quite so quickly.

Of course those functions are different. I would not wish to say that water companies will set out to supply polluted water. Of course they will not, because, unlike the present system—under which, if the authority is sued, it is the consumers who pay—if a private owner is sued, it is the shareholders who will suffer. That is certainly benign.

I could have been persuaded to support this measure if all the revenue, all the receipts from the sale of these assets, were to be recycled into defraying the cost of meeting the purification standards for water and sewerage effluent, of cleaning up our beaches and of replacing the hundreds of thousands of miles of rotten water-pipes and sewerage pipes that are either rotten or of inadequate diameter. If the money had been recycled for those purposes the Bill could have had my reluctant support; but the fact is that it is not so. It is the consumers who will be charged with the cost of bringing sewage effluent treatment and of piping and disposal up to the standards rightly required by the EEC.

We ought not to need the EEC to tell us what the standards should be. For years, mincing up turds and putting them into the sea as processed sewage really was a public scandal—"macerated" was the word that was used. I once swam out in a bay—I may say that it was in a holiday resort—to what I thought was a line of fishing floats, until I reached it and found that it was not.

This Bill is a wasted opportunity. The opportunity could have been taken to set up a really effective National Rivers Authority to define the effluent standards and to enforce statutorily the separation of sewage from storm water disposal. It is unforgivable that sewage works should overflow when there is a heavy downpour. The two systems should be different.

Sir Charles Morrison (Devizes)

Is it not correct that the control of pollution could be carried out more swiftly and perhaps more efficiently by Her Majesty's inspectorate of pollution, which is not of great age?

Mr. Maxwell-Hyslop

If the record of the alkali inspectorate had been such as to fill me with confidence, I might have found that an alluring suggestion. The case for setting up a new, independent inspectorate with its own testing facilities—not using those of some of the principal polluters—is very strong and unanswerable. That is what should have been in the Bill, instead of so much that is.

Again, how does one balance—the Bill does not do it for us—the needs of different sectors of the United Kingdom? In Devon, the population doubles in summer at the time when river flows are at their minimum. The cost of providing impounding facilities to avoid drought when there is a maximum inflow of people who are not normal ratepayers and minium river flows is immense. That cost falls upon the people who live there all the time and who derive less and less benefit from tourism as more and more people bring their holiday homes with them. Instead of staying in hotels or other permanent accommodation. more and more visitors arrive with caravans and tents. with the result that they spend very little, some of which would otherwise go towards the extra infrastructure costs.

Nobody but a fool provides a reservoir at a low level, with the result that all the water has to be pumped at hideous expense, if it can be placed much higher up where the water would flow by gravity. However, those who live in parts of the country to which other people like to go are told that reservoirs must not be put on the moors because that would spoil the view that visitors want to enjoy when they go on holiday. The people who say that do not, however, have to bear the additional expense of low-lying reservoirs from which all the water has to be pumped. There is no rectification of that issue in a Bill that is so large that it had to be printed in two physical parts because the staples would not go though it in one.

At 10 o'clock, which is not so very far ahead, I shall he in the No Lobby. Those are some of the reasons why.

8.23 pm
Mr. Wigley

I agree with many of the points that have been made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The sea coast problems to which he referred are also faced by Wales. Wales also has to support a large population in summer and needs to have the capacity to supply it. Many of the additional costs that Wales has to face have to be borne in the south-west, too—in Devon in particular.

The hybridity of the Bill was referred to earlier. The hon. Member for Tiveton did a lot of work some years ago on the question of hybridity. Between now and further consideration of the Bill elsewhere I hope that he will have the opportunity to consider whether this is a hybrid Bill. If he did so, he would be doing the House a service. He might be able to find a means by which to deflect the Bill from its movement towards the statute book.

Mr. Maxwell-Hyslop

My dislike of monopolies is so great that I would not wish to have a monopoly in the detection and processing of hybridity.

Mr. Wigley

I think that many hon. Members could sit at the knee of the hon. Member for Tiverton and learn about the intrigues and the ins and outs of hybridity, which we should not go into in too great a detail now unless we can prove it. I wish that we could.

Wales did not vote for the Bill at the last election. Wales did not want it. It wants it even less now, the Bill having been subjected to weeks of debate in Committee. For once, Welsh Opposition Members were almost totally united, both in detail as well as in their general approach, in their opposition to the Bill. Week after week we put to the Government a central fallacy—the cost of water to the consumer. That point was not answered in Committee and it was not answered on Report.

The Government tried to get away with press propaganda in Wales. They suggested early in March that there would be a massive reduction in the price of water. In a debate in this Chamber on 1 March, the Under-Secretary of State for Wales told the House: Opposition Members may have a surprise coming to them because it is our intention to give the people of Wales every opportunity to take a stake in their own water company in a way that has not been possible before."—[Official Report, 1 March 1989; Vol. 148, c. 368.] That does not feature in the Bill, and there has been no suggestion as to how it may come about. The people of Wales will not have a 25 per cent. reduction in the price of water, although Ministers tried to sell it in the Welsh press. The reduction was then disowned during earlier debates on Report. In fact, there will be a massive increase in the price of water. It will be on top of other increases in recent years.

During the last few days I have received a letter from someone who lives in the Aberdare area of Mid Glamorgan. This person pointed out that water rates have increased from £23 in 1981–82 to £107 in 1989–90—a fourfold increase. I prophesy, on the basis of what we were told in Committee, that the price of water will increase to about £250 by 1995. That is because there is a need, as everybody recognises, for considerable investment in the industry to improve standards. The Government argue that the only way to secure the resources that are necessary for the work that must be undertaken is to privatise the industry. The Opposition have argued time after time that the only way that capital funds can be attracted is by a massive increase in the price of water, an increase that would hit hard the poorest people in the community.

There is a danger with privatisation that, as private companies find that they do not have the resources to attract capital, the degree of capital investment will be inadequate. That will have an effect on pollution, of which we in Wales are conscious—pollution in the industrial areas and along our coastline. There is a real danger that there will be a reduction in the capital investment that is so much needed in order to meet EEC standards and those that we ought to have set many years ago.

In Committee we asked the Government to clarify the guarantees for shareholders, but the guillotine prevented discussion of amendments that would have led to a large slice of the shareholding going to consumers within the areas served by the private water companies and also to a slice of the shares going to the employees of the private water companies. The Government have made no such provision. Conservative Members who argue that the water industry will be answerable at regional level cannot guarantee that that will happen. Shareholdings will be subject to market fluctuations. Shares will be bought and sold in order to make a profit or a long-term return. They will not be bought and sold to guarantee that the private water companies are answerable to the regions that they serve.

The only way in which the finances of privatisation can add up is by the provision of a massive capital write-off of historic debt. If that debt is written off, why on earth was it not written off before, to bring down the water charges that people face? Perhaps for the only time during the passage of the Bill I want to disagree with the hon. Member for Brecon and Radnor (Mr. Livsey), who referred to the low disparity between charges in various parts of this country as compared with France. In fact, the average equated water rate in 1988–89 in Thames was 33p in the pound, in Severn-Trent 51p in the pound, in north-west England 59p in the pound—and in Wales, it was 108p in the pound. That is almost four times the rate in the Thames area. These charges are high and we are facing yet higher charges. If there is to be a capital write-off, why cannot there be one in the public sector?

The capital value of the Welsh water authority is £1,700 million, and if, as seems likely, it is to be sold off for £250 million or £300 million, why do not the Government go the whole way and enable water consumers in Wales to have the shareholding at a nominal cost, and then at least guarantee that there is answerability in Wales? The same formula could apply to the regions of England.

The other part of the Bill deals with the National Rivers Authority. All the Opposition parties argued in Committee that the Bill represents an unwanted and unwelcome centralisation of the Welsh water industry, with the establishment of the centralised form of the NRA. That is not to say that there was not a case for taking away powers from the plcs and giving them to the NRA, but they should not be given to a centralised body in London. That is to take away the powers that the Welsh water authority has over rivers. The version of the NRA in the Bill provides inadequate involvement for important groups who are concerned with rivers, such as anglers and other interest groups. There is also inadequate capital for the NRA, a subject that has already been touched on this evening.

No doubt other hon. Members have received the letter that I have from Professor Edwards, the chairman of the regional rivers division of the Welsh water authority. On 22 March he wrote pressing that the NRA should be allowed to have the benefit of long-term borrowing where this is necessary in order to carry out any of its statutory functions … the authority must have flexibility to use loan finance for all capital expenditure. Some progress was made on the issue of flooding earlier tonight, but the general argument has not been dealt with—and this letter was sent by someone who is involved in its detail.

Many outside groups are unhappy with the Bill. The National Farmers Union of Wales has written: Farmers are deeply concerned at the lack of control over the ability of the proposed private water companies operating as monopolies to raise their charges, particularly in rural area where their costs are higher. That was one of a number of concerns expressed to us by people who usually support the Conservatives and who are unhappy about these proposals.

Farmers and conservationists are fearful about clauses 7 and 9. Recreational bodies have fears about access to land—97,000 acres of it in Wales, forming a considerable part of the most beautiful areas there.

There are still no adequate safeguards, despite recent Government statements, against the dangers of selling off. There are fears among environmentalists about the Bill's effect on pollution, and among the poverty lobby about its effects on disconnection and compulsory metering. There are fears in Wales that we shall once again be at the end of the queue and that the Bill will do nothing to help solve our problems or to redress the problems that Welsh water consumers have faced over the years.

Although we have put an awful lot of time into it, the Bill leaves the House as unacceptable as it was back before Christmas. That is why my hon. Friends and I will most certainly vote against Third Reading.

8.33 pm
Mr. John Marshall (Hendon, South)

I have listened with great interest to a number of speeches in this debate. The speech by the hon. Member for Brecon and Radnor (Mr. Livsey) led me to assume that the once great internationalists and Europeans among the Democrats have now become the arch-chauvinists. The hon. Gentleman attacked the French with a venom that seemed like the reincarnation of the first Lord Beaverbrook.

I listened with great interest to the speech of the hon. Member for Gower (Mr. Wardell). He complained about the quality of our water, the speed with which the Government reacted to the bathing-water directive, the quality of our rivers and the inadequate level of investment in the water industry. He seemed not to realise that every argument he put forward underlined, rather than undermined, the case for water privatisation. He is typical of many who oppose the Bill, those who continue to attack the consequences of the very status quo that they seek to defend. The hon. Gentleman seemed to forget that the problems of the water industry are the direct consequence of public ownership. His argument about the quality of our rivers was an argument for the National Rivers Authority.

The problems of the water industry are aggravated by inadequate capital investment. That is an argument that Opposition Members should well understand; it was the Labour Government who cut investment in the water industry. As long as the water industry remains in public ownership, it will receive inadequate capital investment. So long as it has to compete with schools, hospitals, roads and railways, it will be starved of the investment that it needs. Once the industry is in the private sector, it will be able to tap the market in the same way as Cable and Wireless has done so successfully—it has increased its capital expenditure dramatically.

I hope that, when my hon. and learned Friend finalises the details of the privatisation issue, he will give the privatised pits a decent dowry, and that a substantial proportion of the money raised by privatisation will be used to improve the balance sheets of the plcs so that they can invest substantially in the capital expenditure that is so necessary.

We have heard from hon. Members such as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) about the problems of monopoly. He forgets that the water companies will be controlled much more effectively in the private sector than in the public sector. The experience of British Telcom and British Gas shows that. No Secretary of State for Energy ever managed to control Sir Denis Rooke——

Mr. Elliot Morley (Glanford and Scunthorpe)

Why, since British Telecom has been in the private sector, has the number of complaints from domestic and commercial users increased dramatically?

Mr. Deputy Speaker

Order. Not on Third Reading of the Water Bill.

Mr. Marshall

I shall ignore that irrelevant and inaccurate interruption. My point about British Gas is that, when Sir Denis Rooke presided over a company in the public sector, Secretary of State after Secretary of State tried and failed to control him. Ofgas was the first body to control Sir Denis Rooke, and Oftel has worked, too——

Mr. Beith

But British Gas had to be referred to the Monopolies and Mergers Commission.

Mr. Marshall

The important thing is that privatisation worked, and it will work with the water industry too——

Mr. Boateng

It says here.

Mr. Marshall

I write my own speeches. I do not know what the hon. Gentleman does, but I know from having listened to him in Harare yesterday that he spoke for more than an hour when he was billed to speak for less than half an hour.

I welcome the possibility of water metering. The present system of charging for water is unfair. Why should the pensioner, consuming one third of the water consumed by her next-door neighbour, pay the same for that water? No one suggests that there should be a standard charge for electricity——

Mr. Boateng

Will the hon. Gentleman give way?

Mr. Marshall

As long as the hon. Gentleman is briefer than he was yesterday.

Mr. Boateng

Does the hon. Gentleman share my concern about the impact on the pensioner of the standing charge and will he urge the Secretary of State to amend this Bill in another place so that the pensioner is protected from the standing charge?

Mr. Marshall

I happen to believe that the pensioner, who will already benefit substantially under the community charge, should be a substantial beneficiary of water metering. A pensioner household consumes very much less water than households with three or four children and sometimes with three or four wage-earners. Why should pensioners, as they do under the present system, pay substantially the same amount for water when they are consuming much less of it?

I also believe that water metering would lead to much more economical use of water. When the right hon. Member for Birmingham, Small Heath (Mr. Howell) was "Minister for Drought" in those long-lost days of the Labour Government, he was able to persuade people suddenly to reduce their consumption of water dramatically. I believe that, if we had water meters, there would he no need for a minister for drought to persuade people to use less water; the price mechanism would do it for him. Why should people pay for large amounts of water when they are small consumers? It is surely much fairer that the pensioner and the single person should pay less than large households.

The Water Bill is a Bill for greater efficiency. No one can regard the water industry under public ownership as a paragon of efficiency. Under private ownership, the water industry's prices will be controlled. The only way in which water companies will be able to increase profits is by becoming more efficient. Surely that is an objective we should all applaud and approve.

I should like to ask the opponents of privatisation why it is that the Socialist President and Prime Minister of France have shown no enthusiasm for nationalising their water industry. The answer is simple: they understand that a water industry under private ownership is more likely to be efficient in providing the water the people need.

Recently I read a speech by the right hon. Member for Plymouth, Devonport (Dr. Owen) addressing the Scottish council of the SDP—I believe it is known as a cottage meeting. He said that the Water Bill was encouraging French companies to buy British water companies. He seemed to ignore the fact that there is a golden share to prevent the plcs from being acquired as soon as privatisation takes place. I was somewhat surprised to see the great former Foreign Secretary, the man who was the great European—[AN HON. MEMBER:"Who said he was great?"] He did; he was always telling us he was great. I was surpised to see him becoming the great chauvinist and the great opponent of the France.

I believe that this Bill will provide the capital to modernise the water industry, clean up our rivers and improve our beaches. It is in the interests of the consumer, the efficiency of the industry and the environment and it should be warmly welcomed.

8.44 pm
Mr. Nigel Spearing (Newham, South)

I hope that the speech of the hon. Member for Hendon, South (Mr. Marshall) will be widely distributed, not only in Hendon but throughout the country, because it well illustrates many of the errors into which he and his hon. Friends have fallen, not least the Secretary of State, who I am very glad to see here. If I had the time, I would enlarge upon the point about the single user of water. We all use water for all sorts of purposes, and the single elderly pensioner requires cleanliness from everybody she meets and everyone who deals with food and the cleanliness of the community. Without pure, clean, cheap water public health would be at risk.

When the House was built it relied on privatised water. I think that the Chelsea water company supplied it. Unfortunately, at that stage, when that water was used it disappeared with all its contents into the river and it was not until the 1860s that the Metropolitan Board of Works built the Victoria embankment, largely for intercepting sewers, and we had drainage in London.

The Bill has three major aspects which so far have not featured largely in debates either in Committee or on Report. The first is that for the first time in history our foul water drainage and purification will be privatised. I believe that this is the first time that this has been tried anywhere in the world, but the Minister will correct me if I am wrong. Secondly, the private firms controlling foul water disposal will for the first time—after the golden share disappears—be controlled from outside the United Kingdom. Thirdly, these private firms will not be confined, as private water companies are at the moment, to the supply and disposal of water. They will be permitted to diversify. That is a point which the Secretary of State confirmed at the start of the debate when he kindly gave way to me.

I have in my hand a press release from Mr. Roy Watts, of the Thames water authority, dated 24 November. He talks about the future and says: 'We shall also be able to move into new, non-regulated areas of activity at home and abroad, water related or not, for the benefit of future shareholders, and customers. [Interruption.] I hear the Secretary of State—I think it was he—saying "Hear hear."

Those three features are, I believe, even more fundamental than the idea of private water supply, which has been largely the theme of Conservative Members. I believe that it is wholly contrary even to that Victorian virtue of collective activity in pursuit of public health, because no Victorian believed in private disposal and purification of water. That is what the Government are doing—largely, I believe, because of their ignorance of what all this means. They are also hiding from the public their real motives and the likely effects of the legislation.

Of course, the National Rivers Authority will be an improvement over what we have at the moment, but it could have been achieved without privatisation. I hope that the NRA will carry out the same model activity as the late lamented Thames Conservancy. We on the River Thames remember that body, which was set up in the middle of the Victorian era, and hope that the NRA will, through proper local consultation and balanced use of many types of water space, bring back the sort of administration that we enjoyed on the Thames many years ago, and which I hope will be recreated. But that has not been the theme of Conservative Members. We have had carbon copy speeches, of which the contribution of the hon. Member for Hendon, South was typical. They have said that there was no, or very little, public investment prior to 1979 and it had been inadequate and impossible post-1979, conveniently forgetting the past 10 years.

Both arguments are specious. The Government do not want to invest in public water supply and disposal. They do not believe in it because they do not believe in public service as a concept. There may be a few Conservative Members who believe in public service as a concept, but I do not believe that the Secretary of State does. Where public service has remained, instead of being given, even on a limited scale, quality, sustenance and high standards, it has been undermined in Bill after Bill, and regulation after regulation.

As an example of this—I am sorry that the right hon. Member for Woking (Mr. Onslow) is not here—the Government have removed local authority members from water authorities. How much more undemocratic can they get? I believe that that was done because originally they wanted to privatise water anyway and that was a step many years ago in that direction. It carries dogma beyond the limits of logic, common sense and political sagacity. Political sagacity is in short supply among Conservative Members and particularly at No. 10 Downing street.

I wonder what Alderman Roberts of Grantham would have said if it had been suggested that the purity and public health of Grantham would in future depend on a private company whose area covered the whole of the east midlands and East Anglia, which had shares traded in Tokyo, New York and Frankfurt, which could perhaps be controlled from anywhere in the world, and which could be subject to a takeover bid by any multinational. I wonder what today's inhabitants of Grantham would think about that. I do not think that they know the full implications of the Bill, and that is one of the problems.

When the Secretary of State opened the debate he fairly and quite properly lauded private water suppliers. We in London know that our first private water supplies came from the great New River company. It collected water from springs in Amwell in Hertfordshire and brought it to London and sold it. It was very good water. It came from the chalk of Hertfordshire and was God-given. There was nothing wrong at that time—and, indeed, there is not now, in Tory terms—in the collection, impounding, piping purification, distribution and sale of pure water by private companies. That is carried on at the moment under due regulation, but the Bill does not continue that pattern. It destroys a pattern of statutory water companies which I do not support, but at least they worked in harmony with the municipal services for over a century. That will now go.

Not only has the London county council disappeared but the Greater London Council has disappeared with it. In my constituency that is of considerable significance in terms of health. Every drop of water which falls on the roofs, roads and pavements or comes from the baths, closets, factories, works or workplaces in north London is piped into my constituency to the Beckton purification works. From there it is pumped over 30 ft from the low-level to the high-level sewers before it is purified and goes into the Thames.

When I first became interested in politics my party chairman was a member of the London county council and was chairman of its rivers and drainage committee. At that time he was heavily involved in a huge capital programme of £20 million. That does not sound much now, but I assure Conservative Members that in the 1950s it was a great deal of money and it was spent on improving the northern and southern outfall works of the London county council. Nobody heard much about that. We did that in London for the disposal of water just as it was done in Birmingham for the supply of water, and we are to lose control even of our pumps and the equipment that deals with these matters in London.

The same loss will be suffered in the constituencies of every Conservative Member and that means that we shall be in the hands of managers such as Mr. Roy Watts. They will be cruising the world looking for worthwhile investments, perhaps in water or perhaps in other things. They will he sharks in an international sea. The plcs will be predatory in order to sustain their activities. In the end the Director General of Water Services will have to agree the necessary funds to keep water supplies going in London and every other part of the country. What collateral for any international speculator!

If the Bill goes through the other place substantially as it is now, we will have a sort of internationalisation or multinationalisation of our public health services. The House and the public may not yet have appreciated that. Ministers are in the Chamber. If I have said anything that is incorrect I shall gladly give way and allow them to correct me. The Bill reaches the low water mark of the limited and unacceptable philosophies of the Government. It pushes private ownership into areas where it is not only unwelcome but unworkable and in the end the public will not stand for that. It besmirches the sense of responsible citizenship which lurks within most Conservative voters. That is the reason for their present unease. If the Bill becomes an Act it will pollute the standards of public life throughout the nation in the way that polluted water poisons the body. In due course, but not first without weakening the body politic, the Bill and its works will be rejected because a reluctant and disbelieving public will not stomach it or the Government from whom it sprang.

8.54 pm
Sir Charles Morrison (Devizes)

Most of the speeches so far have been aimed at the contents of the Bill. On the whole, I should like to look at it rather more politically. On reflection I have decided to vote in favour of Third Reading, but without enthusiasm, because I do not think that there is much, if anything, to be gained from an upheaval which will do no more, as my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said, than turn public monopolies into private monopolies.

I know that the water plcs will enjoy the freedom to borrow in the market the capital that they need to invest and certainly a great deal of investment is needed. But existing water authorities could enjoy that freedom as the result of an administrative decision freeing them from the constraints of the public service borrowing requirement and the overall effect on the economy would be precisely the same.

I shall accede to the Chief Whip's request to support the Bill even though that means that I shall be acting contrary to the desires of Conservatives in my constituency. I emphasise the word "Conservatives". I could say all Conservatives or more certainly all Conservatives who have spoken to me about the Bill. I suspect that lurking somewhere in my constituency there is one or perhaps about 100 Conservatives who support the Bill. However, I must admit that I have not yet met them. That is of some concern to me but it may be a worry about 100 times greater for the Government because I doubt whether my constituents are unique.

My worries fall roughly into two sections. First. there are those who are worried about the National Rivers Authority. The objectives of those people and the objectives of the Government are not very different, but those people do not share the Government's optimism about the Bill's ability to achieve the Government's objectives. Obviously the proof of the pudding will be in the eating. As my right hon. Friend the Member for Woking (Mr. Onslow) said, there is much concern among anglers and others. Their concerns have not been adequately expressed because time for debate has been limited or non-existent. Therefore, I hope that the Government will listen with sympathy and with concessions in mind to the debate in another place in the knowledge that those who are worried about the NRA, simply want to be more certain that it will live up to expectation.

The second section of people who are much more opposed to the Bill are the massive numbers who are. concerned that they will have to face a major rise in prices. It is difficult to believe that they are totally wrong. The rise in prices may be the fault of the Labour Government, who cut investment in water, but the electorate now care little or nothing about that Labour Government. For some of us 10 years ago may seem like yesterday, but for the man in the street 10 years ago has disappeared into the mists of time, like the South Sea Bubble, the loss of the American colonies and other disasters. Therefore, I urge the Government to remember that, while the Whips may hold sway in the House, they have no influence in the country.

8.59 pm
Mr. Pike

The hon. Member for Devizes (Sir C. Morrison) would be better advised at least to abstain tonight, if he does not follow his conscience and vote against Third Reading. I do not believe that there is any reason why he should feel confident that the other House will take the necessary action to put right a Bill about which he has expressed strong reservations.

The Secretary of State opened the debate. He gave his reasons for believing that Government action was necessary to deal with the problems in the water industry. If he really believes that the position is as he stated, he should recognise that the present set-up for the industry results from the Water Act 1973, which was implemented by a Conservative Government. Changes were made by the Water Act 1983 which removed local authority representation from water authorities.

If I had been able to make an intervention in the Secretary of State's speech, I would have asked him if, in all honesty, he believed that the Minister who steered the 1973 Act through the House should still hold office in the Government as a member of the Cabinet if the legislation was as disastrous for the industry as the Secretary of State believes. If it has failed, surely the Minister who made that terrible blunder, in the Secretary of State's view, is not fit to hold office.

The hon. Member for Pudsey (Sir G. Shaw) thought that in the main we can be proud of the water industry, although there are problems. The Select Committee on the Environment drew attention to some of the problems when it inquired into rivers and estuaries in 1987. One result of that is the establishment of the National Rivers Authority. It has to be accepted that it was not the structure of the industry put through in the 1973 Act, which set up the river basin concept and the 10 authorities, that led to any failure. If there have been failings, they have resulted from lack of investment in the industry, which is directly the responsibility of Government.

On numerous occasions Ministers have quoted what happened during the Labour Government's period of office between 1974 and 1979 but they did not mention that the Conservative Government, who have been in office for almost 10 years—next month will see the tenth anniversary of them taking power—have had sufficient time to ensure that water quality is right, that the standard of rivers is improving and that sewage treatment is being carried out more effectively. All the necessary work might not have been completed, but if the Conservative Government had made proper investment over the past 10 years there would not be as many problems.

Only a few weeks ago in his Budget speech the Chancellor announced a surplus of £14 billion to £15 billion but still the Government have failed to invest the money necessary to deal with the problems. Investment is the key. If the Government had a mind to do so, they could retain the industry in the public sector. It does not have to be privatised.

The Secretary of State failed to recognise that the Labour party has not argued for the status quo or that no changes are necessary. We accept that some things need to be changed. We accept that the separation of the water functions from the regulatory body is a step in the right direction. However, at every stage of this Bill we have expressed our fears that in the end the NRA will not necessarily receive sufficient powers, staffing or resources to carry out its function. The Minister referred to the powers of the director general. We fear that the director general will not have the powers to deal with the regulatory functions provided for that position in the Bill.

Not only is there strong opposition to the Bill in this House, but water privatisation did not receive the support of the majority of voters at the last general election. Only one party during the last general election campaign was committed to privatising the water industry and that party did not receive the majority of votes from the people voting in that election. I accept that it received more votes than the Labour party, but if we include the votes for the other Opposition parties, there were far more votes against the water industry being privatised than there were in favour of it.

Opinion polls show that the public are still opposed to the privatisation of the water industry. This Bill will not deal with all the problems. At the end of the day, the legislation will fail because profit will become more important than dealing with the problems in the industry.

If the private sector had been able to yield a profit from water supply, instead of having 20 per cent. of the water supply in the private sector now, there would have been 100 per cent., because people would have invested in it and developed the system. The simple fact is that sewerage has always been a public service function because there is no profit in sewerage and there never will be.

If the hon. Member for Hendon, South (Mr. Marshall) believes that metering is a fair solution, he fails to recognise the penalties that will be imposed on people with large families, families with disabled people in them, and other families who face extra demands for water because of problems within the family.

I recognise that other hon. Members wish to speak so I will be brief. I believe very strongly that this Bill fails to tackle the problems. If the Government were willing to deal with the problems in the industry, there could be an effective regulatory body and an NRA. With proper investment for the industry and a willingness on the part of the Government, the problems could be dealt with. The public would have confidence that the public sector could solve the problems. The Government should change their minds and drop the Bill now.

9.7 pm

Mr. Alastair Goodlad (Eddisbury)

I support the Third Reading. Over the years I have had the pleasure to be a member of many Standing Committees, but being a member of the Water Bill Committee gave me the most unalloyed pleasure. My hon. and learned Friend the Minister for Water and Planning and his team of Ministers comprehensively outplayed the Opposition in every department of the game. They won all the arguments, not only because of the skill of their advocacy, but because of the inherent superiority of their case.

I was very interested to hear the remarks of the hon. Member for Copeland (Dr. Cunningham), who came down as unambiguously as I have ever heard any Opposition Front Bench spokesman come down in favour of renationalisation of the water industry. The Labour party has lost much of its empire, but it is re-finding a role, nationalisation. Clause 4 is what the Labour party is all about—the means of production, distribution and exchange.

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) says that this is the biggest act of nationalisation ever done by the Conservative Government; if that be the case, perhaps the Opposition will follow us into the Lobby tonight.

This measure differs from any other denationalisation measure in so far as a quarter of the industry is already in private hands. I would like to talk briefly about the statutory water companies, which have supported the Government's proposals to transfer the water supply and sewerage operations of the water authorities into the private sector and have been involved in discussions with the Department for many months about the details. They have certan legitimate concerns about how their interests and those of their consumers and employees will be affected.

The areas of concern are, first, debt write-offs. The statutory water companies cannot be relieved of their present debt liability in the way water authorities can. Many of the water companies had very high gearing ratios and the adjustment of water authority debt to provide favourable gearing will inevitably cause statutory water companies to be less favourably regarded by financial institutions.

Secondly, there are the flotation terms. These might make investment in water service plcs a more attractive proposition than a statutory water company and could reduce the relative creditworthiness of the statutory water companies.

Thirdly, there are the differing financial regimes. The authorities and the companies have operated under different regimes approved by Parliament. In the case of the authorities, this has tended to produce low levels of borrowing and high charges, whereas with the statutory companies there have been high levels of borrowing and low charges. The rate of return is therefore very different, as is the level of charges under which the undertakings will enter price increase limitation regimes. Unless these differences are recognised, the ability of the statutory water companies to fund their businesses will be prejudiced, as they will be seen as less creditworthy than the privatised water authorities.

Their capital structure is unique. In addition to conventional debenture and loan stock borrowing, they are based on ordinary share capital, whose dividends historically have been subject to statutory limitation. The yields on these different categories of shares have offered virtually complete security as a result of the ability of the companies to levy rates on consumers reflecting the costs incurred. These shares were attractive to investors seeking fixed income securities offering franked income. The situation will now be totally changed, and it follows that the K-setting regime should recognise the need for the statutory water companies to establish a substantial equity base.

Fourthly, on takeovers, my right hon. Friend has announced that the privatised water authorities will be given a golden share to protect them during their fledgling years after the flotation. Although the statutory water companies are already in the private sector, the fledgling argument could also apply to them. They will have to adjust to a different financial and commercial regime; they will have to adjust to the requirements of the Director General of Water Services and the NRA and will have to carry out substantial capital works in order to comply with the requirements of the EC directive on water quality. The reasons for giving the privatised water authorities protection against takeover could equally be argued to apply to the statutory companies.

My right hon. Friend has also announced special MMC procedures in respect of mergers of water undertakings which have a gross asset value of more than £30 million to ensure the effective operation of comparative competition. However, I do not believe that the size of the operation is any guarantee of efficiency. Small undertakings can be just as efficient as large ones, and in some cases more so, and I do not think it is logical that the director general should be deprived of efficient comparators simply because they are small. This is certainly an argument for applying the MMC procedures to all undertakings.

I am aware that my right hon. Friend will have a discretion to refer small mergers, and I hope that he will occasionally be disposed to exercise it. As my hon. and learned Friend said in the debate on Report stage: to preserve all 39 water undertakers in independent ownership … would be to tend to freeze the existing pattern of ownership in the industry, and there is no reason to suppose that … is necessarily the best or most efficient.— [Official Report, 22 March 1989; Vol. 149, c. 1176.] It is likely that in certain areas that course may be the most appropriate in circumstances of comparative competition. I hope that my right hon. Friend will bear in mind the fact that where there is no mandatory requirement to refer there may be a public interest in so doing.

These are matters to which there is no easy answer. I know that my hon. and learned Friend the Minister has listened carefully to the Water Authorities Association and the companies and that his officials have been extremely patient and helpful. I hope that during the remaining course of the Bill answers will be found to those problems and I wish the Bill a successful passage.

9.14 pm
Mr. Boateng

We have concentrated on Third Reading on two aspects of privatisation—the privatisation of environmental protection and amenities on the one hand and the privatisation of the collection of water and its distribution on the other. At the outset the Secretary of State reassured us that he did not intend to privatise the raindrops, only the places where those raindrops are collected or where water welled. We are supposed to give thanks for that much comfort.

I want to concentrate on one other aspect of privatisation—the privatisation of the public health facility that the public supply and distribution of water has traditionally sought to protect.

When we look at the formation of the water industry as we know it today, we see that our Victorian forefathers sought above all else to protect the nation's health. It is that self-same public health which the Opposition submit is at risk as a result of this act of privatisation.

The Secretary of State told us, in an insight that he had into Labour history—I would say a blighted insight—that the Bill was the single most important measure of environmental protection since the Labour party was a gleam in Keir Hardie's eye. That was the Secretary of State's analysis, which I want to take him up on. I want to look at a period in which the Labour party was a gleam in the young Keir Hardie's eye.

We heard from the hon. Member for Pudsey (Sir G. Shaw) of the situation in the French Cameroons. I know nothing of the French Cameroons, but I do know something of the Kingdom of Ashanti, where I was baptised, and I do know something of London, the city in which I was born.

I want to take the Secretary of State back to the 19th century, as he would have us do, and refer him to a letter in The Times of 11 February 1875 from a Mr. Humphry Sandwith of Wimbledon. What was it that created such a feeling of anxiety in Mr. Sandwith at that time? He begins his letter to the editor by reminding him of the great steps forward that were taken in water sanitation. He says: On the outbreak of the Ashantee War you did good service in the cause of sanitary reform on behalf of our negro fellow-subjects and a few unfortunate Englishmen who were condemned to linger in bad health or to die on that pestilential coast. You pointed out clearly that a bad climate was robbed of half its terrors if the inhabitants could command pure air and pure water". I am bound to say that I take issue with Mr. Sandwith on his description of the Gold Coast as being a pestilential coast. I also take issue with him on the benefits to the people of the Gold Coast of the Ashanti war. My great grandfather fought on the losing side in that conflict. However, I am bound to say that as a result of his efforts and those of many of my ancestors, we were able to ensure that Ashanti became only a protectorate, not a colony. I know that many Conservative Members from the district commissioner brigade know full well the distinction between a colony and a protectorate. The battle was not completely without its victory.

The editor of The Times is taken to task on the impact of the state on that day in 1875 of drinking water and its supply to certain sections of our city. Mr. Sandwith says: I now venture to ask for your powerful aid, not on behalf of Africans, but of the unfortunate dwellers in the West-end of London, the peers, spiritual and temporal, the baronets, knights and esquires who inhabit the fashionable quarters of this singularly filthy and wealthy city. His reference to a singularly filthy and wealthy city is redolent of certain aspects of the city in which we live today. He goes on: The immediate cause of my appeal is the following fact. At a large West-end club the drinking water supplied by a certain water company left such abundant deposits of mud in the cisterns that it was necessary frequently to clean them. I saw large cakes of this dried mud, which had a peculiarly offensive appearance; a portion of it was sent to an eminent analyst. Under the Bill, which the Government seek to push through on Third Reading, the public will be obliged to rely on water companies themselves for analysis, but in those days at least that work was done by an independent analyst. The writer continues: He found it to consist of various unwholesome debris and of a considerable quantity of human excrement. Now, Sir, I ask, are the people of this city, are the wealthy and refined, as well as the poor and the helpless, content to go on drinking this repulsive mixture? A grand scheme is afloat to tunnel the Channel, millions are found to lend to Czars and Sultans; cannot London find money to bring us pure water from Wales? That was in the 19th century, when that correspondent to The Times felt it necessary to draw to the attention of the editor and the general public the consequences of privately owned and distributed water. His response was to suggest—as came to be the case—that the municipalities and the public interest be protected by bringing the supply and distribution of water under public control. That made sense then to our forefathers in Ashanti and in London.

The Secretary of State for the Environment—and we have done our research—does not appear to be a member of any London club, although no doubt he would count himself among the wealthy, if not the refined. It must be said that his hon. and learned Friend does belong to the Carlton. However, one would have thought that even out of concern for the wealthy and refined, for the members of London clubs—never mind the poor and oppressed for whom the Conservatives have never shown concern—and for public health, even at this late stage the Government would abandon this disastrous measure. In so doing, they would save themselves from the fate that Lord Rosebery pointed out lay in wait for any Government. He said: Water is one of those points which has wrecked a powerful government before now, and may wreck governments again. We believe that the Bill will wreck the present Government, and that they will rue the day that they brought it to this House.

9.22 pm
Mr. Alistair Burt (Bury, North)

When the history of this Bill is written, the contributions of the hon. Member for Brent, South (Mr. Boetang) throughout the Committee stage will be remembered as a delightfully irrelevant footnote. He has kept up that tradition right to the end, and I am sure that the whole House thanks him for his further eloquent but totally irrelevant contribution to the passage of our great Bill.

As we near the conclusion of this stage of the Bill, it is right that we should be as honest as possible—as we always are. My right hon. and hon. Friends recognise that it is a tricky Bill and one of whose merits it is difficult to convince the public. However, the public will ultimately be convinced of its value because it epitomises many of the things that the Government have striven to achieve over the years. The Government have taken upon their shoulders the mantle of the radical, belying the term Conservative that is part of the title of the party. We have been radical in respect of this issue.

The Government have also tackled, and not for the first time, sceptical public opinion. In this country, public opinion is innately conservative. Much needs to be changed that can only be challenged by the radical. We have also challenged the cosy presumption that public and state is best—and in some cases is all. That belief flies in the face of what people have often said, and flies in the face of that which people have often voted against. Nevertheless, it is something we have had to tackle.

In dealing with the objections of my own constituents, I have found that the more the Bill is explained to them, and the more that matters are made clear, the more support the Bill generates. Many people are unaware that 25 per cent. of the country is already served by private water suppliers. Many people to whom I have spoken have been unaware that there is public regulation contained in the Bill to ensure quality—the National Rivers Authority, the Director General of Water Services. Many have been unaware of the failure of past investment which we have covered innumerable times, both in Committee and on the Floor of the House. It is important that some of the failures of previous Governments have not been well touched on by hon. Opposition Members tonight.

In dealing with people's concerns, we have been able to point to some encouraging things. We have recalled their concern about other measures carried out by the Government, principally gas and British Telecom. When the measures have been put through, opposition has fallen away and there has been encouragement of wider share ownership and wider participation by employees in their own industries. All these are things that the Government have tackled in many other areas in exactly the same way as they seek to tackle them in the water industry. There are areas where public concern has been very strong at the time that the measure has gone through Parliament but has faded away afterwards as the benefits have become clear.

When it comes to future benefits, I ask the Minister to comment on a couple of things when he replies to the debate. The first is the benefits that may come from the sale of expertise abroad. When private companies develop expertise in dealing with water in this country that technology will be available for use abroad. Why do we always assume that the French will come here and run our industry? Why do we not assume that people in this country will be able to export their expertise?

Perhaps the Minister should also mention the consumers' charter. Again, this is something which is often unknown to our constituents until we talk to them about it as a future benefit which they do not at present receive but which they will get from the way in which water will be supplied to them in future.

If there is one matter, in particular, which is inadequately dealt with at present and which the Minister may be able to clear up for the future, it is disconnections. The Minister is aware of the reservations felt that I and many on both sides of the House feel about the fact that at present a court order is not necessary before the water supply is disconnected. That should become the norm. I ask the Minister very strongly to consider this and see what the Director General of Water Services may make of such a code of practice if he could put it his way for consideration. That would be a very useful thing to do.

My constituents are particularly reassured when they think about the policies of hon. Members of the Opposition. When they think about some of the measures that we have introduced, they remember that the Opposition have caved in to our views on the sale of council housing, on the rights of the individual in trade unions, on renationalisation of many industries. They are encouraged that once again our views will hold sway and that once again the Opposition will cave in.

We believe that the measure will work. It must work. With these things in mind, opinion in the country will be convinced and the measure will be seen in future as a great success.

9.27 pm
Mr. Elliot Morley (Glanford and Scunthorpe)

In my brief remarks I will not go over many of the views, well expressed in the course of the debate, about the mistaken assumption that taking a natural monopoly and putting it into the private sector will somehow improve quality standards and also protect consumers. I will just touch on the argument that those people who live alone will benefit from metering. It ignores the fact that, on the water boards' own figures in the trial areas where metering is taking place and where the standing charges have been applied, even a pensioner will pay significantly more under metering than at present. Those people who have more than one person in the house, who have young children or who care for an elderly relative, will pay a great deal more because of the greater amount of water that they will need. It is not very helpful for some hon. Members to suggest that water will be rationed because of its high costs and that that is a good thing in itself.

Something which has not so far been dealt with but which came up in Committee is the concern of people who have bought houses on estates where the sewers, laid by private contractors, are sub-standard, and will not be adopted by the local water authorities or private plcs, if and when they come in, will not adopt the sewerage systems. Incidentally, according to the argument of sonic Government Members, everything in the private sector is rosy, everything will be more efficient and better delivered. If that were the case, constituents of mine in Winchester avenue, Bottesford would not be suffering from sub-standard sewerage systems. Nor would those of the many hon. Members from all parts of the country who have raised similar problems.

Under the Bill the same people who laid those sub-standard sewerage systems will presumably be able to tender successfully to lay more such systems. The Bill does not protect quality standards. It represents yet another missed opportunity. It could have improved water quality, and protected conservation access and sites of special scientific interest. The Secretary of State has conceded a very small point on national parks: there will, he says, be consultation on the part of the privatised water companies. Nevertheless, they can still ignore the wishes of local people and the parks authorities, and proceed with developments that do no fit in with the areas in question.

Some hon. Members have argued strongly for tight regulation of prices. Such regulations will pose the risk that companies will resort to maximising their assets by capitalising those assets—in this instance, land, often of scientific importance and natural beauty. The Bill poses a danger to conservation, public health and water quality. It also represents a missed opportunity of dealing with private sewers and giving water companies powers to step into estates such as Winchester avenue, make good the damage and bill the people responsible, rather than giving them rights to tender for contracts to do the same again to the public system.

9.30 pm
Mrs. Ann Taylor (Dewsbury)

The Minister of State found himself in rather a bad temper earlier—not for the first time, I would say. I do not intend to follow his example. I was, indeed, intending to start on a note of congratulation: the Secretary of State was absent for some of our debate this evening, and this time it was for a very good reason. He was attending the christening of his grandson—[Interruption.]—of his two grandchildren: I congratulate him doubly. I shall make the obvious comment: I trust that they were not christened with Perrier, which seems to be the Secretary of State's favourite.

This evening's debate has been interesting—despite being the culmination of many hours of discussion—not least because of the enlightening comment from the hon. Member for Hendon, South (Mr. Marshall) that water will be better in private hands because those who can afford it will be able to obtain the water that they need during a drought. That shows the market going to extremes.

A Third Reading debate is supposed to consider a Bill as it stands after Committee and Report stages. Considering the Government's attitude, however, it is not surprising that today's debate has been something of a repeat of the Second Reading debate in December. Throughout our proceedings, the Government have dug in their heels and refused to listen to reason or public opinion, or to take account of the practical considerations that formed the basis of our debates and amendments in Committee.

There are three basic reasons why we—and public opinion—oppose the Bill as it stands. The first is one of principle. When we talk about the water industry, we are talking about an industry that is vital to the individual health of each and every one of us. More than that, we are talking about the public health of the nation, and indeed the long-term health of future generations. That is one of the reasons why the public know the dangers of water privatisation better than the Government. They recognise that advances in water purity and the safe disposal of sewage have contributed more to improvements in health than many of the drugs and medicines that are given so much credit. Almost all of that has been done at public expense by public authorities—in the main by those bodies that the Government love to vilify, the local authorities.

The second reason why we opposed and still oppose the Bill is practical. Everyone knows, and we have always said, that investment is necessary to bring the industry up to scratch. We have had arguments about the level of investment under Labour and Conservative Governments, and I am happy to repeat them this evening. The facts are clear: the average level of investment under the last Labour Government was substantially higher than it has been under Conservative rule. Leaving that aside, and looking to the future, what is likely to produce more investment?

The Government argue that the private sector will provide more investment. Leaving aside the Chancellor of the Exchequer's comment that investment in the private sector will be more expensive—which must somewhat reduce the amount of investment that the industry will receive—will the private sector invest more to clean up our rivers, to tackle pollution, to clean up our beaches and to provide pure drinking water, free of aluminium and nitrates and, more expensive to achieve, free of lead?

What incentive will the private sector have to make that level of investment? What incentive will there be for the industry in private hands to invest an extra £1 billion to clean up the beaches an additional £3 billion to improve drinking water quality or an extra £9 billion to confirm with EEC directives? What extra return will investors receive from additional investment of that magnitude? Will the industry sell more water or dispose of more sewage? Of course it will not.

The return to the private investor will not be high enough unless the Government's flotation is done in such a way as to cheat the taxpayer and the consumer. Water authorities are supposed to be valuing their present assets and liabilities—not an easy task when, for example, the Yorkshire authority does not know the condition of 70 per cent. of its sewers and does not even know where 30 per cent of them are.

The sampling techniques which form that basis of the asset management plans which are being drawn up have been described to me by a statistician, consulted professionally about the issue, as nothing more than an attempt to obtain a statistical blessing on guesswork. Anyone who buys into the industry will be buying a pig in a poke, which, on the basis of market forces, does not look that attractive. Indeed, the stockbrokers Seymour Pierce Butterfield Ltd. said in their report on the industry and privatisation: It is accepted that in terms of core operations, such as water supply, sewage treatment and disposal, growth is distinctly limited. That does not sound an attractive proposition for the private investor. That, however, is the position before Government intervention. I say that because the one thing this so-called free market Government cannot do is let a privatisation of this kind flop. That is why they are busy interfering with and intervening in market forces, stacking the cards in favour of potential investors.

I am sure that we shall soon hear about proposals for debt write-off. The massive debts of the water industry will not be passed to the private sector. They will be met, as usual, by the taxpayer. We now have the Government's latest document for price-setting. That confirms what we discovered in Committee, which is that the initial round of price-fixing will be done by the Secretary of State and that the new regulator, the Director General of Water Services, will not be involved.

We heard today that the Secretary of State has appointed the first Director General of Water Services, the man who, according to the Government, will look after the interests of consumers. He is, the House will not be surprised to learn, a Treasury civil servant apparently with considerable experience of the rates of return of nationalised industries, but with no experience of looking after the interests of consumers.

That fits in with the Government's outlook generally, because when the first round of price-fixing takes place in the autumn, consumer representatives will not be consulted or have any input. Indeed, the document on price-fixing says: The primary duty will be to ensure that companies are able, in particular by securing reasonable returns on their capital, to finance the industry. It goes on to say that subject to that duty will be a duty to ensure that the interests of customers are protected. In other words, the duty to ensure the interests of customers, of consumers, is given only as a secondary duty, secondary to the job of securing reasonable returns on capital. That means that prices will be higher, investment costs will be passed directly to the consumer and, because the K factor in prices will reflect a basket of charges, domestic consumers could end up subsidising industrial polluters. That is a long way from the principle that the polluter must pay.

The Government are interfering with market forces so that the industry will be more attractive to private investment. They are doing this in three ways. First, they are doing it with regard to debt write-off. We await the Minister's announcement, and if he does not intend to write off the debt, I hope that he will clarify the position by telling the House this evening that that is the case. The second way in which the Government intend to make this industry more attractive is by allowing higher prices once the industry is in the private sector, and by allowing cost pass through to the consumer. The third way in which they are making the industry attractive is by handing over to the private sector assets and powers that will inevitably be used against the public interest.

Looking again at the report of the stockbrokers and city analysts, one sees what they say of a private water industry: Low increases in earnings per share, limited potential for growth in dividends, and a semi-static market do not, at first sight, suggest an exciting investment. This is not a view, though, which is likely to be shared by a number of potential predators. Any company that could optimise the use of a water authority's client base by using it to expand the market for its existing products, perhaps in a related field, stands to benefit significantly. Companies in the chemical waste disposal and heavy construction sectors might find particular attractions in bidding for privatised water industries. There we have a summary of what this Bill is all about. The words of the City analysts are "potential predators". They are the people who have their eyes on this industry; they are the people who will make most out of it once it goes into the private sector.

We do not want to see, and the public do not want to see, a water industry that is owned by chemical companies and construction companies, yet these are the very companies identified by the City analysts as most likely to be interested in buying into this industry. If water companies are to be owned by chemical companies, and then those water companies are to contract out the analysis work of the NRA, the NRA will become a farce. The likes of Mr. Court of South West Water will be well on their way to achieving their objective of outwitting the regulators, and the chemical companies, or other polluting companies, will be well on their way to ensuring that the polluter does not pay.

Of course, there is also the land issue. Of the land, the city analysts say: Water authorities with significant amounts of surplus land may well realise sizeable capital gains by selling it. Of course, the new water plcs will be given that land when the industry is sold, so that they may realise those gains. To asset-strip and take the gain of the land values wherever possible is certainly the objective of those companies.

Another development has become clear—and I hope that the Minister will confirm the reports that have appeared in the press. It has become clear that the Government have decided to give important planning powers to the new water companies. These private companies will be able to decide whether a building development will have adequate water supply and sewerage facilities. How very convenient for the construction companies that buy up water companies and get 500,000 acres of land, much of it in areas of outstanding natural beauty. The construction companies will decide land values and where development should take place. That is one of the reasons why the French are interested.

If the price of the industry when flotation takes place is low enough and if enough bribes are given, the water industry will be sold. If that happens, the consequences will be with us for many years to come. Fortunately, the public realise what this is all about. The public, like the Opposition, want a water industry that is accountable not to the shareholder but to the consumer. That is why they want us to vote against the Bill.

9.45 pm
The Minister for Water and Planning (Mr. Michael Howard)

One of the last points made by the hon. Member for Dewsbury (Mrs. Taylor) was typical of the Opposition's approach to the Bill. There is no truth whatever in her suggestion that the water companies will be given powers over development. The position will not change. The water companies will have a duty to provide infrastructure for development and they will have a right to be consulted, just as they have at the moment. That was an absolutely typical example of the way in which the Opposition have sought to mislead, exaggerate, scaremonger and play upon people's fears.

Mrs. Ann Taylor

Will the Minister give way?

Mr. Howard

No, I have already dealt with the hon. Lady's point.

The Bill has been discussed in Standing Committee and on the Floor of the House for over 187 hours. The last few hours have been as interesting as ever. I shall deal at the outset with another example of scaremongering by the hon. Member for Stalybridge and Hyde (Mr. Pendry). He suggested that, contrary to earlier assurances, workers in the industry will not be provided with a pension scheme that includes index-linking. That is not so. They will be entitled to terms, through the mirror image scheme, that will be exactly similar to those in the local government superannuation scheme. It will be at the same cost to employees and it will include index-linking. I hope that the hon. Gentleman will return to his sponsor, NUPE, and ask it to put the matter right and tell the truth to its members who are employees in the industry so that they are not misled.

In his interesting speech my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) based his opposition to our proposals on what he saw as the lack of competition in the industry. With respect to my hon. Friend, I think that he exaggerated the competition that exists in the telecommunications and gas industries and underestimated the extent to which the Director General of Water Services will be able, by comparing the performance of different companies in the water industry, to ensure that the standards of the most efficient spread to the rest of the industry and that the customers of the industry benefit from the greater efficiency. I am confident that in due course he will see the merit of what we are suggesting.

My hon. Friend the Member for Bury, North (Mr. Burt) again expressed his fears about disconnections. He expressed those fears many times in Committee. We are still considering his suggestion that disconnections should take place only after a court order. However, we have decided that the disconnections code should be subject to the approval of the director general. That was one of the points in which he was interested. My hon. Friend the Member for Eddisbury (Mr. Goodlad) raised a number of interesting points, which we shall look at carefully.

My right hon. Friend the Member for Woking (Mr. Onslow) and my hon. Friends the Members for Devizes (Sir C. Morrison) and for Tiverton (Mr. Maxwell-Hyslop)—whose speech I was sorry to miss—expressed concern about the strength of powers and the independence of the National Rivers Authority. We shall take care to ensure that the National Rivers Authority is an independent body and that is has the powers that are in the Bill for all to see, as well as the resources that it needs to do its job properly.

I say to my right hon. Friend the Member for Woking that the National Rivers Authority has the duties for which he pressed. We think it right that it should have a discretion when it comes to decide to what extent it is appropriate to take samples, but its duties will be supervised by the Secretary of State, who can issue directions to the authority and whose exercise of that supervisory power is itself subject to supervision in the courts.

The National Rivers Authority is in many ways the cornerstone of our proposals, and it has presented Opposition Members with something of a quandary. It is so obviously a good idea, and so obviously a body that is badly needed that even Opposition Members have found it difficult to attack. Sometimes they have taken refuge in attacking not the proposals contained in the Bill but the proposals contained in the arrangements which were previously proposed for the industry and which were withdrawn by my right hon. Friend the Secretary of State.

Perhaps the true attitude towards the National Rivers Authority was let slip—as the true attitude of the Opposition so often is—by the hon. Member for Bootle (Mr. Roberts) when he was winding up our debate on 22 March. The hon. Gentleman sneeringly and derisively referred to a description of the National Rivers Authority provided by my right hon. and noble Friend Lord Crickhowell, who will be its first chairman. Lord Crickhowell had referred to the need to operate a slim, efficient, cost conscious organisation". To the hon. Gentleman and his hon. Friends that was a description worthy of derision. He would no doubt prefer a bloated, inefficient, extravagant organisation—an organisation of the kind which was so typical of the Opposition's years in government. Indeed, it was during those years that we saw the remarkable triple achievement of massive increases in water charges, massive increases in staff and a halving of capital investment in sewerage.

Mrs. Ann Taylor

On the specific point of the size and resources of the NRA, surely the Minister should support our earlier amendments which would have given the NRA sufficient resources and powers to do its job properly. If it is to be the slim organisation about which he spoke, that is why it has to contract out so much of its work back to the water plcs.

Mr. Howard

The hon. Lady has made that charge before; there is no substance to it. In eight of the 10 regions there will be no contracting out to laboratories. There will be no contracting out of sampling in any of the 10 regions and we shall respect the safeguards that the National Rivers Authority advisory committee has put forward to safeguard its independence.

Of course, when pressed about the undoubted achievements and advantages of the Bill, Opposition Members say—this is the kernel and crux of the argument—that it is not necessary in order to achieve these advantages for the industry to be transferred to the private sector. All these advantages can be achieved, they say, while keeping it in the public sector.

This is a straightforward proposition. It is, moreover, a proposition which can be tested. It can be tested against the record of the Labour party when in Government; it can be tested against the record of this Government. What the Opposition have never done is to make it clear which, if either, of these tests gives them any confidence that the argument which they advance is a sound one. That argument can hardly be said, even by Opposition Members, to survive the test of the industry's performance while their party was in government.

We know—the figures are incontrovertible—that capital investment in the industy fell by one third during the Opposition's period in Government. Investment in sewage and sewerage services fell by no less than one half. That fall continued during the period when the right hon. and noble Lord Callaghan of Cardiff was Prime Minister in an Administration in which the hon. Member for Copeland (Dr. Cunningham) served successively as parliamentary private secretary to the Prime Minister and as a Parliamentary Under-Secretary at the Department of Industry.

One might have expected that those cuts would have been marked by great heart searching on the part of the Government who were responsible for them. It might have been expected that the most anxious consideration would be given to the effects of those cuts on our rivers, on our bathing waters and on our water environment generally. I turned for enlightenment to the autobiography of Lord Callaghan, so aptly entitled "Time and Chance". I turned to the index of the book. Do we find there page after page of reference to anguished discussions on the future of the water industry, and on the effects on the industry of those cuts? I fear not.

I looked under water; there was not a single reference. I looked under sewage and sewerage services; not a single reference. So far from being accompanied by a gnashing of teeth or a wringing of hands, or indeed any realisation of the damage that was being done to our water environment, those cuts were made without any mention, without any regret, without any realisation of the enormous damage that they would do.

I thought that perhaps the then Prime Minister was too busy on grander matters to have concerned himself with these minutiae, and I was anxious to be fair to the Labour party, so I turned to the memoirs of Lord Barnet, who was Chief Secretary at the time. I looked in the index of his book for a reference to water; there was not a single one. [Interruption.]

Mr. Speaker


Mr. Howard

I looked under sewerage services; there was not a single reference. But, to be fair to the right hon. Gentleman and the Labour party, there were some references which were relevant to this subject. There were three—[Interruption.]

Mr. Speaker


Mr. Boateng

On a point of order, Mr. Speaker. Can it possibly be in order for this tour around the memoirs of previous distinguished members of the Labour party to be made at this stage of the Bill? Is it any more in order——

Mr. Speaker

Order. What is being said is in order.

Mr. Howard

This is a test of the policy which the Labour party is putting forward. I found three references of some relevance to this matter in the memoirs of Lord Barnet under the heading "Water workers strike spy". On page 169 of the book, under the evocative chapter heading "Gloom and doom", we read: There was unofficial action of a most damaging kind in the water industry, with many homes without water and elderly people having to use stand pipes. That was what was happening in the water industry under the Labour party almost exactly 10 years ago.

If the Labour party's attitude does not pass that test, let me suggest another test to the Opposition. They can hardly say that they wish their policies to be subjected to a test of what has happened while the present Government have been in office. We say that matters have improved under the present Government, but——

Mr. Spearing

On a point of order, Mr. Speaker.

Mr. Speaker

Is it a point of order? Very well.

Mr. Spearing

Is it not a fact, Mr. Speaker, that the Third Reading debate is confined to the contents of the Bill?

Mr. Speaker

I think that the Minister is talking about the Bill.

Mr. Howard

What I am talking about is the policy which is at the heart of the Bill and the Labour party's opposition to that policy. Labour Members are advancing a policy which has consistently failed to give the people of this country the water environment to which they are entitled. It failed while the Labour party was in power and it has not done as well as it should have done while the present Government have been in power because the only way in which we can get the resources necessary to give this country the water environment it needs is by putting the industry in the private sector, and giving it access to private sector resources to enable it to operate with the efficiency which the private sector will provide. That is what the Bill provides. That is the only way in which we shall achieve the advantages that are so essential if we are to proceed with the clean-up of the water environment which all the people of our country wish to see.

The hon. Member for Copeland has repeatedly said that the Labour party will return the industry to the public sector. He does not seem to be in the confidence of his hon. Friend the Member for Dagenham (Mr. Gould) who keeps leaking to the newspapers the fact that the Labour party will not return the industry to the public sector. No doubt that is why the hon. Member for Copeland said that he was willing to set out all the answers to the questions that have been put. However, that will not be in this debate, but in a speech that he will make in a few weeks. He has not told the House the Opposition policy during our debates on the Bill but says that he will wait for a few weeks before doing so. That is a measure of the contempt with which the hon. Gentleman treats the House. I invite the House to treat the Opposition tactics on the Bill with similar contempt and to give the Bill the Third Reading it so eminently deserves.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 319, Noes 227.

Division No. 137] [10 pm
Adley, Robert Day, Stephen
Aitken, Jonathan Devlin, Tim
Alison, Rt Hon Michael Dicks, Terry
Amery, Rt Hon Julian Dorrell, Stephen
Amess, David Douglas-Hamilton, Lord James
Amos, Alan Dover, Den
Arbuthnot, James Dunn, Bob
Arnold, Jacques (Gravesham) Dykes, Hugh
Ashby, David Eggar, Tim
Aspinwall, Jack Emery, Sir Peter
Atkins, Robert Evans, David (Welwyn Hatf'd)
Atkinson, David Evennett, David
Baker, Rt Hon K. (Mole Valley) Fairbairn, Sir Nicholas
Baker, Nicholas (Dorset N) Fallon, Michael
Baldry, Tony Favell, Tony
Banks, Robert (Harrogate) Fenner, Dame Peggy
Batiste, Spencer Field, Barry (Isle of Wight)
Bellingham, Henry Finsberg, Sir Geoffrey
Bendall, Vivian Fishburn, John Dudley
Bennett, Nicholas (Pembroke) Forman, Nigel
Benyon, W. Forsyth, Michael (Stirling)
Bevan, David Gilroy Forth, Eric
Biffen, Rt Hon John Fowler, Rt Hon Norman
Blackburn, Dr John G. Fox, Sir Marcus
Blaker, Rt Hon Sir Peter Franks, Cecil
Boscawen, Hon Robert Freeman, Roger
Boswell, Tim French, Douglas
Bottomley, Peter Fry, Peter
Bottomley, Mrs Virginia Gale, Roger
Bowden, A (Brighton K'pto'n) Gardiner, George
Bowden, Gerald (Dulwich) Garel-Jones, Tristan
Boyson, Rt Hon Dr Sir Rhodes Gill, Christopher
Braine, Rt Hon Sir Bernard Glyn, Dr Alan
Brandon-Bravo, Martin Goodhart, Sir Philip
Brazier, Julian Goodlad, Alastair
Bright, Graham Goodson-Wickes, Dr Charles
Brown, Michael (Brigg & Cl't's) Gorman, Mrs Teresa
Bruce, Ian (Dorset South) Gorst, John
Buck, Sir Antony Gow, Ian
Budgen, Nicholas Grant, Sir Anthony (CambsSW)
Burns, Simon Greenway, Harry (Ealing N)
Burt, Alistair Greenway, John (Ryedale)
Butcher, John Gregory, Conal
Butterfill, John Griffiths, Peter (Portsmouth N)
Carlisle, John, (Luton N) Grist, Ian
Carlisle, Kenneth (Lincoln) Ground, Patrick
Carrington, Matthew Gummer, Rt Hon John Selwyn
Carttiss, Michael Hague, William
Cash, William Hamilton, Hon Archie (Epsom)
Channon, Rt Hon Paul Hamilton, Neil (Tatton)
Chapman, Sydney Hampson, Dr Keith
Chope, Christopher Hanley, Jeremy
Churchill, Mr Hannam, John
Clark, Hon Alan (Plym'th S'n) Hargreaves, A. (B'ham H'll Gr')
Clark, Dr Michael (Rochford) Hargreaves, Ken (Hyndburn)
Clark, Sir W. (Croydon S) Harris, David
Clarke, Rt Hon K. (Rushcliffe) Haselhurst, Alan
Colvin, Michael Hawkins, Christopher
Conway, Derek Hayes, Jerry
Coombs, Anthony (Wyre F'rest) Hayhoe, Rt Hon Sir Barney
Coombs, Simon (Swindon) Hayward, Robert
Cormack, Patrick Heathcoat-Amory, David
Couchman, James Heseltine, Rt Hon Michael
Cran, James Hicks, Mrs Maureen (Wolv' NE)
Critchley, Julian Higgins, Rt Hon Terence L.
Currie, Mrs Edwina Hill, James
Curry, David Hind, Kenneth
Davies, Q. (Stamf'd & Spald'g) Hogg, Hon Douglas (Gr'th'm)
Davis, David (Boothferry) Holt, Richard
Hordern, Sir Peter Nicholson, Emma (Devon West)
Howard, Michael Norris, Steve
Howarth, Alan (Strat'd-on-A) Onslow, Rt Hon Cranley
Howarth, G. (Cannock & B'wd) Oppenheim, Phillip
Howe, Rt Hon Sir Geoffrey Page, Richard
Howell, Rt Hon David (G'dford) Paice, James
Howell, Ralph (North Norfolk) Parkinson, Rt Hon Cecil
Hughes, Robert G. (Harrow W) Patnick, Irvine
Hunt, David (Wirral W) Patten, Chris (Bath)
Hunt, John (Ravensbourne) Patten, John (Oxford W)
Hunter, Andrew Pattie, Rt Hon Sir Geoffrey
Irvine, Michael Pawsey, James
Irving, Charles Porter, Barry (Wirral S)
Jack, Michael Porter, David (Waveney)
Jackson, Robert Portillo, Michael
Janman, Tim Powell, William (Corby)
Johnson Smith, Sir Geoffrey Price, Sir David
Jones, Gwilym (Cardiff N) Raffan, Keith
Jones, Robert B (Herts W) Raison, Rt Hon Timothy
Jopling, Rt Hon Michael Rathbone, Tim
Kellett-Bowman, Dame Elaine Redwood, John
Key, Robert Renton, Tim
King, Roger (B'ham N'thfield) Rhodes James, Robert
Kirkhope, Timothy Riddick, Graham
Knapman, Roger Ridley, Rt Hon Nicholas
Knight, Greg (Derby North) Ridsdale, Sir Julian
Knight, Dame Jill (Edgbaston) Rifkind, Rt Hon Malcolm
Knowles, Michael Roberts, Wyn (Conwy)
Knox, David Rossi, Sir Hugh
Lamont, Rt Hon Norman Rost, Peter
Lang, Ian Rowe, Andrew
Latham, Michael Rumbold, Mrs Angela
Lawrence, Ivan Ryder, Richard
Lee, John (Pendle) Sackville, Hon Tom
Leigh, Edward (Gainsbor'gh) Sayeed, Jonathan
Lennox-Boyd, Hon Mark Scott, Nicholas
Lester, Jim (Broxtowe) Shaw, David (Dover)
Lilley, Peter Shaw, Sir Giles (Pudsey)
Lloyd, Sir Ian (Havant) Shaw, Sir Michael (Scarb')
Lloyd, Peter (Fareham) Shelton, Sir William
Lord, Michael Shephard, Mrs G. (Norfolk SW)
Luce, Rt Hon Richard Shepherd, Colin (Hereford)
Lyell, Sir Nicholas Sims, Roger
McCrindle, Robert Smith, Sir Dudley (Warwick)
Macfarlane, Sir Neil Smith, Tim (Beaconsfield)
MacGregor, Rt Hon John Soames, Hon Nicholas
MacKay, Andrew (E Berkshire) Speller, Tony
Maclean, David Spicer, Sir Jim (Dorset W)
McLoughlin, Patrick Spicer, Michael (S Worcs)
McNair-Wilson, Sir Michael Squire, Robin
McNair-Wilson, P. (New Forest) Stanbrook, Ivor
Madel, David Stanley, Rt Hon Sir John
Major, Rt Hon John Steen, Anthony
Malins, Humfrey Stern, Michael
Mans, Keith Stevens, Lewis
Maples, John Stewart, Allan (Eastwood)
Marlow, Tony Stewart, Andy (Sherwood)
Marshall, John (Hendon S) Stradling Thomas, Sir John
Martin, David (Portsmouth S) Sumberg, David
Mates, Michael Summerson, Hugo
Maude, Hon Francis Tapsell, Sir Peter
Mayhew, Rt Hon Sir Patrick Taylor, Ian (Esher)
Mellor, David Taylor, John M (Solihull)
Miller, Sir Hal Taylor, Teddy (S'end E)
Mills, Iain Temple-Morris, Peter
Miscampbell, Norman Thatcher, Rt Hon Margaret
Mitchell, Andrew (Gedling) Thompson, D. (Calder Valley)
Mitchell, Sir David Thompson, Patrick (Norwich N)
Moate, Roger Thorne, Neil
Montgomery, Sir Fergus Thornton, Malcolm
Morris, M (N'hampton S) Thurnham, Peter
Morrison, Sir Charles Townend, John (Bridlington)
Moss, Malcolm Townsend, Cyril D. (B'heath)
Moynihan, Hon Colin Tracey, Richard
Neale, Gerrard Tredinnick, David
Nelson, Anthony Trippier, David
Neubert, Michael Trotter, Neville
Newton, Rt Hon Tony Twinn, Dr Ian
Nicholls, Patrick Vaughan, Sir Gerard
Nicholson, David (Taunton) Viggers, Peter
Waddington, Rt Hon David Wilkinson, John
Wakeham, Rt Hon John Wilshire, David
Waldegrave, Hon William Wolfson, Mark
Waller, Gary Wood, Timothy
Walters, Sir Dennis Woodcock, Mike
Ward, John Yeo, Tim
Wardle, Charles (Bexhill) Young, Sir George (Acton)
Warren, Kenneth Younger, Rt Hon George
Watts, John
Wells, Bowen Tellers for the Ayes:
Wheeler, John Mr. Tony Durant and
Widdecombe, Ann Mr. David Lightbown.
Wiggin, Jerry
Adams, Allen (Paisley N) Duffy, A. E. P.
Allason, Rupert Dunnachie, Jimmy
Allen, Graham Dunwoody, Hon Mrs Gwyneth
Alton, David Eadie, Alexander
Archer, Rt Hon Peter Eastham, Ken
Armstrong, Hilary Evans, John (St Helens N)
Ashley, Rt Hon Jack Ewing, Harry (Falkirk E)
Ashton, Joe Ewing, Mrs Margaret (Moray)
Banks, Tony (Newham NW) Fatchett, Derek
Barnes, Harry (Derbyshire NE) Faulds, Andrew
Barnes, Mrs Rosie (Greenwich) Fearn, Ronald
Barron, Kevin Field, Frank (Birkenhead)
Battle, John Fields, Terry (L'pool B G'n)
Beaumont-Dark, Anthony Fisher, Mark
Beckett, Margaret Flannery, Martin
Beith, A. J. Flynn, Paul
Bell, Stuart Foot, Rt Hon Michael
Benn, Rt Hon Tony Foster, Derek
Bennett, A. F. (D'nt'n & R'dish) Foulkes, George
Bermingham, Gerald Fraser, John
Bidwell, Sydney Fyfe, Maria
Blair, Tony Galbraith, Sam
Blunkett, David Galloway, George
Boateng, Paul Garrett, John (Norwich South)
Boyes, Roland Garrett, Ted (Wallsend)
Bradley, Keith Godman, Dr Norman A.
Bray, Dr Jeremy Golding, Mrs Llin
Brown, Gordon (D'mline E) Gould, Bryan
Brown, Nicholas (Newcastle E) Graham, Thomas
Brown, Ron (Edinburgh Leith) Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon) Griffiths, Nigel (Edinburgh S)
Buchan, Norman Griffiths, Win (Bridgend)
Buckley, George J. Grocott, Bruce
Caborn, Richard Hardy, Peter
Callaghan, Jim Harman, Ms Harriet
Campbell, Menzies (Fife NE) Heffer, Eric S.
Campbell, Ron (Blyth Valley) Henderson, Doug
Campbell-Savours, D. N. Hinchliffe, David
Cartwright, John Hogg, N. (C'nauld & Kilsyth)
Clark, Dr David (S Shields) Holland, Stuart
Clarke, Tom (Monklands W) Home Robertson, John
Clay, Bob Hood, Jimmy
Clelland, David Howarth, George (Knowsley N)
Clwyd, Mrs Ann Howell, Rt Hon D. (S'heath)
Cohen, Harry Howells, Geraint
Coleman, Donald Howells, Dr. Kim (Pontypridd)
Cook, Robin (Livingston) Hoyle, Doug
Corbett, Robin Hughes, John (Coventry NE)
Corbyn, Jeremy Hughes, Robert (Aberdeen N)
Cousins, Jim Hughes, Sean (Knowsley S)
Cox, Tom Hughes, Simon (Southwark)
Crowther, Stan Illsley, Eric
Cryer, Bob Ingram, Adam
Cummings, John Janner, Greville
Cunliffe, Lawrence Johnston, Sir Russell
Cunningham, Dr John Jones, Barry (Alyn & Deeside)
Dalyell, Tam Jones, Ieuan (Ynys Môn)
Darling, Alistair Jones, Martyn (Clwyd S W)
Davies, Rt Hon Denzil (Llanelli) Kennedy, Charles
Davies, Ron (Caerphilly) Kilfedder, James
Dewar, Donald Kinnock, Rt Hon Neil
Dixon, Don Kirkwood, Archy
Dobson, Frank Lambie, David
Doran, Frank Leadbitter, Ted
Douglas, Dick Leighton, Ron
Lewis, Terry Rees, Rt Hon Merlyn
Litherland, Robert Richardson, Jo
Livingstone, Ken Roberts, Allan (Bootle)
Livsey, Richard Robertson, George
Lloyd, Tony (Stretford) Robinson, Geoffrey
Lofthouse, Geoffrey Rogers, Allan
Loyden, Eddie Rooker, Jeff
McAllion, John Ross, Ernie (Dundee W)
McAvoy, Thomas Ruddock, Joan
Macdonald, Calum A. Salmond, Alex
McFall, John Sedgemore, Brian
McKay, Allen (Barnsley West) Sheerman, Barry
McKelvey, William Sheldon, Rt Hon Robert
McLeish, Henry Shore, Rt Hon Peter
Maclennan, Robert Skinner, Dennis
McWilliam, John Smith, Andrew (Oxford E)
Madden, Max Smith, C. (Isl'ton & F'bury)
Mahon, Mrs Alice Smith, Sir Cyril (Rochdale)
Marek, Dr John Smith, Rt Hon J. (Monk'ds E)
Marshall, David (Shettleston) Snape, Peter
Marshall, Jim (Leicester S) Soley, Clive
Martlew, Eric Spearing, Nigel
Maxton, John Steel, Rt Hon David
Maxwell-Hyslop, Robin Steinberg, Gerry
Meacher, Michael Stott, Roger
Michael, Alun Strang, Gavin
Michie, Bill (Sheffield Heeley) Straw, Jack
Michie, Mrs Ray (Arg'l & Bute) Taylor, Mrs Ann (Dewsbury)
Mitchell, Austin (G't Grimsby) Taylor, Matthew (Truro)
Morgan, Rhodri Thompson, Jack (Wansbeck)
Morley, Elliott Turner, Dennis
Morris, Rt Hon J. (Aberavon) Vaz, Keith
Mowlam, Marjorie Wall, Pat
Mudd, David Wallace, James
Mullin, Chris Walley, Joan
Murphy, Paul Wardell, Gareth (Gower)
Nellist, Dave Welsh, Andrew (Angus E)
O'Brien, William Welsh, Michael (Doncaster N)
O'Neill, Martin Wigley, Dafydd
Orme, Rt Hon Stanley Williams, Rt Hon Alan
Parry, Robert Williams, Alan W. (Carm'then)
Patchett, Terry Winnick, David
Pendry, Tom Winterton, Nicholas
Pike, Peter L. Worthington, Tony
Powell, Ray (Ogmore) Wray, Jimmy
Prescott, John Young, David (Bolton SE)
Primarolo, Dawn
Quin, Ms Joyce Tellers for the Noes:
Radice, Giles Mr. Frank Haynes and
Randall, Stuart Mr. Robert N. Wareing.
Redmond, Martin

Question accordingly agreed to.

Bill read the Third time, and passed.

  2. cc146-58
  3. Electricity Bill [Money] (No. 2) 6,257 words, 1 division
  4. cc159-66
  5. Electricity Bill [Ways and Means] (No. 2) 3,860 words, 1 division