`Public access to meetings

HC Deb 22 March 1989 vol 149 cc1128-87

7. In paragraph 1 of the Schedule to the Public Bodies (Admission to Meetings) Act 1960 (bodies to which Act applies in England and Wales), at the end there shall be inserted the following sub-paragraph— (i) customer service committees established and maintained under the Water Act 1989.";

and the functions of a customer service committee shall be regarded as public functions for the purposes of that Act.".

Government amendments Nos. 31, 32 to 36 and 41.

No. 143, in clause 46, page 53, line 40, at end insert `or to show that it was prevented from complying with its obligations under this section by frost, drought, unavoidable accident or other unavoidable cause'.

No. 144, in clause 50, page 59, line 11, at end insert 'or to show that it was prevented from complying with its obligations under this section by frost, drought, unavoidable accident or other unavoidable cause'.

No. 122, in clause 51, page 59, line 23, after 'supply', insert 'within the meaning of section 52(1A) below'.

No. 123, in clause 52, page 60, line 31, at end insert— '(1A) No water shall be regarded as wholesome where it falls below the prevailing standard determined by the European Community in respect of Drinking Water Quality, whether or not contained within a Directive.'.

Government amendment No. 63.

No. 127, in clause 71, page 82, line 25, at end insert— '(4A) Any arrangement made in pursuance of this section may authorise a local authority to undertake works in the relevant area and in such other place as may be incidental to the area referred to in the arrangement and where it is expedient to do so to secure the efficient discharge of the sewerage functions of any sewerage undertaker.'.

No. 128, page 83, line 11, at end insert— '(5A) In the absence of any arrangements under this section each sewerage undertaker shall in making arrangements for the discharge of their sewerage functions invite competitive tenders for the design supervision and execution of all works of maintenance or construction within the relevant area from at least three organisations, one of which shall be the relevant authority for that area.'.

No. 131, in page 83, line 11, at end insert— '(5B) Where arrangements have been entered into in pursuance of this section by a sewerage undertaker and a relevant authority any such arrangements may be varied or terminated by agreement between the parties thereto and in the absence of an agreement the arrangements shall be terminated by either party giving to the other at least 12 months notice of termination taking effect from 1st April following subject to the provisions set out in (a) (b) and (c) below: —

1. (a) the notice shall contain a Statement of Reasons explaining why termination of the arrangements proposed would benefit customers or potential customers of the sewerage undertaker
2. (b) either party may apply within twenty one days of receiving the notice to the Secretary of State for a review of the decision to terminate and any such notice shall not come into effect until the Secretary of State has published the outcome of the review and
3. (c) in carrying out the review the Secretary of State shall have regard to the benefit accruing to consumers as a result of the proposed termination and the financial consequences of termination on the parties to the arrangements.'.

No. 126, in clause 73, page 83, line 34 at end insert— '(1A) The Director shall lay before Parliament in each year in which charges are fixed under this section a report setting out those charges together with such information as he may consider to be relevant in relation to those charges.'.

No. 148, in page 84, line 5 at end insert— '(3A) When a water main or sewer is requisitioned or a connection is made in accordance with the provisions of this Act or section 34 of the Public Health Act 1936 the undertaker shall be entitled to charge the person or body making the requisition or requiring the connection in respect of each dwelling a sum (the connection charge) to cover the costs of any additional works required to ensure compliance with sections 37 and 67 of this Act.'.

No. 136, in clause 76, page 87, line 29 at end insert— '(2A) Notwithstanding the generality of subsection (2) above, or of Schedule 10, regulations may not impose any right on a water undertaker or sewerage undertaker to require any person to make any payment for the connection or maintenance or repair of a water meter installed at the undertaker's request or insistence.'.

No. 125, in page 87, line 46 at end insert— '(dd) provide for optional arrangements for payments by instalments'.

Government amendments Nos. 43 to 48.

Dr. Cunningham

Amendment No.1 is an excellent amendment and has the additional merit of being quite simply understood, even by those hon. Members who have paid only fleeting attention to the work of the Standing Committee. The effect of the amendment is to remove from the Bill the whole process of privatising the water industry.

Amendment No. 1 is part of a large group, which includes several other amendments in my name and in the names of my hon. Friends. Amendments Nos. 122 and 123 would require the Bill to include drinking water quality standards that met the provisions of the European Community directive. Amendment No. 126 is an important amendment, which would require the director general to give Parliament an annual report on pricing in the water industry. Amendment No. 125 is a small but significant proposal, which would allow people to pay their bills by instalments. Amendments Nos. 127, 128 and 131 deal with local authority sewerage agency arrange-ments.

We also have an interest in the significant amendments tabled by the hon. Member for Macclesfield (Mr. Winterton)—amendments Nos. 102 to 109—which would have important implications for references to the Monopolies and Mergers Commission and other aspects of takeovers in the water industry.

It is well known that the Labour party is totally and irrevocably opposed to the idea of privatising water—the nation's most fundamental natural resource. Privatisation has always been a bad idea, as is recognised increasingly widely. The two most comprehensive opinion surveys have been conducted by the BBC. The survey conducted by the Derek Jameson show——

Mr. Edward Leigh (Gainsborough and Horncastle)

Oh yes; quality stuff.

Dr. Cunningham

That is an interesting reaction. Clearly, the hon. Gentleman does not like the idea of the British people expressing their views. No doubt Mr. Jameson and his listeners will be interested to hear of the contempt expressed by Conservative Members. I am not surprised that Conservative Members do not want to hear what happened as 36,068 people recorded their opinion, of whom 96.4 per cent. said that they were opposed to the whole idea of privatisation. More recently, on the "Open Air" programme, about 10,000 people responded, and 96 per cent. of them expressed opposition to the idea of privatising the water industry.

Mr. Howard

Is the hon. Gentleman suggesting that the Derek Jameson show will be the touchstone of the policies of any future Labour Government? Is the bold cry of the Opposition, "We offer you government by the Derek Jameson show"?

Dr. Cunningham

Of course not. I am entertained by the contempt in which Conservative Members hold the opinions of the British people and by the dismissive—[HON. MEMBERS: "No."] Conservative Members seemed to laugh contemptuously at the opinions of the British people. They may laugh on the other side of their faces before too long because, as the arrangements unfold, a significant and steady trend of opinion can be seen that is opposed to the Government's proposals.

Miss Emma Nicholson (Torridge and Devon, West)

The test of British opinion is in the ballot box, and the Conservative party is consistently returned to government by the British public. Surely the hon. Gentleman does not have the face to put forward misleading surveys by semi-qualified people broadcast on the Derek Jameson programme. Non-viable surveys are irrelevant and should form no part of a properly prepared and presented Opposition argument against the Bill.

Dr. Cunningham

If the hon. Lady prefers, I can read into the record the results of the Gallup poll, the MORI poll—[Interruption.]

Miss Nicholson

I am quoting the hon. Gentleman's figure of 96 per cent.

Dr. Cunningham

All the other opinion polls, too, show a trend against the Government. I agree that it is slightly smaller, being in the mid-70s. Is the hon. Lady saying that she is content with 76 per cent. opposition to the Government's proposals?

Mr. Alistair Burt (Bury, North)

rose——

Dr. Cunningham

I shall give way in a moment; I have given way twice already.

It is well established that British public opinion is implacably opposed to the idea that the nation's most fundamental essential resource should be a matter of profit-taking by private enterprise monopolies. I believe that the public will remain opposed to that proposal.

Mr. Burt

rose——

Dr. Cunningham

I shall give way in a moment.

In almost 19 years in the House, I have never seen so much adverse press and public condemnation of a proposal. No doubt we shall hear that leading articles and editorials in the Financial Times, The Guardian, The Independent and The Daily Telegraph do not matter either. However, we believe that those and other newspapers are expressing genuine concern about, and in some cases are showing outright opposition to, the implications of the proposals. The Guardian showed its concern in an editorial headed, "Wet and worrying." I do not know whether the Minister would describe himself as wet in the political sense—certainly not. He is, however, in a certain amount of deep water on this issue.

The Times had the heading, "Flotation is heading into deeper water"; The Independent, "The wrong way to sell water"; the Daily Mail, "Why water charges are overflowing"; the Financial Times, "Water sale in a muddle"; The Daily Telegraph, "Privatisation water torture"; and The Observer, "Risk of drowning in water sell-off'.—[Interruption.] They are all very recent.

The Financial Times said "Costly water, rotten eggs". That is absolutely ringing condemnation of the very idea of privatising the nation's water resources.

Mr. Burt

All this is very amusing, and I take the hon. Gentleman's point. It is amusing, because it reminds the House of the Opposition's reliance on ephemeral opinion. Will he think back to the considerable opposition at the time of the introduction of the measures to privatise the telephone service and British Gas and to deregulate the buses, which at the time brought tremendous opposition in much the same way as the hon. Gentleman has described? However, their success has now been proved. Does the hon. Gentleman not agree that that will happen with this measure?

Dr. Cunningham

That is a matter of opinion. I would not say that the majority of people think that the privatisation of the telephone service was a wonderful success, or some of the other inadequate privatisations. People in the rural area that I represent do not consider that bus deregulation has been a roaring success, because they do not have a bus service any more. That is hardly success for those people. That is typical of what has happened in the rural areas. The suggestion of this being some kind of ephemeral public opinion is, too, a matter of opinion and remains to be seen. However, the evidence over the past two years has been that the public are implacably opposed to the idea.

Mr. Mullin

Does my hon. Friend recall that, when it was said in Committee that 96 per cent. of more than 30,000 people who telephoned a radio show were against privatisation, the hon. Member for Bury, North (Mr. Burt) was overheard to remark that, if that was calculated on the same basis as under the Housing Act, it would constitute a majority in favour?

6.15 pm

Dr. Cunningham

It would be typical of the Government and their supporters to construe something like that as a victory rather than a defeat. Indeed, on the basis of some of their earlier legislation, that might be their intention.

Privatisation has little, if any, support outside the House. I do not believe either that it has an honest majority in favour inside the House.

Mr. Burt

What does that mean?

Dr. Cunningham

It means that there is a whipped, arm-twisted, bullied and cajoled majority for it. [Interruption.] I shall tell the hon. Member for Penrith and The Border (Mr. Maclean) that I would be happy to have a free vote on the issue, but would he? Of course he would not. I suggest that, before he makes sedentary interventions like that again, he thinks about the implications of what he is saying.

Mr. Peter Thurnham (Bolton, North-East)

The free vote that matters is that of the electors at the polling stations. If the hon. Gentleman is paying so much attention to what the papers and opinion polls say, he should know that they have always said that they would much rather have this Government in charge of the country's affairs. The reason why the Opposition were thrown out of government in 1979 was their completely inefficient management of the economy—including the water industry, where investment was cut by one third.

Dr. Cunningham

It is a blinding statement of the obvious that the Conservative party won the last general election. However, I do not believe that such issues as water privatisation and the sell-off of our national parks played a significant part in that general election. I wish they had. However, they will play a significant part in the next general election, and they will not be helpful to the hon. Gentleman's cause.

Mr. Knapman

rose——

Dr. Cunningham

I shall not give way for the moment.

The public are already paying an unnecessary and heavy price for this dogma-driven idiocy, as the recent increases imposed by the statutory water companies have made clear. The Minister of State has huffed, puffed, bellowed and cajoled about the matter. He said that he could not see any reason why consumers should pay more than a 10 per cent. increase in the coming financial year. We always believed that that was nonsense. I remember his right hon. Friend the Secretary of State saying during Second Reading that our predictions about the effect of this on prices were "absolute nonsense".

Within months, our arguments have been proved right and those of the Secretary of State proved wrong. The forlorn and bedraggled attempts of the Minister of State to resurrect the Government's credibility from the fiasco— not to protect the public—have come to naught. He has tried to make a virtue of the fact that the average price increase for 12 million consumers will be 22 per cent. in the coming financial year.

The Minister of State looks somewhat puzzled. He looks as though all this is new to him. An increase of 22 per cent. is three times the rate of inflation. There has been an attempt to present this debacle of policy as a great victory for consumers.

Mr. Howard

rose——

Dr. Cunningham

I shall give way in a moment.

I wrote to the right hon. Lady the Prime Minister about the connection between privatisation and increased charges. The Secretary of State got into a bit of a lather today and said that what I was saying in that letter was not true. I was, however, quoting the West Kent water company. The management of that statutory company —one of those paragons of rectitude often paraded from the other side of the House as role models for how to manage the water industry—told every one of its consumers that a 21p in the pound increase was being dunned on them as a direct consequence of the Government's privatisation proposals.

Mr. Howard

Does the hon. Gentleman not recognise that that reinforces the need for the regulatory structure that we are providing in the Bill? Does he not recognize that those companies operate under an out-of-date system, with inadequate regulation that was untouched by the Opposition when they were in power?

Dr. Cunningham

Yes, of course it was untouched, because those companies were not levying increases of 42 per cent. For the Minister of State to propose that private enterprise is necessary for the regulation of prices is the most incredibly stupid argument for the market that I have ever heard. To say that we must have private enterprise so that we can have price controlsis economic illiteracy. As an act of kindness to the Minister, I suggest that he would do far better to keep his head down and keep quiet about this.

I have the Daily Mail with me, which is the most implacably loyal supporter of the Conservative Government through thick and thin whatever happens, but it says of the Minister of State and his huffing and puffing and bluster about price increases: Ministerial anger over this is bluster and humbug.

Mr. Howard

Never mind what the Daily Mail says; does the hon. Gentleman appreciate that, if one has monopolies in the private sector, they should be properly regulated? Part of that proper regulation should be price control of precisely the kind that we shall put in place as a result of the Bill's provisions.

Dr. Cunningham

But the point is that we should not have private monopolies in the first place. What is the possible justification for leaving consumers to the mercy of private, cosseted, protected monopoly power?

Miss Emma Nicholson

rose——

Dr. Cunningham

No, I shall not give way.

We shall be faced with private monopolies with unprecedented powers in the British economy, from which consumers will have no escape. They will have no choice, unless, of course, they take the advice of the Secretary of State who said, "Yes of course they have a choice—they can buy Perrier." I cannot see people in Durham watering their leeks with Perrier or washing their greyhounds in it or anybody bathing their grandma in it. Of course consumers have no choice; the Minister knows that full well. Public Finance and Accountancy of 17 March was right to describe privatisation—I forgive it the pun—in this way: Sluice gates open for water charges. That is the consequence for consumers of the Government's proposals and the Minister knows it.

It is bad enough that water consumers should be taxed in this way to pay for Conservative party dogma in the face of all reasonable and reasoned arguments, but the environment too will pay a heavy price as a consequence of privatisation.

We believe that the whole idea of water privatisation is nonsense, and I believe that the public share our view. Water is inevitably a natural monopoly, essential to life, to health and to well-being. It should not be an object for profiteering. The Prime Minister's comparison between the water supply and the food industry is offensive.

People have no choice about needing water and they have no option about from where they get it, but they have all sorts of choices and options about where they can buy their food—they can even grow it themselves. It is insulting to millions of people throughout the country to say that the things are the same and that therefore there is a case for making water the subject of profit taking and private monopoly powers. The private monopolies will not face any market forces, and there will be no competition in the sense that people talk about private enterprise creating such competition. There will be no private enterprise, because the private monopoly will be protected from the market simply because no market will exist.

The Government's notion of comparative competition is a half-baked idea which has been dreamed up to try to give the privatisation some cloak of respectability, but no one has any difficulty in seeing through it.

Mr. Nicholas Baker (Dorset, North)

The hon. Gentleman has spoken about private monopoly. Why then did the Labour Government do nothing about the statutory private water companies from which I and many other people draw their water supply? Their prices were not controlled by the Labour Government, but the hon. Gentleman appeared to suggest that those prices were not put up enough. How does he suggest that a Labour Government would get the required investment? In Committee, he accepted that a large amount of new investment is necessary, but who would he get to pay for it?

Dr. Cunningham

I do not want to be discourteous to the hon. Gentleman, but his compendium interventions with multiple questions are difficult to answer in total. I do not like Conservative Members' allusions to "private" water companies. They are not private enterprise water companies, but statutory, regulated water companies. We did not do anything about them—to paraphrase what the hon. Gentleman has said—because we did not believe there was a significant problem. They supply about 25 per cent. of consumers and, in the circumstances that then prevailed, they did a reasonable job.

The hon. Gentleman is aware that I recognise that major investment is required to improve drinking water quality, to protect and enhance the environment and to eliminate pollution. The hon. Gentleman was upstairs with us for weeks on end, and he knows that there was no argument about that. The argument is whether such improvements are best controlled, directed and planned as part of a national policy, which is open and accountable, with national objectives under Government and public control, or whether it is better done by private enterprise monopoly power exercised in secret, with the public having little or no impact on the matter. In that case, the public would have little say in what happens and nowhere else from which to receive their water. There is a wide gulf of opinion about the way in which such things are managed, but there is no argument about the need for investment.

We believe that we are far more likely to achieve sustained, coherent, strategically planned and coordinated investment if such matters are subject to public policy rather than to private enterprise policy. That is the great political difference between the opposition parties and those who support the Bill. I am sorry that I rehearsed all of that again at some length, but——

Mr. Howard

Was it part of such a coherent, planned strategic policy that investment in sewerage was cut by 50 per cent. by the previous Labour Government?

Dr. Cunningham

We had numerous exchanges about this in Committee. I read the figures into the record last night. Total capital investment in the water industry during the Labour Government's period of office was, on a yearly average, higher than the yearly average during the nine years of this Government's office. That investment was made in different economic circumstances. Expenditure was not cut and the Minister need only look at the water statistics published by the Water Authorities Association to see that.

Mr. Howard

The hon. Gentleman has not answered the question.

Dr. Cunningham

That does answer the question. The hon. and learned Gentleman is wrong.

Mr. Howard

rose——

Dr. Cunningham

I have given way to the Minister three or four times.

Mr. Howard

The hon. Gentleman has not answered the question.

Dr. Cunningham

I have answered the question, and I will not give way again. The Minister can no doubt use different figures to try to prove his point. I am talking about total capital investment over a five-year period in the water industry.

6.30 pm

The Government have argued that, by passing the nation's water resources into the hands of protected private monopolies, efficiency will improve. Let us test that claim. The arguments for the market and for private enterprise have been that competition and market forces —the need to be in the lead, and the challenge of other providers of goods and services—drive efficiency. None of those will exist in the circumstances that the Government are creating in this case. That is clear beyond doubt, so none of the alleged creators of efficiency in a free market will impinge on the private water monopolies. The Government claim does not stand up.

It is argued that water authorities will not only be able to borrow freely but that they will invest more when they are privatised. In fact, it is cheaper for the regional water authorities to borrow from the national loans fund than it will he for them to borrow in the open market. Immediately, therefore, it will he more expensive for them to borrow to finance their investment.

The Secretary of State has said, not once but often, that these protected private monopolies will be given immunity from prosecution if they pollute the environment. Hence, pressure on them to invest and improve and be more protective of the environment is being knocked away before they even exist. From where will the efficiency come? How will there be a drive for greater investment? What will direct, control and motivate all of that?

These protected private monopolies will face a dilemma. They will have to keep their shareholders and investors happy and achieve the necessary returns and dividends, and pay the directors' fees and all the other paraphernalia of additional expense, and at the same time invest in long-term matters of environmental protection and pollution control, on which the pay-back periods will stretch far into the future. We think we know where their final choice will rest. It will be to keep their shareholders happy and pay dividends at the expense of consumers and at the expense of investment to protect the environment.

It is argued that the new system of regulation will protect consumers, but the director general will have no part in the initial price-fixing, and it will take at least 10 years for his system to have any significant effect. Privatisation, it is argued, will release the industry from political control. Yet the Secretary of State will fix the original prices, and thereafter they may be reviewed after five years.

The Government will try to palm off the shares to a few million people whom they believe will want to take them up. I do not think there will be a very positive response to a flotation of the water industry, because people already see the difficulties and contradictions in the Government's position. The privatisation proposals in the Bill are a triumph of ideology over reason and common sense. They are costly, messy and deeply unattractive proposals.

It has been suggested that involved in all this is the selling off of public assets worth about £27 billion—assets built up over years out of the rates and public investment —for between £5 billion and £7 billion. That sale will be challenged in the courts by a number of local authorities, and understandably so. That is another negative factor for the flotation, if it ever reaches that stage.

We are seeing a great deal of public investment and assets being sold at a knock-down price. I have said many times that much of our priceless natural heritage and environment is being sold off in this way. I defy the Minister to tell me of any other national Government of any political persuasion who are putting large tracts of their national parks on the market, up for grabs. It is not happening in the United States, in the Federal Republic of Germany or in Scandinavia, France, Portugal, Spain or anywhere other than in Britain. That fact is deeply offensive to millions of people who are horrified at the prospect.

We believe that the Government are proposing to ease this privatisation by writing off £2 billion to £3 billion of the total accrued debt of the industry, which is standing now at about £5.2 billion. We believe that they intend just to write it off. It will be another huge cost to the taxpayer. It is happening almost without a word. Indeed, I do not recall one word of protest by Conservative Members when that matter has been discussed. Do Conservative Members call that protecting the interests of the taxpayer? They have been silent on this issue, as they are now.

It has become an accepted fact of life that privatisation and Government dogma is enough justification for these huge write-offs to take place at the public expense, and apparently another one is on the way. That will be necessary to give the industry some semblance of the sensible capital structure that it will need to be even remotely attractive to investors.

Adding debt to relatively debt-free companies, such as Thames Water, to create the level playing field necessary to maintain the charade of competition is apparently to be another facet of all this. It means that customers of Thames Water, whose charges over the years have funded investment rather than it being financed through borrowing, will have to pay again. Thames Water consumers will have an additional tax placed on them. They will be allocated some debt. That will be their prize for privatisation. They do not have much debt now, but they will be given some. There is no real justification for that action. The justification is simply the Government's dogma-driven ideology, and that is the only reason why the Bill remains before the House in its present form.

The proposals are about guaranteeing a rate of profit to the industry to ensure that investments are made, irrespective of whether any commercial risks are involved and irrespective of management competence. We cannot get much further from market forces and private enterprise. That is a signal feature of what Ministers are asking the House to accept. We are to have increasing prices to finance profit, dividend, corporation tax and investment up front rather than ensuring that the generators who benefit will have to pay.

The Government's proposals are about the creation of cosseted, protected private monopoly power over captive consumers on a scale and of a nature unprecedented in Britain. There is to be immunity from prosecution and from market forces. These bodies will be protected even against takeovers for the first few years of their existence, regardless of competence and performance. In 19 years in the House I have never seen such a miserable, pathetic collection of incoherent proposals. If it has any sense, the House will throw them out now.

Mr. Nicholas Winterton (Macclesfield)

I am grateful, Mr. Speaker. I appreciate the importance of the delay before you called me to participate in the debate.

I intend to support the Opposition on amendment No. 1. I see it as my duty as a Back Bencher to seek to improve a fundamentally flawed, unpopular and unnecessary Bill. One way of improving it would be to leave out part II. That has been dealt with adequately by the hon. Member for Copeland (Dr. Cunningham).

I wish to direct my remarks to other amendments. The purpose of amendment No. 102 is to prevent an appointment being made to a new plc where a reference is outstanding to the Monopolies and Mergers Commission. I am widely supported in my view that we should introduce a pause while the MMC reports on mergers which are in progress after 11 January this year and before the new companies are appointed as undertakers.

Amendments Nos. 103, 104 and 105 have an important purpose. They would delete the provision for, and all references to, the asset limit of £30 million below which references to the MMC are not made automatically. Since all water undertakings are monopolies, as has been pointed out already in the debate, it should make no difference in principle whether a company is large or small when determining the reasons for a referral to the MMC.

Amendments Nos. 106, 107 and 108 also have an important purpose. They would add to the duty of the MMC to examine a merger in the light of its impact on comparative competition an equal duty to examine it in the light of its impact on the interests of consumers or other industries. Amendment No. 109, which might be described as an optional amendment, would have the effect of ring-fencing the assets of the industry at transfer for the purpose of a reference to the MMC.

Privatisation of the water industry will place in private hands the 10 regional monopolies that dominate the industry. The 100 per cent. of consumers whose sewerage services are provided by water authorities, and the 75 per cent. of consumers whose water is supplied by them, are to join the 25 per cent. of water consumers presently supplied by private water companies. All consumers, whether currently supplied by water authorities or by the statutory water companies, will have supplies regulated on a different basis from that which obtains at present. All consumers have an interest in the Bill. I seek on this side of the House to represent the genuine concern and confusion of people up and down the country who are deeply worried about the Bill and its implications.

The Bill will transform an industry which is a vital component of everyday life. All consumers, therefore, have an interest in seeing that the Bill is made right. That is what I am seeking to do at this late stage. There is much in the Bill which seeks to protect the interests of consumers —price controls, environmental controls and regulation by the Director General of Water Services. In the long term, it is the control imposed upon the creation and ownership of the monopolies which comprise the industry that will underpin the system and perhaps dictate whether the legislation—if it ever reaches the statute book—is a success.

That control will determine the general approach that the monopolies take to business. It is intended to ensure that companies interested only in exploiting the potential position of monopolies to increase prices while cutting the quantity and quality of services, rather than those interested in providing a genuinely effective and efficient service, are kept out of the industry. That is the purpose of some of the amendments. It is thus essential that the parts of the Bill dealing with the acquisition and extension of monopoly powers are got right in the House. It is because of fears that the Bill as it stands has not got it right that I have tabled the amendments.

6.45 pm

My amendments would have three effects. First, the Secretary of State would be required to refer to the Monopolies and Mergers Commission all takeovers and mergers in the industry rather than just those involving companies with water or sewerage assets in excess of £30 million. Secondly, the companies which would be deemed relevant for the purpose of such a referral would include all those which develop out of the industry as it currently stands, not just those which are water and sewerage undertakers.

Thirdly, and most important, the amendments would require the Monopolies and Mergers Commission to have an equal regard for the interests of consumers and for other parts of the wider economy, as it would have to be used to maintain the system of comparative competition when making a recommendation on any case referred to it by the Secretary of State.

The questions giving rise to the amendments were touched on briefly in Committee. At its 29th sitting, and at the end of the day, the Standing Committee found time to spend just 45 minutes discussing these issues. Because of the briefness and inconclusiveness of that discussion, the matter requires an airing before the full House. Without such an airing, the chance to put right a fundamental omission from the Bill, which would have serious and unwarranted long-term consequences, would be lost.

The first matter is relatively straightforward. Amendments Nos. 103, 104 and 105 propose the removal of the exemption on referrals of takeovers and mergers where the relevant assets of either company are under £30 million. The Bill already embodies a concession: if the assets of either company involved, rather than those of the object of the bid, exceed £30 million, a referral is automatic. That concession is warmly welcomed. My amendments propose to take the matter to its logical conclusion and extend to all consumers the protection that investigation of bids and mergers by the MMC is supposed to afford.

The need for such protection is already evinced by the Bill—hence the requirement for referral where assets exceed £30 million. It is already admitted that the possession of monopoly powers involves such risks to consumers that their investigation is warranted by referral. Yet for those whose water is provided by statutory water companies with assets of less than £30 million there will be no automatic protection.

The Parliamentary Under-Secretary of State and other Ministers have defended the position by saying that the operation of comparative competition, whatever that might be, will give consumers all the protection that they need. I ask my hon. and learned Friend whether that assurance can be relied upon. Comparative competition is a relatively new concept—untested and untried except in the local authority sector, with which the water industry is not comparable. Further, it is to be operated by a directorate staffed by only 80 people. That is hardly a sufficient complement to police 39 companies, given the other duties that the directorate has. In any case, were it to operate effectively, the customers of those companies would still be afforded less protection than those of other companies. Yet the last two years suggest that it is these customers who are, in fact, in need of protection, for it is the smaller statutory water companies that have been the object of the most sustained interest from what I can describe only as foreign predators. Surely it is in precisely those circumstances that the protection afforded by an MMC investigation is most needed, since foreign predators are those about whose track record and intention the least is known in this country.

I hope that my hon. Friend will accept the validity of what I am saying, particularly in the light of evidence that I have about the extent of French interest in the water industry of this country—the French having bought into some 16 of the private water companies already, and having increased the value of their shareholding dramatically.

Miss Emma Nicholson

rose——

Mr. Winterton

I shall give way in a moment. I suspect that I shall be tempting the right hon. Lady—I should say the hon. Lady, though perhaps it is only a matter of time —in a few moments.

The second matter—that of extending the investigatory role of the MMCs to the entire industry as it currently exists, rather than just to the water and sewerage subsidies of successor holding companies following privatisation —may be less straightforward, but in my view it is no less necessary. Throughout the discussion of this Bill—indeed, since it was first mooted back in 1986—there has been much public concern about what will happen to the assets of the industry. We are not talking just about the distribution and supply of water, or about effluent disposal, but about an industry that has immense, rich assets, which were built up over many decades, being paid for by ratepayers and users of the services throughout the country. They now total between 400,000 acres and 500,000 acres, much of which is not, strictly speaking, necessary for operational purposes and, as the Bill stands, will in many cases be outside public scrutiny after privatisation. There will be nothing to stop unscrupulous predators—by which, of course, I mean the French, among others—from taking over part of the industry and, while giving a perfectly good account of themselves so far as the water and sewerage undertakings are concerned, will use their acquisitions as an excuse to asset-strip other companies in the groups to which the undertakers belong.

The rights of access and the leisure and recreational facilities that have been developed over many years will, in my view, be severely jeopardised. I speak with a deep interest, as there are in my own area of Macclesfield many hundreds of acres, owned by the North West water authority, which are widely used by the people of my constituency and—yes—by the people of Greater Manchester as well, for recreation and leisure.

Sir Anthony Grant (Cambridgeshire, South-West)

rose——

Mr. Winterton

I will give way in a moment.

I am deeply concerned, despite some of the assurances that my hon. and learned Friend the Minister gave in earlier debates both in Committee and on the Floor of the House. I should say that in my view no Minister in Her Majesty's Government could more adequately, competently and intelligently promote the Bill—I have said that publicly—but the problem is that my hon. and learned Friend can present a good case only when there is a case to put. In this instance, there is no case whatsoever. That is perhaps a backhanded compliment, but it is intended very sincerely none the less.

Sir Anthony Grant

On the point that my hon. Friend made so powerfully, I know his area and I know how beautiful some parts of it are. Does he agree, however, that there is a body—presumably known as the Macclesfield planning authority, or something similar—which no doubt shares his views and has the power to preserve the beauty of that amenity?

Mr. Winterton

I shall be coming to that in a moment, but I will tell my hon. Friend now that I do not believe that the local planning authority has the necessary power to ensure that that land is not exploited or developed in ways which are undesirable to the area and are certainly not in the interests of conservation or the environment. In my view, the rights of access and the leisure and recreation facilities that have been developed over the years will be jeopardised.

Nor is this just a fear of the more unusual groups— those whom many of my hon. Friends would describe as the bearded weekend ramblers—[Interruption.] I make that point merely to strengthen the views that I am expressing.

Mr. Knapman

My hon. Friend may rest assured that the bearded ramblers in the Opposition ramble only when they are speaking.

Mr. Winterton

I am glad that my hon. Friend did not accuse me of rambling.

That fear is shared by many organisations. One of them is the National Trust, of which I am a member. Dare I say that it is shared also by the Country Landowners Association—not a notoriously Socialist-oriented body —and the Countryside Commission? The amendment would subject to the scrutiny of the Monopolies and Mergers Commission the takeover of any assets currently within the water industry and would thus afford protection against those fears being realised.

The third and final matter—that of extending the remit of the MMC's investigation to include consideration of the effect of mergers and takeovers on consumers and on other parts of the economy—is perhaps the most important point covered by this group of amendments. As the Bill currently stands, cases referred to the Monopolies and Mergers Commission are investigated by it in the light of the usual remit of potential detriment to the public interest.

Above and beyond that remit will be a duty to examine the impact of a merger or takeover on the operation of comparative competition. That consideration stands above all others. That provision is, however, naive. It results from a blinkered view of how the industry may develop and what its links with other sectors of the economy are. Comparative competition may be well and good in theory but, as has been made clear, it is untried and untested in any comparable industry in this country. In theory it would provide a check on the abuse of monopoly power—but only in theory. It is in the nature of natural monopoly that one cannot be sure of the counterfactualisation against which it is to be measured. Comparing one natural monopoly with another can guarantee only that neither abuses its position more than the other; it cannot guarantee that abuse does not take place. [Interruption.] It is therefore illogical to make the maintenance of comparative competition a primary consideration to the exclusion of all others.

Mr. Nicholas Bennett (Pembroke)

Will my hon. Friend give way?

Mr. Winterton

My hon. Friend should perhaps show a little more respect to one who has been in the House rather longer than he. This happens to be a very technical matter, and if I am referring to notes rather more frequently than I should, it is because I want to get it right. I can only say that I believe that in this instance I am reflecting the views of a dammed sight more people than he is.

Mr. Bennett

Will my hon. Friend give way?

Mr. Winterton

I will give way when I have finished this paragraph.

The first purpose of the amendment, therefore, is to give equal importance to the examination of consumer interests. I trust that we on the Conservative side of the House are interested in consumer interests. [Interruption.] I will give way in a moment. It is entirely correct that the MMC should take an inside view of the industry, but it needs also to take an outside view.

Mr. Bennett

Can my hon. Friend tell me first what he put in his own election address in 1987, when water privatisation was a clear commitment in the Conservative manifesto? What did he tell his electors then? Secondly, what is the role of the Director General of Water Services?

Mr. Winterton

The subject did not appear anywhere in my election address.

Mr. Bennett

Is that why the hon. Gentleman's majority went down?

Mr. Winterton

My majority is satisfactory—[Interruption.]

Mr. Bennett

rose—

7pm

Mr. Winterton

No, I will not give way on a trivial, pathetic point which should not feature as part of this important debate. I only hope that my hon. Friend will continue to enjoy any kind of majority in his constituency.

Miss Emma Nicholson

I am concerned about the position of the Macclesfield planning authority. I invite my hon. Friend to put forward his plans for new, revolutionary and even more democratic planning authorities. I do not know where he expects planning decisions to be made. Personally, I believe that they should be made as close as possible to the people who will suffer the effects. I am delighted to have two outstanding planning authorities in my constituency—Torridge and West Devon. In addition, we have the Dartmoor national park committee. I do not imagine that it will be better to pluck those decisions away and to have them made here or by the parish council, the county council or even, for example, by Macclesfield town council. I am confused—[Interruption.] I wonder whether the hon. Gentleman, with his keen and burning interest in the Bill, was here last night to hear the splendid amendments that were tabled and accepted by the Government and by my hon. and learned Friend the Minister, whose virtues the hon. Gentleman has so adequately lauded. Those amendments have been accepted. I believe that the hon. Gentleman fusses too much.

Mr. Winterton

There are times when I should not give way and that was undoubtedly one of them.

Without such a view being taken, situations could arise in which companies may buy their way into the industry at no damage to the operation of comparative competition, but at considerable risk to consumers. A management with aims other than that of providing a public service at a reasonable rate of return may take over the industry. Performance would still be competitive, but it would also be worsened. In the long term, the director general's exercise of his powers could—perhaps even would—restore the situation, but in the short term a continual see-saw would be created in which standards would alternatively rise and fall.

The task of the director general—this was one of the questions asked by the hon. Member for Pembroke (Mr. Bennett)—would become like the economist's pursuit of equilibrium. It would always be aimed at, but never achieved. Therefore, just as the economist goes for the pursuit of "second best", knowing that the holistic benefit is greater than that of equilibrium, so the remit of the MMC must be shaped with an acceptance that the market is not in a perfect state. By giving the MMC an equal duty to examine the impact of mergers and takeovers on the consumer interest, that can be achieved. That would prevent the entry of firms which have no track record in the industry, or those whose track record was poor. It would change the remit from one in which there was a presumption in favour of entry—on the assumption that if problems arose the director general could put them right afterwards—to one where there was a presumption against entry unless it could be shown that problems would be unlikely to arise in the first place. In many industries this would be unnecessary, but in one so vital to public health it is not the case.

Firms which may have a tougher attitude to disconnections or which may be lax about health and safety or unused to the market in England and Wales should be weeded out before they are allowed to cause problems. It will be no consolation to consumers who may otherwise be adversely affected that the director general, in whom so many people seem to put so much trust, will have the power to close the stable door after the horse has bolted.

Mr. Tim Boswell (Daventry)

My hon. Friend has been making a most eloquent case but it seems that, whether he intends to or not, he is directing his case almost entirely to the one moment of consideration in advance of clearance. Surely he agrees that it is better to have the continuing regulation of the director general and the safeguards established under the Bill for the continuing conduct of the privatised authorities than to have one moment or gateway in which the Monopolies and Mergers Commission could be invited to speculate on some hypothetical future conduct of a privatised water undertaking.

Mr. Winterton

I am not unsympathetic to the views that my hon. Friend has just advanced. My amendments go along with that. There is an ongoing role for the director general in just the way that my hon. Friend has described. I am trying to ensure that we do not allow undesirable companies into the industry in the first place. That is the reason for some of the amendments to which I am referring.

There is, however, a second reason for amending the remit of the MMC—to give it a duty to have regard to the impact of mergers and takeovers on other sectors of the economy. For such a requirement to be made explicit may seem unusual, but it is a measure of the extent to which one needs to be on one's guard. The past 18 months have seen an unusual flurry of takeover activity among the statutory water companies. The French have been buying in and paying up to 10 times the market capitalisation for companies whose financial performance has always, to say the least, been a little predictable.

One has to ask, and I do ask my hon. and learned Friend the Minister, why that is so. It cannot simply be because those companies see an opening to increase prices and thus increase profitability. That is part of the story, as the statutory companies average price increase of 22 per cent. shows, but the high prices paid for the companies suggests that that is not the whole story.

One does not have to search far to find the other reasons for those takeovers. It is by now widely realised that the water industry is asset-rich but cash-hungry. Indeed, my hon. and learned Friend the Minister has said so himself on several occasions. It has many non-operational assets which could be sold off and many which, though operational, could be simultaneously developed to purchase additional profits. In Standing Committee the Minister said that that should cause no problems for consumers, and that the normal planning process would guard against unwanted development, but assurance requires concrete form. It should be incumbent upon the MMC to weed out what I can only describe as the asset-strippers. My right hon. Friend Lord Young and the Government did that recently in respect of Elders IXL and Scottish and Newcastle Breweries. I hope that they can do the same again in the future.

Beyond that, the French firms pose a further threat that we must guard against. As my hon. and learned Friend the Minister knows all too well, those firms are not only—or even primarily—water and sewerage undertakers. Their subsidiaries cover chemicals, construction and civil engineering. What is more—I say this especially to Opposition Members —they cover many functions cur-rently performed by local authorities, but which are shortly to be put out to tender in the compulsory tendering process. It is those areas on which the French have their eye as much as on the water industry. In the run-up to 1992 they will expand into civil engineering and municipal services.

Mr. James Pawsey (Rugby and Kenilworth)

rose——

Mr. Winterton

I will give way in a moment.

That may not necessarily be a bad thing and to some extent it is inevitable, but it must be guarded against lest we end up with markets handed over to French cartels interested in promoting uncompetitive practices for their own sole and exclusive benefit.

Mr. Leigh

That is pathetic.

Mr. Winterton

It is not pathetic—it is a real threat to this country. It could be well outside the remit of the director general, to whom reference has already been made several times, to examine the issue. It should therefore rightly be the duty of the MMC to consider it.

Mr. Hawkins

rose——

Mr. Winterton

I will give way to my hon. Friend the Member for High Peak (Mr. Hawkins), who is my neighbour and my colleague.

Mr. Hawkins

I put this kindly to my hon. Friend, to whom I am grateful for giving way. I believe that he is giving an impression that he would not wish to give in saying that French firms are building a bridgehead here and when he talks about "undesirable investors". British firms are building a bridgehead in Europe for 1992. Can my hon. Friend say how the Monopolies and Mergers Commission would define "undesirable investors" in a water company if the people concerned were obeying the law of the land? I do not believe that my hon. Friend wants to give the impression that the French are unwelcome. The Perrier company bought Buxton Water in my con-stituency, and transformed it into a household name. I greatly welcome that.

Mr. Winterton

It is sad that Buxton Water was unable to make itself a household name when it was independent —[Interruption.] It was in our household, among others. I trust, however, that I am not giving the House the impression that my hon. Friend sought to imply by his intervention. I am concerned that, unlike British firms which buy companies in America openly and honourably for the purpose for which they exist, the French seek to come here and take advantage in other ways, by the back door. The Minister understands what I am saying. Rightly or wrongly, the people of this country are sincerely worried about that.

The amendments are designed to give teeth to the controls which will be placed on the industry after privatisation. I am not trying to destroy the Bill but to put meaningful, rational controls on it so that if it proceeds to the statute book it will provide the correct solutions. Controls may seem contrary to the concept of bringing market forces to bear on state-owned utilities, but it is not market forces which are being brought to bear on the water industry. It is private monopoly forces—precisely those which encourage bad practice and inefficiency.

Mr. Barry Porter (Wirral, South)

rose——

Mr. Winterton

I shall not give way because I am about to sit down.

It is amazing that the Government, who worship at the door of Adam Smith, are doing precisely what he advised against—exchanging a public monopoly for a private monopoly. He did not believe that it would work, and neither do I. The electorate are well aware of that. Strong controls of the kind that I have proposed must be put in place to convince the public that the Bill is not an ideological measure with no regard for their interests.

I hope that my hon. and learned Friend the Minister will seek to respond to my speech, not to destroy the Bill, but to make it better so that when the Conservative party comes to fight the general election in 1991 it will not be faced with the dire consequences of the Bill, but the legislation will be in force and working properly. That will happen only if the kind of proposals that I have put to the House today are incorporated in the Bill.

Mr. Deputy Speaker (Mr. Harold Walker)

Order. Obviously, many hon. Members wish to take part in this debate. I should remind the House that the debate is guillotined and that long speeches are made only at the expense of other speakers.

7.15 pm

Mr. Eric S. Heller (Liverpool, Walton)

I certainly do not want to make a long speech. I wish to draw to the attention of the House the fact that a document has arrived in my hands called "Supplement to The Engineer", dated 15 July 1892. The document is about Lake Vyrnwy and the Vyrnwy water supply to Liverpool, which was inaugurated on 14 July 1892 by His Royal Highness the Duke of Connaught. It contains an article by George F. Deacon, M. Inst. C.E. Engineer.

I draw the House's attention to this document because on 14 July 1892 Lake Vyrnwy was handed over to Liverpool city council's water committee, which was a publicly owned body. Incidentally, Lake Vyrnwy is still one of the main water supplies to Liverpool. The article states: During the last census period the rate of increase in population —in Liverpool— was not quite so great as in the immediately preceding decades, but no less than 518,000 people within the city boundaries and 801,000 people within the area of distribution are now supplied with water by the Corporation of Liverpool. Such a population will, at the rate of, say, 30 gallons per head, require over 24,000,000 gallons per day, and to meet this demand the existing and extensive water supply works have become insufficient. The article then explains why the supply should be extended.

I considered the document carefully and discovered that Liverpool city council, in relation to water supplies, goes back even further than 1892. The first Act of Parliament was in 1847. This is all about public ownership. When did that public ownership fail the people of Liverpool in regard to their water supply? People in Liverpool, including Conservative city councillors, have never argued that the Liverpool water supply was not good enough and ought to be privatised. That is a figment of the imagination of the Secretary of State for the Environment and the Minister who, for some reason, have developed a crackpot idea in their heads that they ought to introduce water privatisation even when there is no demand for it among the people who are perfectly satisfied with the present water supply and who have been quite happy for local authorities—mainly Conservative controlled since 1847—to supply Liverpool's water. I do not understand what this Government are about, except that they want to get hold of the land surrounding Lake Vyrnwy in order to sell it off at what they believe to be a profit.

I sat on the water committee in Liverpool—until I did so I did not know much about the water supply. However, I then realised the great things that have been achieved over the years, many of them absolutely magnificent. All sorts of facilities have been granted so that youngsters from Liverpool who had never seen such things could visit lakes and participate in water sports and other activities connected with the lake. What do the Government intend to do with that land—sell it off to their mates and friends? Is that what this is about? The people of Liverpool are not arguing for that.

I could continue to speak about this document, which is truly magnificent. I am glad that it came into my hands and I shall repeat the details. It is the supplement to The Engineer, dated 15 July 1892, and contains many lovely pictures depicting how water was brought to Liverpool —including the route, which was a great engineering feat——

Mr. Thurnham

I thought perhaps the hon. Gentleman would allow me to intervene, as I am an engineer myself. I am sure that, in harking back to 1892, he will find that engineering then was nothing like engineering today. Does not the Bill adapt the structure of the water supply industry to the needs of modern society, rather than try to sit with all the old-fashioned stuff? If the hon. Gentleman were an engineer, I expect that he would try to introduce engineering that was designed in 1892.

Mr. Heffer

The hon. Gentleman may be aware that I worked on construction sites all my life until I came into the House. There are engineers and engineers. For example, once when I went to do a job in an office, the office manager said to me as I was hanging a door, "Joiners are not like they used to be." I said, "How the hell do you know? Could you hang that door?" He did not know what it was about. I knew, because I was a trained carpenter and joiner. All joiners are not great; neither are all engineers.

The document that I have shows what a magnificent feat of engineering this was to Liverpool. Is the hon. Member for Bolton, North-East (Mr. Thurnham) suggesting that the engineers of that day did not do a great job? We have some of the best and purest water supplies in the whole country, and we should be proud of those engineers. They worked for Conservative city councils, which also built the docks in Liverpool. The councillors tried to further the interests of the people of the area so that, once they had the basic services under their control, they could expand private enterprise. The hon. Member for Bolton, North-East does not seem to understand this.

Certain public services should never be privatised. As the hon. Gentleman knows, I do not agree with private ownership of many things. I accept that some can be privatised and opened up to competition, but the basic services of this country, such as water, should never be privatised. There is no rational argument for privatisation —there are only ideological arguments emanating from the likes of the hon. and learned Gentleman.

Mr. Howard

The hon. Gentleman has spoken of the drinking water that is supplied to the city of Liverpool. Is he aware that, to this day, 75 per cent. of the sewage from the city is untreated? Does he regard that as an adequate testament to the record of the public sector in this industry?

Mr. Heffer

Just because it is said that is so it does not mean that we have to privatise water. The Minister knows full well that that is a separate issue that can be dealt with separately. Over the years, the water committee on which I served asked the Government for financial support to develop the sewage works, but we never got the full support that we needed——

Dr. Cunningham

I should like to ask my hon. Friend to suggest that the Minister write to the Prime Minister to tell her that 75 per cent. of Liverpool's sewage goes out into the Irish sea untreated. She says that no untreated sewage goes into the sea around Britain. Perhaps the Minister will tell the Prime Minister that she is wrong.

Mr. Heffer

My hon. Friend knows that the Minister will not tell the Prime Minister that if he wants to keep his job for long. Saying boo to the goose leads to one being dealt with quickly——

Mr. Leigh

That is what happened to the hon. Gentleman.

Mr. Heffer

I made a principled stand on an issue, and I am not ashamed of having been sacked from a Government for doing so. Most Conservative Ministers never seem to make a principled stand on anything; it is left to Back Benchers such as the hon. Member for Macclesfield (Mr. Winterton) to do that. The day when we see a principled stand by a Minister I shall be delighted. It will give me new faith in the House of Commons and in the idea of Ministers standing up for what they believe in. However, I doubt whether it will happen.

There is no case for privatisation, and no one can argue there is. The hon. Member for Macclesfield made a first-class speech against it, and I did not disagree with most of his arguments. The Minister, with his steamroller majority, will roll the Bill through, but he had better understand that the people of this country do not want it. Whatever criticisms I may have of the way in which Labour is conducting itself, I believe that the people of this country will roll the Government over and get them out at the next general election.

Mr. Thurnham

The speech of the hon. Member for Liverpool, Walton (Mr. Heffer) harked back magnificently to all the great features of the past, of which he himself is a magnificent relic. His thinking is stuck in the past and its great works; he does not look ahead to how we should adapt the structure of the water industry to the needs of a modern society in which one can separate the function of providing water from the function of regulating how it should be provided. That is the principle behind the Bill, and it is why I oppose the Opposition amendments and cannot support the amendments of my hon. Friend the Member for Macclesfield (Mr. Winterton).

Mr. Allan Roberts (Bootle)

If the purpose of the Bill is to separate the regulation of the water industry from the running of it, why is the National Rivers Authority going to sub-contract work back to the privately-owned water companies, thereby recreating the problem that the hon. Gentleman claims is being destroyed—that of the gamekeeper and the poacher being one and the same?

Mr. Thurnham

I am satisfied that the National Rivers Authority will be a well-constituted body of 6,500 employees. That does not mean to say that it will he incapable of calling on resources from anywhere that it wants. The authority will properly execute its functions and if it wants to call on the services of others, so it should. It is only dogma on the part of the Opposition that would prevent it from calling on the services of other bodies, private or public sector.

I must oppose amendments in the spirit of those tabled by the Opposition which strike at the heart of the Bill. My only criticism of the Government is that we have not been able to privatise the water industry earlier. Because we did not privatise water in our first or even second Parliament, a myth may have developed in the minds of the public that for some reason the industry could not be privatised. That is why public opinion is still showing so much inertia. Now that we are arguing that the industry can be privatised, it will take time for people to accept the idea.

I do not accept any criticism of my hon. and learned Friend the Minister or of my right hon. Friend the Secretary of State about all the work they have done on the Bill. It has been magnificent. If there is inertia in public opinion, it existed long before they came along to do the job that they are now doing.

Dr. Cunningham

First, the hon. Gentleman must have heard the Prime Minister say that the Bill has not been well presented. Secondly, there is no inertia in public opinion: it is moving steadily against the proposal.

Mr. Thurnham

Criticisms of presentation arise purely out of the ignorance, superstition and nonsense that are evident in the attitudes that we heard expressed by the relic from Walton, who is stuck in the past. If the public are fed the sort of misinformation that has come from the Opposition——

Mr. Heffer

The hon. Gentleman's past is already behind him.

Mr. Thurnham

Conservatives can look forward to the future. It is only the Opposition who worry about the past, because they have nothing to look forward to.

At the time of the outstandingly successful privatisation of the National Freight Corporation, the trade unions were so opposed to it that their Leeds branch persuaded all the employees of the corporation there to burn their applications for shares on a bonfire. I do not think that the work force in Leeds has ever forgiven the trade unions for that; it has cost them dear. That is the sort of attitude that we are fighting on the Water Bill and it is indicative of how public opinion can be wrongly influenced by misinforma-tion from the Opposition.

It is said that we should not privatise water because it is a vital commodity. I remember that that was said about British Sugar. We were told that we could not privatise British Sugar because sugar was such a basic commodity. I have not heard anyone mention any problems about privatising British Sugar. Food and clothes are as vital as water, but we do not hear comments about privatisation in those areas. The Opposition want to ditch their clause four, but they can do that only by ditching it into a privatised drain and they do not like that idea.

Mr. Nigel Spearing (Newham, South)

Will the hon. Gentleman give way?

Mr. Thurnham

I want to make progress.

7.30 pm

Before British Telecom was privatised, there were endless complaints about telephone boxes. People are now very pleased that they can use telephone boxes. British Telecom is far better now than it was in the public sector. Mercury exists as a competitor to British Telecom now. The pricing formula—RPI minus X—is working very satisfactorily for British Telecom. When we talk about RPI plus K for the water industry, we should not forget minus E where E is the efficiency factor which should work in exactly the same way as it has for British Telecom.

The hon. Member for Copeland (Dr. Cunningham) is an example of the new designer Socialist who wants to ditch what was wrong and unacceptable with Socialist policies, but is not sure where to ditch it or what he wants to pick up instead. He seems to believe that a public monopoly is all right, but he cannot accept that a private monopoly should work as well. That is the difference between us. There must be confidence in the regulatory mechanisms in the Bill which will enable the water industry to operate much more efficiently in future.

Mr. Spearing

The British Sugar Corporation was formed as a private company, although the majority of the shares were held by the public. As an engineer, will the hon. Gentleman tell us how he reacts to the idea that all the sewers—their bricks, pumping stations and filtration plants—in Bolton might be owned by a private company, which, as far as I know, and unless the Minister can deny it, can be traded and controlled on the New York, Tokyo and Johannesburg stock exchanges?

Mr. Thurnham

The thrust of the Bill is that we need more investment which clan be conducted more efficiently by the private sector, and the costs of that investment can be spread over several years.

The fundamental problem about investment in the public sector is that the Treasury seems to count current expenditure and investment as coming from one pot which must be recovered or accounted for in the year in which it occurs. I am confident that the work which needs to be done in Bolton will be better funded as resources will be available from the financial world in this country and abroad.

The key factor is that the costs can be spread over several years and funded by the workings of the RPI plus K formula rather than all the investment being recovered in the year that it occurs. That is why investment has been so restricted in the past and why the Labour Government had to slash investment. That is why investment in the sewers and drains in Bolton was cut under the Labour Government. They did not know how to fund the industry. They were in a desperate crisis with the IMF knocking at the door, and the country was bankrupt. The Labour Government did not understand how we could gain the efficiency that we needed by spreading investment over several years and by having a management which was accountable to the people who provided the investment and which ensured an efficient return on it.

I have great confidence in the Bill. To appease public anxiety we must be very careful to set up regulatory structures which will function efficiently. The public wants to see that happen. It would be nice if we could do it step by step, because one of the fundamental improvements in the British economy has been the way in which industrial relations have been transformed through step-by-step legislation.

However, it would be impractical to have a step-by-step privatisation of the water authorities. It might be very nice to start with the North West water authority, but it would not be practical to privatise one water authority one year and another two years later. If we are going to do it, we should get on with it. As I argued at the beginning of my speech, we should have privatised water years ago. We have allowed a myth to develop that the industry is a sacred cow which cannot be privatised. However, there is every reason for getting on with privatisation.

This is complex legislation and we should not rush it. That is why the Government have taken their time to privatise the industry. I have every confidence about the way in which it is being done and in the work carried out by my hon. and learned Friend the Minister. I am sure that the Bill will reach the statute book without any more undue delays. I am sure that the public will invest their savings in this basic utility with every confidence. I am sure that those who use water and will be accountable if they pollute it will also benefit in every way possible from the Bill.

Mr. Livsey

This is a vast series of amendments, 38 as far as I can see, and they cover a huge area. I congratulate the hon. Member for Macclesfield (Mr. Winterton) on making a speech, like the hills behind Macclesfield, of true grit and determination. He put forward constructive ideas to the Minister who I hope will take note of some very constructive criticism of the Bill.

This legislation gives rise to immense questions. I support amendment No. 1 which removes part II of the Bill. That would result in no privatisation of water and would be particularly constructive.

The private monopoly which the Bill creates is inexcusable. There will be no competition as a result of the legislation. It seems that the Cabinet consists of the "Monopoly" generation. Clearly Ministers must have played too much "Monopoly" in their youth. They are obsessed with producing private monopolies under which there will be no competition.

Privatisation will increase costs as a result of the legislation's duality. Prices will inevitably rise because shareholders will have to be satisfied while consumers pay more. The need to introduce higher standards in the industry will also create massive expenditure. It appears at the moment that consumers will have to pay the lion's share of that expenditure. Why are the Government or the Treasury not prepared to shell out some of that money to create the necessary investment to raise standards?

Mr. Collins on "Panorama" on Monday estimated the cost of privatisation to be £842 million. Who will pay that sum? Will the consumers have to pay? The argument is that the statutory water companies represent 25 per cent. of the water industry, and those companies are already in the private sector. However, that argument does not stand up when it is subjected to close examination. Those companies are regulated and statutory. I believe that the Prime Minister does not understand the basis of the statutory water companies.

The water prices in the statutory water companies have been kept low. They have been kept 25 per cent. lower than those of the water authorities because of their statutory functions. As a result of this legislation, prices will rise between 30 and 50 per cent. because the basis of the statutory water companies is being fundamentally undermined.

Mr. Porter

Missing from the hon. Gentleman's argument is any understanding that what is required in the water and sewage industry is investment, which has been lacking under Governments of both parties for the past quarter of a century. The purpose of the exercise, as I understand it, is to ensure that private capital is available. My hon. Friend the Member for Macclesfield (Mr. Winterton) reckoned that with all the regulations concerning price, quality, and the rest, the City will not be particularly attracted to investing in the new plcs. We shall see. If the City does not wish to invest, I am sure that the Treasury Bench will think again. In any event, the Bill is not about competition but about capital investment and where it can be found. It cannot be denied that investment has been unavailable from the public sector in the past.

Mr. Livsey

We all agree that investment is necessary to improve standards, but investment can be made equally well if water remains in the public sector. Yesterday, the Secretary of State himself admitted that billions of pounds must be spent to put matters right. Why has the Treasury not been prepared to sanction such expenditure, and why have the Government adhered to such policies? The Government failed to make sufficient investment in the public sector of the kind that the hon. Gentleman seeks. That is a basic flaw in Government philosophy.

Water is essential for life itself and is a fundamental necessity. It is a natural public utility and should remain so. The concept of privatisation is wrong, and the Prime Minister has admitted that its presentation has been inadequate. However, one cannot present a bad idea well, and privatisation is a rotten idea.

A number of the amendments address the subject of charges, which will depend on the investment that will be required of the water plcs, which will, in turn, depend on measures taken by the European Community to enforce acceptance of its drinking water standards. That issue is one which cannot be dodged. Those standards are based on clear scientific principles and ought to be accepted by the Government as being right and proper in ensuring the health of the consumer. The Secretary of State told the House that billions of pounds must be spent to provide clean, wholesome drinking water. Some estimates put the figure at £3 billion, while others put it at £6 billion. If the flotation of the water companies raises £7 billion to £10 billion, the Government's friends in the City may ask whether that is a reasonable deal for investors. I think not. The public cannot be expected to pay the whole bill, and some of that expense should surely be met from general taxation.

Here is the rub. The Bill as drafted enables water plcs to fleece consumers, regardless of their ability to pay, to meet the cost of an investment programme that should be a public duty. The RPI plus K formula and the K calculation for price increases incorporate efficiency savings and a cost pass-through factor for consumers relating to additional expenses. That factor will be deducted from inflation but there will still be an additional amount to pay, and no one can argue otherwise. The prices resulting from those calculations could double every seven years, and, by the application of the RPI plus K formula, water charges could rise by 150 per cent. by the end of the century rather than by the 12.5 per cent. that the Secretary of State anticipates.

The flaw in the formula is that efficiency is assessed only in relation to other companies, which are in any case monopolies, so any notion of comparative competition is a fallacy. One cannot have competition between monopolies that vary so much in nature—from Thames Water, with 10 million consumers and about 6,000 miles of pipeline to Welsh Water with only 3 million consumers but about 24,000 miles of pipeline.

Miss Emma Nicholson

Does the hon. Gentleman believe that companies that are not of exactly equal size and having precisely the same resources cannot be competitive?

7.45 pm

Mr. Livsey

Companies will not be competitive in their own areas because they are ring-fenced and competition will not exist. One will not have six taps in one's house, with Perrier water coming from one of them and west country water, or whatever, coming from another.

Particular groups of people will find themselves discriminated against as a consequence of privatisation, particularly in respect of disconnections. Last year, there were 9,000 disconnections, 2,000 of them in Wales. After privatisation, private water companies will be licensed. I hope that the Minister can assure the House that the original draft licence has been altered in some respects, as it allows the plcs to draw up their own codes of practice. I know that the Minister has drawn up a code of practice on disconnection and has consulted on it, but the protection it gives is not sufficient for poorer members of the community.

Water is such an essential commodity that no one's supply should be disconnected by a private company. The only way of ensuring adequate consumer protection is by requiring the granting of a court order; the Minister has partially accepted that view. There should be a three-week cooling off period before the court acts, because of the suffering that could be created if a water supply is summarily disconnected, particularly to pensioners, families in which there are young children, and the disabled.

That problem will be exacerbated by the need of some people to pay water rates out of their supplementary benefits, particularly as water prices will rise after privatisation. It is essential that we consider the human aspects of privatisation as it affects the poorer members of the community. I hope that the Government will take that consideration on board, as well as the other points that I have made.

Mr. Burt

I agree with the concluding remarks of the hon. Member for Brecon and Radnor (Mr. Livsey) about disconnections. As my hon. and learned Friend knows, in Committee I made a strong plea for use of the court before disconnection can be authorised. He was receptive and sympathetic, and offered to consider that proposal. I am still of the opinion that such a provision would be very helpful to the general presentation of the Bill.

I always enjoy listening to the hon. Member for Liverpool, Walton (Mr. Heffer)—as much as to my hon. Friend the Member for Macclesfield (Mr. Winterton). Although I do not always agree with the views of either of them, they represent a strand of opinion that is strongly held and sincere, and gives a contrary view to that presented by the Government. I also enjoy listening to the hon. Members for Burnley (Mr. Pike), for Manchester, Withington (Mr. Bradley) and for Wakefield (Mr. Hinchliffe), who have raised similar arguments. I do not always agree with them, but the strand of thought which produced their arguments exists in the country at present and needs to be considered by the Government. I do not treat the straw polls of the Derek Jameson show with contempt, as I recognise that they tell the Government something. They tell the Government not that they are wrong, but that their message is not reaching people yet

We start from a consensus, which was recognised in Committee by the hon. Member for Barnsley, West and Penistone (Mr. McKay) who said that Conservative Members were just as keen as Labour Members on environmental quality and the need to protect a clean, cheap, safe water supply. Everyone knows that we all share that view and want to maintain water quality. We differ as to how we wish to ensure a clean, safe water supply that is as cheap as possible. The fears that are abroad in the country have been expressed by my hon. Friend the Member for Macclesfield (Mr. Winterton). It is certainly possible to be worried by yet another privatisation. Some months ago I would have sympathised with my hon. Friend's arguments, but since I have been on the Committee considering the Bill I have been converted and I now realise that the quality improvements in the water supply that we all seek cannot be achieved without privatisation. That goes to the heart of the argument of the hon. Member for Walton, as I shall explain in a moment.

For my constituents, the bottom line is a good quality service. They are not bothered about who provides that service, but they are concerned about the service that they will eventually receive. The arguments about water are clouded by the idea that who provides the service is more important than the service itself. I and my constituents want a water supply that works and that provides clean water that is as cheap as possible. I am more worried about that than about who provides it.

Mrs. Ann Winterton (Congleton)

I have been listening very carefully to my hon. Friend's arguments. Does he represent any rural areas? He said that he wanted the highest quality water for all hisconstituents. Does he agree that the cost of that water should be the same for all his constituents, whether they live in rural areas or in towns? He will probably be aware that, in addition to the increased costs of water brought about by privatisation, and by improvements in the quality of water, there may well be additional costs in rural areas to people living at the wrong end of a supply pipeline. Does he agree that in other privatisations, such as British Telecom and that of electricity, which is going through the House, the status quo is maintained and the same charge is levied on constituents living in rural and urban areas? Surely that is a fair point.

Mr. Burt

I represent more town than rural areas, and the rural parts of my constituency are not far from major towns and cities. I believe that pricing policy is a matter for the water companies, as it is for the water authorities at the moment. But I am certain that the highest-quality water will be produced at the cheapest possible cost for everyone. My hon. Friend will be able to make her own arguments about water quality later.

Some time ago, I would have been sympathetic to the arguments of the hon. Member for Copeland (Dr. Cunningham). He takes the cosy view that we can have improvements in the regulation and quality of water supply without affecting the way in which the service is supplied. In a sense, he takes a lazy view—that we can have the best of everything without changing the structure of the industry. But that is not a fair compromise and it does not work. Only privatisation, the key to freeing investment, can possibly supply the improvements in quality that we need. That is why the amendments moved by the hon. Member for Copeland are wrong.

I do not believe that the crux of the matter has been correctly perceived by Opposition Members, some Conservative Members and the public. They do not understand the connection between privatisation and the changes to regulation and quality control in the industry. Privatisation is vital because it will free the water companies and allow them to attract investment. It will free the companies from the political control previously exercised upon them. I pray in aid the views of the chairmen of the Water Authorities Association in a letter to all Members of Parliament about water privatisation: Is it also the way to avoid the constraints on necessary capital investment which we have experienced under Governments of different political complexions over the 15 years or so since the formation of the Authorities.

Mr. Elliot Morley (Glanford and Scunthorpe)

Is it not the case that the chairmen of the water authorities are political appointees, and that, contrary to the views of their employees and their commercial and private customers, they have supported water privatisation, even to the extent that every water authority has a contact point with a Tory Member of Parliament? They have been having cosy little dinners and wining and dining their contacts. The letter was a completely political statement. The chairmen of the water authorities stand to do very nicely out of privatisation, unlike their customers.

Mr. Burt

During the proceedings on the Bill, we have been lobbied by a variety of different groups, each expressing its own point of view. The hon. Gentleman can take whatever view he wishes about the chairmen of the water authorities, but they are responsible for the authorities at the moment and are as entitled to express their views as other interests are entitled to lobby Opposition Members who have quoted them strongly during the debate. I am as entitled to quote other points of view as the Opposition are.

The case for privatisation is clearly made when we consider the investment in the water industry in recent years. We have debated time and again the investments made by previous Labour Governments and by the present Government. I wish to draw attention to the trend in water investment under the last Labour Government and under this Government. When the Labour party was in office, it started much higher investment and continually ran it down. Opposition Members have consistently quoted the average level of investment, but the trend was that the level of investment continued to drop steeply and only under this Government have the tables been turned and investment has started to rise. While investment was falling, consumers were receiving some remarkable demands in increased charges. In 1975–76, when investment was falling steeply, the average rise in water rates throughout the authorities, not only the statutory water companies, was an astonishing 43 per cent. As investment was declining, charges were shooting up. At present, investment is rising.

Mr. Allan Roberts

One of the reasons why revenue costs increased, causing increased water rates, was that under this Government water authorities have been forced to fund capital expenditure from revenue because how much they could borrow for capital purposes was restricted by the Government.

Mr. Burt

The hon. Gentleman makes my point. As long as investment for the water industry is in the hands of Government, of whatever complexion, and subject to Treasury control, there will probably never be as much investment as is necessary.

Mr. Roberts

Rubbish.

8 pm

Mr. Burt

The hon. Gentleman says, "Rubbish." With the best will in the world, the Labour Government would have liked to do more for the water industry, but because of the way in which they managed the economy and had to use the International Monetary Fund, investment fell so dramatically and severely that it almost irreparably damaged the capital structure of the industry. We are only now picking up that bill. It is vital to free the industry from such constraint and to allow it the money it needs to put into effect the repairs and improvements in water quality that we all want. That is why I believe there is a fundamental link between the privatisation of the supply of the industry and improvements in quality through regulation.

It is important that the public should understand that the springboard of privatisation has challenged the myth that everything is better in the public sector. It has led to important new initiatives that will help consumers in the future.

Concern has been expressed that private monopoly companies will abuse their control, so the National Rivers Authority has been introduced. Everyone agrees that it is a good idea, but no Government put it forward before. It was encouraged only by the spur of privatisation. It is because people are concerned that there might be abuse of prices that a Director General of Water Services has been appointed. It is because people are worried about the introduction of private companies that the consumer's charter has been introduced. All those benefits and improvements would not have been obtained without privatisation.

The improvements to regulate quality which have been demanded by all of us would not have occurred with out a change in the regime for the supply side of the industry. That is why I believe that there is a fundamental link between privatisation and regulatory controls. Privatisation will provide the funding that has been so woefully lacking from Government investment over the years. When people understand that fundamental link, they will believe that this measure will be good for the consumer, the environment and the country.

Mr. Keith Bradley (Manchester, Withington)

Following the speech of the hon. Member for Bury, North (Mr. Burt), in which I am sure he convinced himself of his arguments, the slogan at the next election will be, "We come to bury Burt, not to praise him."

On the second day of the Report stage, the farce has continued of Conservative Back Benchers trying to digest the propaganda being put out by No. 10 Downing street. They tried to re-present the arguments to the public for privatisation, but re-presentation of the arguments will not work.

I should say how much we support the hon. Member for Macclesfield (Mr. Winterton), who expressed the clear views of thousands, if not millions, of Tory voters. I have received letter after letter from constituents who were not previously supporters of the Labour party but who have said that the Bill marks a clear change in how they will vote in future. The hon. Member for Macclesfield represents those views.

We regard part II as the evil of the Bill. It must be stressed that, although we support the National Rivers Authority, it will not be as effective as the national environmental protection agency that the next Labour Government will set up. We must consider the pollution not only of rivers but of land and air in an integrated approach. We must not destroy the concept of integrated river basin management that we have under the current water authorities. Although under amendment No. 1 we are not ruling out the NRA, we must continue to express our concern that, without proper staffing and resources, even this part of the Bill will not be worth supporting.

Time is short, so I shall deal briefly with three issues that arise under part II of the Bill—comparative competition, pricing policy and disconnections. My hon. Friend the Member for Copeland (Dr. Cunningham) devastatingly exposed the Government's arguments for part II of the Bill. It would be folly to try to compete with his excellent speech, which destroyed the Government's credibility, but it is worth reinforcing some of the issues about which we are especially concerned.

We have clearly shown the flaws in the concept of comparative competition. There is no validity in the Government trying to compare competition in the food industry with that in the water industry. If people want to change the place where they buy their food they can move from shop or supermarket to obtain the lowest prices. No such choice will exist for water. It is a natural monopoly, and after privatisation the public will have no choice about which water plc they buy their water from.

We clearly showed in Committee that the only way in which comparative competition would have any reality for the consumer would be if a tap from each plc were installed in every house and people could use the tap providing the cheapest water. We know that that is a farce and will not happen. In future, there will have to be not only taps from the 10 new water plcs but one running through the Channel tunnel from French water companies.

In his more manic utterings, the Secretary of State clearly told the public that there was choice not because of the water companies but because they can buy bottled water or Perrier water instead of using water from the tap. That is nonsense to the people of Manchester who struggle to choose what food or fuel they can afford. As usual, the hon. Member for Gainsborough and Horncastle (Mr. Leigh) is holding his face in pain when an hon. Member is talking about poor, low-income families in Manchester. Yesterday, yet again we saw him trying to impersonate Alan B'stard—or was it the other way round?—when he was discussing the NRA. He showed that he has no grasp of the real world. He does not represent the views of real people.

The Director General of Water Services is meant to consider comparative competition. We must consider the position in different water authorities and the problems facing water authorities such as those in the north-west, the problems of huge debt and inadequate investment. No comparative competition indicators, whether they are devised by the Director General of Water Services, the Audit Commission or whichever body the Government choose to set up, will ensure competition between companies. People will be tied to the problems, debts and investment problems of the water company in their area. [Interruption.] Does the hon. Member for Crawley (Mr. Soames) want to intervene?

Mr. Soames

Certainly not.

Mr. Bradley

Throughout the deliberations in Committee, the Government advanced no credible argument to show that prices will not have to rise massively. They will have to rise massively to meet the investment required by the industry and to meet the potential investors' wish for a quick buck. They will need to make a quick buck if they are seriously to consider investing. When they see other privatisations, such as electricity, coming along, they will make choices, and when they see that there is no money to be made out of water, they will wait for the other privatisations.

When we discussed the price rise with the Minister, he said that it would be between 7.5 per cent. and 12.5 per cent. above that already in the investment plans of the water authorities. He has not been able to say how much is already included in the forward plans of those companies. When we pressed him in Committee, he said: The programmes, to which the Secretary of State referred when he gave that estimate, are already out of date. That cost will be met by a mixture of charging and borrowing. Therefore, we cannot make a sensible estimate of the cost of these programmes. We have given the cost of the additional programmes as explained by the Secretary of State."— [Official Report, Standing Committee D, 21 February 1989; c. 1207.] The Government can give no estimate of the real price increases required. We have only to study the increases in the charges of the private water companies to see that the new water plcs will put prices up by as much as 30 per cent. to 40 per cent. to meet the investment required and to ensure that investors will make a quick profit on their investment.

Disconnections are an issue of crucial importance. When we consider consumers in constituencies such as Manchester, Withington, we must consider the thousands of low-income families, low-income pensioners and low-income people with handicaps and disabilities who have to manage on meagre benefits. We have to ask the Government pertinent questions about how they will handle the hardship that may be caused by such dramatic price increases. We have to ask the Government how people on income support or housing benefit will deal with the dramatic increases in prices. Benefits such as child benefit—a crucial support to low-income families—have been frozen. Prices will not be frozen; they will rise. Low-income families need to be assured that they will be able to afford the water coming through their taps in future.

We need to ask the Government some specific questions tonight about disconnections. We need to ask, as the hon. Member for Brecon and Radnor (Mr. Livsey) pointed out, why there has already been a dramatic increase in disconnections and how those disconnections will relate to the price increases after privatisation, if it goes ahead. If families are disconnected, how long will the Government expect them to survive without an adequate water supply to their homes? If there are disconnections, how long will the Government be prepared to let the community suffer from the increased public health hazard of families being disconnected? That will place an increased demand on an already overstretched National Health Service.

We must ask the Government whether, if metering is to be the preferred option of the new private companies, the cost of metering, estimated at £1.3 billion, will be passed directly to consumers by being included in future charges. There will be an extra demand for water from families with children, families with handicapped or disabled members or families which have a large number of elderly members. Will the extra demand for water in such families, reflected through the meter, cause the Government to reconsider the pricing policy?

If families are disconnected, as we fear, will there be any penalty on neighbours and friends who care for those people supplying water to them to ensure that they do not become a health hazard and to ensure that they have healthy, clean water coming into their homes? Should not the code of practice be a statutory code which covers all water companies and does not allow each separate water company to devise its own system, which will mean different regimes for disconnection in different parts of the country?

8.15 pm

Cities such as Manchester have a proud heritage of investment in their water industries. As other hon. Members have pointed out, it was the ratepayers of such cities who paid for the water industry and who were in the forefront of public health legislation to ensure proper water supplies in their homes. Such cities will not have those assets passed to the water authorities without a fight and without any element of compensation for taking away assets that have previously been paid for by the ratepayers. The legal challenge will come from cities such as Manchester to ensure that the assets that belong to local people are retained by those people.

We must look at campaigns against privatisation, such as that in Manchester, which join together individuals, groups represent-ing consumer interests, groups representing pensioners' interests, groups representing conservation and environmental issues and the Ramblers Association. They are all joining together to say to the Government that they are not going to have this privatisation. Such campaigns will be successful. This Bill will be the Government's Achilles' heel, unless they decide tonight to support our amendments or the amendment tabled by the hon. Member for Macclesfield. The Government should think again, because if they do not, they will be forced into submission by 1991.

Mr. Knapman

I am extremely grateful for the chance to catch your eye, Mr. Deputy Speaker, because I sat here for most of yesterday and have done so again for most of today. I appreciate your difficulty, as so many of my hon. Friends want to demonstrate their support for this excellent Bill. For that reason, I shall be brief.

My right hon. Friend the Secretary of State said yesterday that of four Opposition amendments under discussion two were unnecessary and two were undesirable. I hesitate to suggest that perhaps it is good that my right hon. Friend is not here tonight, but I do not know what he would make of the collection of Opposition amendments before us. Amendment No. 1 seeks to delete the whole of part II—clauses 10 to 98. I hope that the Government will not be tempted to accept those deletions, because they would make some little difference to the Bill, which was considered in detail in Committee.

I should have thought that all hon. Members would welcome the creation of the National Rivers Authority. It is a giant step forward because it will be a far more effective regulatory body than any we have had before and will be guided by clear and comprehensive codes of practice. However, the Opposition amendments seek only to achieve two things—to dot the i's twice and to cross the t's twice. That would be not a step forward, but a recipe for inaction and would strangle the National Rivers Authority with red tape. The authority's success will not be measured in the tons of annual reports that the Opposition wish them to produce. The authority should be in a position to produce a quick response to problems as they arise.

Having listened to Opposition Members, I fail to understand why there is any need for them to support the National Rivers Authority. I listened with interest to the hon. Member for Burnley (Mr. Pike). In the first sitting of the Committee, he welcomed the creation of a National Rivers Authority. He was always good value in Committee and I believe that he also mentioned that he was a member of the Select Committee on the Environment, which recommended the creation of the National Rivers Authority. He spoke of that with some pride and had every reason to do so. But I do not understand what value the National Rivers Authority has for the Opposition, because they oppose privatisation.

The Government rightly say that we need to separate the gamekeeper from the poacher—in this case, the provider or water plc. Perhaps there is no particular reason why the National Freight Corporation should be a hundred times more profitable and efficient than British Road Services, but it is, and that is a fact. In the same way, the water plcs will be a great deal more efficient than the existing water authorities. The Bill provides for the separation of the poacher from the gamekeeper or regulator, the National Rivers Authority.

Conservative Members seek a clear-cut division of responsibility—this is the crux of the matter—whereas the Opposition want to retain water authorities in public ownership. That is not a poacher-gamekeeper relation-ship; it is a two gamekeepers relation-ship, which is neither satisfactory nor practical. If the Opposition had their way, we would have two Government bodies exchanging correspondence. The two gamekeepers would soon get to know each other's ways and each other's foibles, and. with all the red tape and reports that the system would entail, it would be a recipe for inaction. The buck would stop nowhere.

Mr. Morley

I have been listening carefully to the hon. Gentleman's argument, but I find it hard to understand why the National Rivers Authority should not be as effective when dealing with water companies in the public sector. Are not public health inspectors effective in their inspections of public abattoirs? Are not Her Majesty's inspectors of pollution effective in overseeing industries in the public sector? It seems to me that they are equally effective—there have been no complaints—so I do not understand the hon. Gentleman's argument.

Mr. Knapman

I am grateful to the hon. Gentleman for raising that point. He served on the Standing Committee and will have listened to his hon. Friends the Members for Copeland (Dr. Cunningham) and for Dewsbury (Mrs. Taylor) talking at length about the importance of the Camelford incident. They were entirely right about that. It has been pointed out to them time and again that such incidents happen under the present system precisely because the poacher is not separated from the gamekeeper. That is the whole point of the Bill.

I hope that my hon. Friend the Minister will actively consider the amendment tabled by my hon. Friend the Member for Dorset, North (Mr. Baker). I realise that he has much to consider, but it seems to me that my hon. Friend's amendment is worthy of detailed examination.

Mr. Pawsey

My hon. Friend properly referred to a system involving two gamekeepers. Can he say a little more about the additional safeguards built into the Bill—for example, the director general, who is the consumers' white knight? Will my hon. Friend draw Opposition Members' attention to the effect of the other safeguards in the Bill and agree with me that, under the Bill, consumers will have more, rather than fewer, powers?

Mr. Knapman

I am obliged to my hon. Friend, who has made those points a great deal better than I could. Whereas the consumer has few rights at present, the Bill provides a code of practice that not only describes the product that must be provided—wholesome water—but allows fines to be imposed when it is not provided. I find it extraordinary that Opposition Members should argue so forcefully in favour of high standards when they know very well that there is no chance of such standards being reached under the existing system of public ownership.

Mrs. Ann Winterton

Will my hon. Friend tell the House who brought in the present system of water authorities 15 years ago? Is his memory really so short?

Mr. Knapman

The 1973 reorganisation produced integrated river basin management, and I do not see how the geographical base of that—which is the important part —is altered by the Bill, under which the 10 areas are to be retained. The Bill merely seeks to separate the poacher from the gamekeeper. The Water Act 1973 was valuable because it brought together hundreds of small water companies. It is well understood that, with the increasing demands in both the drainage and water supply sectors, it was necessary to have larger blocks of authorities. I do not seek to detract from the importance of the 1973 provisions, but I would still argue that there is justice in separating the poacher from the gamekeeper, rather than having two gamekeepers, as Opposition Members would suggest.

Mr. Dafydd Wigley (Caernarfon)

We come to the guts of the Bill. We should certainly be much happier to live with the Bill if we succeeded in removing part II. It has been suggested that the alternative to water supplied through the tap is Perrier water. Advertisements on the television showing droves of milk floats delivering hundreds of bottles of water to hundreds of doorsteps bring home to us the lack of choice. The Welsh advertising campaign brings home to us the fact that the chair of the National Rivers Authority, the former Secretary of State for Wales, is also a director of HTV and reminds us that the chairman of Welsh Water has also been made a director of HTV. One must have misgivings about the heavy use of advertising to try to sell a product which is clearly not sellable.

Wales does not want the Bill. We have seen the effects of the Government's water policies in recent years. It is interesting to note that the average domestic water bill in Wales, which was £49.08 in 1979–80, had increased to £122.61 by 1987–88; in other words, it nearly trebled. Over the same period, the required rate of return has increased from 0.3 per cent.—the going rate in 1980–81—to 2.35 per cent. in 1987–88. As the rate of return has been pushed up by the Government to increase the capital formation of Welsh Water, so the charges landing on the ratepayer have increased substantially. Similarly, we shall face enormous increases in charges for our water when the Bill is enacted because a return of 2.35 per cent. will not attract the capital necessary for the programmes that have been referred to. To achieve even a modest return of 8, 9 or 10 per cent., as Ministers have suggested, will require substantially greater charges to be levied for water.

The average equated water rate in Wales in the financial year 1988–89 is 108p in the pound as compared with 50.95p for Severn-Trent, 58.50p for North West and 33.54p in the Thames area. We already pay twice to three times the amount that those in other water authority areas pay. We dread to think what will happen to water prices in future years; it is a grim prospect for the Welsh water ratepayer.

We accept that we need to pay for the work that has to be undertaken, but we want a fairer method of payment than that proposed in the Bill. As long ago as the debate on the Queen's Speech, the Secretary of State said: the necessary investment might increase prices by between 7.5 per cent. and 12.5 per cent. in real terms by the end of the century."—[Official Report, 28 November 1988; Vol. 142, c. 450.] He was referring to the investment in a programme for environmental improvement, for cleaner beaches, drinking water quality and improvement of sewage treatment works and it seems that that is over and above the other inevitable increases.

The Secretary of State was very honest in his response to me yesterday. He said: That is equivalent to an extra 7.5 per cent. to 12.5 per cent. in real terms in financial costs over the next 10 years. That is little more than 1 per cent. per year in real terms. As I have said, that is over and above the increases that would have been required without those additional programmes."—[Official Report, 21 March 1989; Vol. 149, c. 1012.] In other words, we are facing a substantial increase. The Prime Minister said: we shall need increases in water charges. She claimed that it was not for privatisation … but to provide the capital to spend on the required increased quality."—[Official Report, 16 March 1989; Vol. 149, c. 528.] 8.30 pm

That is what we need, but what we are saying is that the water charges will go up astronomically because of this part of the Bill. It will not just be 12.5 per cent. plus a little more, but in real terms 50, 60 or 70 per cent. The Government are acknowledging that between the lines of such answers as those given by the Secretary of State yesterday and the Prime Minister on Thursday, but that is directly contrary to the publicity campaign that was launched in Wales earlier this month. A statement released in the Committee corridor by the Minister of State, Welsh Office led to the Western Mail having the banner headline on the front page saying: 25% off—The hope for Wales's water bills. That statement was directly engineered by the Minister of State, Welsh Office to give the impression that the legislation would lead to a 25 per cent. reduction in the price of water for Wales. That is absolutely disgraceful. I call on the Minister of State to tell the House that that statement—that leak was also given to the Daily Post on the same day—was unfounded, misleading and the people of Wales should take no notice of it. That is based, of course, on the statement that The Government is planning to write off £460m of Welsh Water debts to make the authority more attractive to private investors and city institutions. If that debt was written off now, water rates in Wales could be at a reasonable level instead of at the levels that we have suffered over recent years.

The Government must come clean about where they stand on the matter of the writing-off of debts. How will that be managed? Was the hon. Member for Copeland (Mr. Cunningham) right when he suggested that it would be equated between all areas? Has the matter been properly discussed? Will that be spelt out clearly in the prospectus? If we look at what was said in Committee we see that the Under-Secretary clearly had no answers to those points. He said: A decision will be made on the amount of equity for each company that will be offered for sale. My hon. and learned Friend the Minister for Water and Planning made it clear this morning that the Government intend that 100 per cent. will be floated. How we achieve that will be decided closer to the time in the interests of the taxpayer and of maximising the flotation. The Bill will leave the Commons without our having an inkling of the direction in which we are moving. The Under-Secretary continued: I cannot tell the hon. Gentleman whether the equity will be 51 per cent., 71 per cent., 91 per cent., or 100 per cent. I cannot tell him whether the shares will be paid for in one go or, as with other privatisations, by part payments. I cannot make those decisions now or say how much income will be generated."—[Official Report, Standing Committee D, 23 February 1989; c. 1326.] In other words, we are being asked to vote for a pig in a poke. We do not know what we will be getting. All we know is that the costs will be substantially higher and those will push water charges in Wales to an astronomical level.

Privatisation is supposed to provide certain benefits. One of the benefits is said to be greater efficiency. We have not yet heard where that efficiency will come from, how many redundancies there will be, what slimming down there will be, or what services will not be provided. Privatisation is supposed to provide a great attraction for capital. That will not happen without the scale of charges that I have mentioned. Without those high charges, the capital will not be there. Privatisation is supposed to provide a better service for customers because of competition. However, many hon. Members—in fact, more Conservative Members than Opposition Members —have said that that competition is not there. It is a monopoly and one which cannot in any way be effective in the market place.

We have been told that privatisation will lead to better quality. When the main criterion will be profitability, I wonder what effect that will have on the quality of water and, indeed, on public health.

We have been told that there will be better protection for the environment, yet there is a real danger that the plc will sell its assets to raise capital that it will be unable to raise in the market place. We have been told that individuals will be more involved and that they can be shareholders. However, we know that the large institutional shareholders are likely to move in, especially with the low returns that will be available. There will be no democratic answerability and no mechanism to raise questions in the House.

We have been told that there may be a fairer charging system. Certainly, water rates can be very unfair under the present system, but will metering be fairer when someone old and incontinent will use more than the average 9,000 gallons per annum? There have been no mechanisms to allow rebates in the past. I cannot see that metering will be fairer.

We have been told that possibly there will be better co-ordination of the industry, but I wonder, when the question of the use of reservoirs and land arises and there is an opportunity to make money, whether the amenity value of the land will go out of the window.

What effect will there be on industry? The increased charges may make many industries, such as the chemical industry, uncompetitive. The Department of Industry advertised at one time the attraction of water charges as an incentive for industry. I wonder whether it could put out the same booklet as it did in 1981 and 1982. Will there be any greater stability, as we have seen companies that have been taken over having to rely on the whims of the market place? All those factors fill us with foreboding.

I tabled amendment No. 136 which refers to the need to have an absolute assurance written into this part of the Bill that there will not be any charges passed on with the introduction of meters. We welcome the Government's move on the amendments regarding disablement. Amendment No. 53, which has not been selected, deals with metering and disabled people. The Government may be able to reconsider that aspect in another place, because in comparable Bills, such as the one for gas, a provision has already been written in. Perhaps the Minister will consider that at an appropriate time.

We are fearful of the effects of privatisation. Privatisation by a Government who do not have a mandate is not wanted by Wales. I hope that even at this late stage they will change their minds.

Miss Emma Nicholson

The speeches today have had a valedictory ring. The utterances from the Opposition resembled those of professional mourners at a funeral burying the corpse of nationalisation. I do not believe that they will ever be able to exhume that corpse and rattle its bones again. It is like a pavane for a dead doll because nationalisation has shrunk to that size. The hon. Member for Macclesfield (Mr. Winterton) has been the chief pall bearer. Speeches from other Conservative Members, however, had the ring of a job well done—a task completed and a polished performance—and were more like a march triumphant.

It is relevant that we should be discussing the Water Bill in the round, especially the retention of part H. In 1977, the United Nations declared the 1980s to be the decade of international drinking water supply and sanitation. The goal was to meet the needs of everyone world wide by 1990. The Bill ensures that in the United Kingdom we shall do just that with an innovative, imaginative and highly effective piece of legislation which will bring immeasurable benefits to the consumer.

As it enters its last year, the present decade has many notable achievements to its credit. The principal one is the establishment beyond doubt of the relationship between ill health, dirty water and poor sanitation. I remind the House that every day 30,000 people die from water-related diseases. In that context, and thinking especially of the developing world, it is interesting to note that every human being needs five gallons per diem for washing and drinking, but in the developed countries we use about 25 to 40 gallons. We are profligate with a natural resource. Water metering may help us there.

In the months in which we have been debating this major piece of legislation, we have had food scares, food and health scares and, in Committee, water scares. Unwarranted, unjustified and unscrupulous attacks have been made on the purity of unbottled British drinking water. All the medical experts of the United Kingdom have declared that water to be of excellent quality, and more of our rivers have a higher water quality than many of those in Europe.

In Committee we were threatened with Alzheimer's disease if we drank British water. The threat has been flourished with seeming relish, as though the disease would be caught by anyone drinking tap water in Britain. The chief medical officer's verdict has been wholly ignored by the Opposition. He does not believe that there is any perceived link, although he is continuing serious and proper studies.

The Opposition have based their scare stories on an invalid extrapolation from data about kidney patients undergoing dialysis and ingesting water in an abnormal way to cleanse their kidneys, with distressing but preventable side effects. As a result of that scare story, acute unhappiness has been caused to widows and widowers whose partners have died of Alzheimer's disease.

People ask me whether they were wrong to move to Devon and whether they did a terrible thing which caused their spouses to die.

Mr. Heffer

I shall not take up the last point because I am not competent to do so and I do not know whether any such problems have been caused. The hon. Lady and the Government should make up their minds. On the one hand we are told that if we privatise we shall improve the quality of water—that is the essence of the argument. The hon. Lady then says that the quality of water is better than that in most of the advanced world. I do not disagree with that. I do not agree with those who say that our water is bad. Having visited Italy regularly, particularly after the war, I remember that if one went south of Milan one was damned careful not to drink the water around Rome, and so on. We all knew what could happen. The fact is that our water is good water, so why do we need to privatise it?

Miss Nicholson

I thank the hon. Gentleman for his excellent and highly intellectual intervention based on his experience of Italian and British drinking water. The circle can be properly squared because the public are rightly becoming more environmentally conscious and calling upon us to improve the quality of our water still further. I invite the hon. Gentleman to visit my constituency, where he will discover an appalling history of poor quality water supply. The new mechanism for investment and for attracting money will improve beyond belief the appalling water that we have suffered in Bideford, Launceston and Tavistock for many years. Under the new South West Water chairman, all is being rapidly improved. That did not happen under the Labour Government appointee. With an irresponsible and heartless Opposition Front Bench team playing most meanly upon people's fears, we certainly need the Bill. It is as well that, in this context, Britannia is the clean woman of Europe.

Mr. Allan Roberts

If our drinking water is of such a high standard, why do 11 million people drink water that is below EEC standards?

Miss Nicholson

Our drinking water is only 95 per cent. perfect. We still have 5 per cent. to go.

As water scares have been promoted by the Opposition, public education is the key. We need a strong and resilient group of customer service committees with powers to call for evidence from companies outside their normal remit and with the ability to challenge those companies with their findings and to put those findings to the director general. As those customer service committees will serve the public, it is most important that their meetings should be held in public. I have never understood the idea of a body that is meant to represent the public holding its meetings in private. In that context, I commend amendments Nos. 25 and 96 to my hon. and learned Friend the Minister and to the House. They will give us that strong and outward looking public body to educate, inform and serve the customer.

8.45 pm

Mr. Morley

The hon. Member for Torridge and Devon, West (Miss Nicholson) said that perhaps we are mourning a dog's funeral, but I believe that the Bill is more like a dog's breakfast.

The way in which the Bill has been presented is a total shambles, and the arguments have been contradictory. Amendment No. 1 seeks to discover what the Government are trying to get out of privatisation. There may be a case for a separate regulatory body, the National Rivers Authority. That is fair enough. If we delete part II we can go ahead and set up an NRA that will have the powers to regulate water quality, do something about our river quality and ensure that our sewerage standards are improved. All that could be done without everything being moved to the private sector.

The question posed by the public, which the Government must answer, is what are the advantages from putting the water and sewerage undertakers into the private sector? So far they have not come up with any convincing arguments in favour of such a move. The evidence suggests that it will be a great deal more expensive for the consumer if such a move goes ahead. They have also not told the public why a natural monopoly should be put into the hands of the private sector when its natural place should be in the public sector, where control and accountability can be exercised.

The Minister may argue that, together with passing control over to the private sector, a whole range of regulations will be introduced to prevent abuse by any private owner. That is the argument in favour of the price control mechanism. If that is the case, it makes nonsense of the argument of the Water Authorities Association that, by moving into the private sector, water companies and authorities will be free of Government interference. Given the regulations that will accompany the Bill—I accept there is a need for them—there will be more Government interference in the water companies than at present.

It is also argued that everything will be more efficient in the private sector, but that does not automatically follow. I am not suggesting that private sector companies are not efficient—many are—but if they were all efficient, there would be no bankruptcies or fraud cases. Such things happen all the time because there are good and bad companies. By making something private it does not follow that everything will be more efficient.

It is clear that the move into the private sector will be more expensive. The Secretary of State will not produce figures to show what it will mean for the public, because he dare not. If we are to achieve the necessary investment in our sewerage works, the sewage outfalls and the associated infrastructure, the necessary money must be raised. Raising such money through a privatised water company, however, will be more expensive than raising it through the public sector. Private water companies will not have access to the lower rates of interest that are available in the public sector and they may not have access to various European grants currently available. The shareholders' dividend will be an extra element that must go on top of the distribution charges.

Opposition Members have already pointed out that, if those companies are to attract private capital, there must be a decent return on it. Most companies in the private sector believe that the minimum return on capital invested is 10 per cent.

Under the present pricing regime, there is nothing like a 10 per cent. return on capital. The implication is that water charges will rise dramatically to meet that return and leave sufficient to invest in the infrastructure. Apart from some Conservative Members, nobody denies that. Even stockbrokers in the City have given a cool response to this privatisation because they know the investment difficulties that will have to be faced.

Mr. Wigley

Is my hon. Friend aware that, in an unguarded moment towards the end of last year, the Secretary of State admitted that other factors would be involved, including what he described as the higher cost of private sector capital? The Government have shied away from putting a figure to it. Perhaps the Minister will give a figure tonight.

Mr. Morley

I am obliged to my hon. Friend for that intervention. People who think about these issues impartially recognise the logic of what I am saying. By putting the industry into the private sector, the Government are being responsible for dramatically increasing charges. Water charges for industry will also go up. That will have an effect on our ability to compete with the Europeans, especially after 1992.

Apart from the fact that it has not been proved that the industry will be more efficient in private hands, we must remember that the water authorities are part of our natural heritage. They control some areas of outstanding natural beauty, including important nature reserves and areas of leisure and recreation.

Considering the restraints that will be placed on private water companies and the fact that they will be in a financial straitjacket, having little room for growth in their core services, they will inevitably look towards the land assets that will be given to them on a plate by the Government. They will be inclined to develop those land assets, and that could have a detrimental effect not only on the conservation role of that land but in terms of access by the public and the maintenance of areas of natural beauty.

It is nonsense to suggest that the existing planning controls give sufficient protection. The Countryside Commission, a Government quango, has said that the present planning regime is not adequate to prevent the despoliation of areas of outstanding natural beauty.

Anglian Water has put up its charges this year by 12 per cent., double the rate of inflation. That is an early indicator of the way in which charges will rocket under privatisation. The private statutory companies have already said that their astronomical increases in charges are due mainly to privatisation and not to necessary investment in the infrastructure. Indeed, one has said that the infrastructure element represented only 4 per cent. of its increase and that the rest was due to privatisation.

Some of the amendments in this series deal with extending the role of agencies with sewerage functions. I hope that the Minister will reconsider some of the arguments that were adduced in Committee about the problem of private sewers that have not been adopted by local authorities because those sewers are not up to standard.

I have that problem in my constituency, in Winchester avenue in Bottesford, Scunthorpe. When that develop-ment was constructed, the sewers were not put down to an adequate standard, and the local water authority, understandably, refused to adopt them. The residents of the area are anxious because the developer of the estate blames the builder who put down the sewers and the builder claims that it is the developer's responsibility. The only people who are suffering are the residents because the roads have not been adopted, the street lights have not been connected and the grass verges cannot be laid out, all because the sewers under the roads are in need of repair.

If we are to make changes, we should introduce into the Bill a provision by which the new water plcs have power by law to go in, to do the job, to bring the sewers up to standard and to recover the cost from the company which laid them in the first place. That would cut through the circle of complaint, with the buck constantly being passed between developers and builders. I hope that the Minister will examine that matter. Several hon. Members, including Conservative Members, raised in Committee similar problems affecting their constituencies and we should take the opportunity of this measure to tackle that problem.

The Bill will do nothing to improve the efficiency of the water companies. The restraints from which they have been suffering are artificial. If the Government want to improve our rivers and water standards and wish to make sure that various aspects of the infrastructure receive the necessary investment, they should remove those restraints and allow water authorities to borrow on the open market and have freedom to invest.

By all means establish the NRA, create more regulatory powers and introduce a more efficient code of conduct, but all of that could be done by deleting part II of the Bill and making sure that part I goes through.

Sir Anthony Grant

The 12 per cent. increase to which the hon. Member for Glanford and Scunthorpe (Mr. Morley) referred in the Anglian water authority area is in line with the forecast made by the Secretary of State for the Environment on Second Reading.

The Cambridge water authority, which supplies water to me and my constituents, recently had to announce an increase. It was not the 43 per cent. rise which some authorities have had to announce, but it was sufficiently high at 29 per cent. It made it clear that the money was required for the replacement of old plant and for other engineering necessities and had nothing to do with privatisation.

The Bill has not been adequately explained. That is undoubtedly why Mr. Derek Jameson and his telephone pollsters misunderstand the situation. I acquit the Minister of State entirely in that respect; he was bogged down in Committee, giving massive attention to detail—a task which he performed with his usual forensic skill—but it is now necessary to concentrate on the two fundamental points in the Bill. If that is done, we shall be able to disregard straw polls conducted by straw men.

The first point concerns the setting up of the NRA to deal with standards and quality. The Opposition may want the NRA to be strengthened in certain respects, but it. is agreed in all parts of the House that the basic principles of the body are right. We debated this subject at length yesterday, so at this stage I will simply say that the principles involved in establishing the NRA are right, that the fears that have been expressed about dangers to our beautiful countryside are wildly exaggerated and that we can have the highest respect for our erstwhile colleague, Lord Crickhowell, who will chair that body.

Secondly, while we are demanding higher standards, we should appreciate that our water is extremely good compared with that in some countries. Nevertheless, we and Europe want it to be better. In my constituency there is a great fuss about nitrates. We have the highest concentration of nitrates in the soil, although even that concentration is wildly exaggerated. I pointed out in the House recently that, while nitrates are said to cause stomach cancer, the highest incidence of stomach cancer is in Wales, where there are the lowest amounts of nitrates, and the lowest incidence of stomach cancer are to be found in East Anglia, where we have the highest concentration of nitrates. That must be borne in mind before people become hysterical over this issue.

If we want higher standards, they have to be paid for. The Opposition have proposed a wrecking amendment. If we accept their arguments we shall simply stay in the same miserable circumstances as we had between 1974 and 1979, and subsequently, with the water industry standing docilely in a queue at the Treasury, trying to get the necessary investment. The water industry was not the only one to suffer between 1974 and 1979. Hospitals, nurses and everyone suffered in times of economic difficulty. The same could happen again. If the water industry is in the queue behind Ministers who are clamouring for more money for pensions, hospitals, defence and education, we will be back to square one.

9 pm

I agree with my hon. Friend the Member for Macclesfield (Mr. Winterton). Part II of the Bill provides the opportunity for competition, although not in the commercial sense as we know it. No one can say, "I do not like Anglian Water so I will go to Thames Water because it is better or cheaper." That is not what we are talking about. By their efficiency and the way in which they conduct themselves, water authorities will be able to apply to a wider circle of investors to raise funds. They will be liberated from the constraints that have caused the difficulties up to now. That is fundamental and one of the main purposes of the Bill. We must hammer that home and explain it to the people in simple terms.

Much nonsense is talked about the French taking over things. I am not so xenophobic as some hon. Members and I do not worry particularly about that. In 1992, if Anglian Water plc is efficient enough and keen enough, it may take over the French. When we were negotiating to go into the Common Market the Prime Minister, my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), told me that Pompidou was complaining bitterly that the British had taken over the French food industry, which they had. There is no reason why the water industry should not do the same. We should not be frightened of competition and we should not talk xenophobic nonsense.

I will conclude by quoting from a letter to The Times by the chairman of Anglian Water, Mr. Bernard Henderson, who has put it as well as anyone could. He said: For too long the United Kingdom water industry has been starved of the funds needed to carry out these improvements as it wanted to do. This has got to cease. Stop-go policies have left the water industry frustrated and underfunded time and time again. The present Bill offers the chance to revolutionise this situation. The powers of the secretary of state and the National Rivers Authority will ensure the remedial work is carried out. The director general will oversee the maintenance of standards and impose a price control which should encourage further efficiency gains, whilst allowing for the necessary work to be financed. And the privatised companies in turn will, for the first time, have the freedom to operate outside the constraints of public expenditure policies. Mr. Henderson has got to the root of the problem. We should forget the other nonsense and put that message forward. We should reject amendment No. 1. The sooner the Bill is on the statute book the better for everyone.

Mr. Pike

I shall be extremely brief because there is a guillotine and other hon. Members want to speak. Important issues are involved in this large group of amendments. If time permitted, I would take to task the hon. Member for Bolton, North-East (Mr. Thurnham) for some of his comments about other privatised industries; he said that they had done extremely well but he did not give a true picture of the position. Many of them have created additional top-tier jobs which have benefited those at the top, but they have not done much good for the consumer. At the end of the day we should judge things by the results for the consumer. Many times during the debate the hon. Member for Torridge and Devon, West (Miss Nicholson) has claimed to be a champion of consumer interests, but when she supported the main drift of the Bill she showed that she is no friend of the consumer.

The hon. Member for Stroud (Mr. Knapman) referred to the Select Committee report. The Minister also made an intervention about it, referring again to the chart, as he has done so many times. The Conservative Government have been in power for almost 10 years, and they must be judged on their record. The simple fact is that, in true comparative terms, the Government investment in the water industry in 1989 is lower than it was in the mid 1970s. The chart does not give the latest figures, but what I have said is correct. The Government have failed miserably.

There is some truth in the statement by the hon. Member for Stroud that the National Rivers Authority originated in the proposals of the Select Committee. While the Select Committee accepted that there was a need for a regulatory body, and a separation of the poacher and gamekeeper functions, it did not say that the industry should be privatised to achieve that objective. It stated clearly that the problems in the water industry arose not from ownership but because the Government controlled capital investment and interfered too much. There is no reason why the Government, if they wished, could not remove the PSBR from water authorities and allowed them to borrow on the open market, perhaps even involving some private sector finance. We do not need to go along the road of privatisation.

If the House does not accept amendment No. 1 to delete part II which deals with privatisation, we have grave doubts that the Bill will deliver the goods. Whatever regulatory powers are provided, at the end of the day the industry has to have profit as its prime motive. We know that the Government have to fiddle the figures anq wipe out debt. They will have to make provisions for derogations and extending the period for water authorities to meet the requirements for river and water quality, and for the improvement of beaches. If they do not, the industry will not pay.

The hon. Member for Bolton, North-East said that in other privatised industries the regulatory control for price increases was RPI minus X but that in this case it would be RPI plus K. The important difference is the plus rather then the minus.

My hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) made an important point about sewers of existing properties not being up to an acceptable standard. The Minister should recognise that it is still possible for properties to be constructed with sewers that are not of the required standard to be taken over by water authorities. That will continue. This may not be the appropriate Bill to cover it—the Local Government and Housing Bill might be better—but the Government should do something about the problem which exists even on estates built in post-war years. The Government must accept responsibility to prevent that happening in future.

I have known the hon. Member for Macclesfield (Mr. Winterton) for many years. Indeed, I worked as a full-time Labour party organiser in the 1971 by-election that brought him to this House. He made a very bold, constructive and important speech. He recognises very clearly that, while the Government, with their majority, may win the votes in Committee and in this House, they are not winning the debate, either in Committee or in the House. But, even more important, they are not winning the debate in the nation. The people recognise that in this industry comparative competition and all that kind of nonsense is absolutely unrealistic. This will be a private monopoly. The consumers will have to pay, and if there is metering the poorer sections of the community will be penalised. If time permitted, I would go into detail on that matter.

The Government must recognise that there are important issues involved in these amendments. The latest Select Committee report on toxic waste says that the Government should make the National Rivers Authority the basis of an environmental protection agency. As I have said to the Minister before, if the Government were to drop this nonsense of privatisation and made the National Rivers Authority an environmental protection agency, they would be doing a lot more to serve the nation.

Mr. Leigh

I have now sat through five hours of Second Reading debate, 150 hours of Committee debate, and countless hours of Report stage debate.

Mr. Paul Boateng (Brent, South)

Do you want a medal?

Mr. Leigh

The hon. Member for Brent, South (Mr. Boateng) shared those labours with me.

I am pleased that the Minister has accepted several of my amendments. The one that I have down this evening concerns due diligence, but I shall not delay the House by talking about that, as there is already considerable correspondence about it. In the two or three minutes available to me—I want to give other hon. Members a chance to take part in this debate—I shall try to boil down some of the arguments. Unless we can put over our case very simply, in a couple of minutes, we really are in serious trouble. But I think we can do so.

I hope that hon. Members opposite, who may not agree with everything I say, will at least accept that I have tried to study the Bill with reasonable care. It seems to me that we are all agreed—this is the view of the people who work in the water industry: not just the chairmen of the water authorities, but people at all levels—that there is a large measure of historical under-investment in the industry. It is accepted throughout the industry that, if it were to remain in public ownership, it simply would not get the investment it needs, given the fact that it would have to compete for scarce resources. That is not a party political point. I am not making an attack on past Labour Governments; perhaps I am attacking the records of all Governments on this issue. There simply are no votes in sewerage. That is the first point.

Mr. Boateng

Will the hon. Gentleman give way?

Mr. Leigh

No, because I intend to speak for only two or three minutes.

The second point is that it is in the very nature of this Bill that the regulatory functions of water quality are split from the actual provision of water and sewerage. As a result, the Government and Government agencies such as the NRA are allowed to get on with the job that they do best, which is regulation, while the private sector is allowed to get on with the job that it does best, which is providing the service. That is the very essence of the Bill.

9.15 pm

I think that we can get the argument across in the country if we inform people that these private sector companies will not be like other private sector companies. It seems that people out in the country think that they will operate for profit in an entirely free market. In fact, they will be tightly controlled by the Director General of Water Services, operating under the K factor. They will be operating within a tightly regulated framework, and will be much more akin to private contractors working for Government Departments than to private companies. It is not so much a question of privatising something for profit margin; what we are doing is splitting up an unhealthy relationship, in which secretive water authorities have both provided the service and regulated themselves. We are creating something much more healthy—a healthy tension between Government agencies regulating, and tightly regulated private companies providing the service.

The people in the water industry to whom I have talked are actually looking forward to being let off the leash of Government control, of chopping and changing, as was mentioned in the letter from the chairman of the Anglian water authority—let off the leash of the Treasury, allowed to invest, allowed to attract private capital. That is what people in the water industry are saying. They look forward to providing a service. There may be price increases, but they will be the result of historic under-investment. The only way we can get real improvements really quickly is by privatising this industry, and to that end this amendment must be rejected.

Mr. David Hinchliffe (Wakefield)

The hon. Member for Torridge and Devon, West (Miss Nicholson) talked about this Bill representing a march triumphant. I would argue that it is a march that tramples the poor and disadvantaged into the ground. The Bill constitutes a serious attack on the rights and interests of low-paid and disadvantaged people. The hon. Lady talked about scare stories. It is no scare story to look at the record of the present Government in water charges and the hardship that those have caused in the run-up over the past few years to privatisation. In 1984, the average bill was £76; now it is £107. It is no scare story to say that the Water Authorities Association itself said that that increase was the direct result of the Government's move towards privatisation. That is not a scare story.

Nor is it a scare story to suggest that Gordon Jones, the chairman of that association and of Yorkshire Water, has said that bills will effectively double to £200 per year by 1993. These are not scare stories. It is not a scare story to talk about the private companies and the figures that they put forward. The Minister proudly announced that he had got the increases down to 22 per cent.—three times the rate of inflation. These are not scare stories; they are facts, truths, that the hon. Lady conveniently forgot.

Amendments 126 and 125 are intended to help the interests of the poor if this Bill goes through its parliamentary processes. They respond to the growing trend of disconnections. Over the past few years we have seen an average of 2,000 extra disconnections each year. The hon. Member for Brecon and Radnor (Mr. Livsey) referred to a figure of 9,000 disconnections this year. That so many people are deprived of such a basic commodity as water is an appalling indictment of this Government. They must be very proud of their record. We heard in Committee the Tory view of wilful non-payers—the clear distinction between the deserving poor and the undeserv-ing poor—concepts which, as my hon. Friend the Member for Liverpool, Walton (Mr. Heller) said when he was discussing measures that have been brought in in Liverpool, take us back to the last century.

I am deeply concerned about what will happen under this Bill to those families who cannot afford to meet their bills now, let alone when we have the huge increases that will be brought about by privatisation. It is vital to understand the seriousness of the situation in which families will find themselves when their water supply is cut off. I have listened to all the speeches that have been delivered since 6 o'clock this evening. Not one hon. Member opposite—not even the hon. Member for Macclesfield (Mr. Winterton)—mentioned the position of the poor, the position of the disadvantaged, the position of the disabled, the position of those people who will be, and those who have been, deprived of a water supply.

I am sure that all hon. Members have received representations and information from the citizens advice bureau nationally about the evidence it has received. It has referred to a case in Lichfield where its client, a woman who is a single parent with a three-week-old baby, had her water supply cut off without her knowledge after she had actually paid the bill. I repeat that a three-week-old baby was deprived of its water supply.

I have also referred to a family that I went to see while we were considering the Bill in Committee. The family has five children, one a nine-week-old baby, and it too was deprived of its water supply. Can any hon. Member who supports the legislation defend a nine-week-old baby being deprived of water? How on earth can people care for a child of that age without a water supply? It is a disgrace that the Bill will add to the misery of families such as the one I visited which told me—I mentioned this in Committee—that one of the children——

Miss Emma Nicholson

rose——

Mr. Hinchliffe

I am sorry but, with respect to the hon. Lady, I shall not give way to her because I am limited to only a few minutes before the wind-up speeches.

I mentioned in Committee the condition of one of the children in that family—a five-year-old child who had diarrhoea. When there was no water supply that child refused to use the toilet because it could not be flushed so the child went to the toilet in the garden. That is the sort of situation that there will be with the privatisation of water. This country will be taken back 100 years to the conditions of the last century. I am sure that the Secretary of State, who has now just turned up, will be proud of that record.

The Bill adds to the problems that are being faced by the poor as a direct result of Government policy. The Government have hammered the poor by their discon-tinuation of water rates allowances and by the way in which direct payments of water rates have been scrapped and by the way in which the benefit system has not reflected the huge increase in water rates.

I am being looked at by my Whips so I shall sit down in a moment. I have sat here from 6 o'clock and I have had a couple of minutes in which to get this off my chest. Let us remember the poor, the disadvantaged and the deprived, not those who will make a fast buck out of the legislation.

Mr. Nicholas Baker

The hon. Member for Wakefield (Mr. Hinchliffe) spoke with feeling, as he did in Committee, and we respect him for it. I am only sorry that the hon. Member for Brent, South (Mr. Boateng) has been muzzled in this debate.

I shall be brief, but I must advise my hon. Friends—and, especially, the hon. Member for Copeland (Dr. Cunningham)—that the more I go round my part of the country and my constituency to explain the case for the Bill, the more it is understood and the more support it receives. People appreciate that the need for substantial investments is urgent. They appreciate that there is a need to define the functions of regulation and the supply of services. They appreciate also the need to raise environmental standards, even if the hon. Member for Bootle (Mr. Roberts) does not. They appreciate too that there is a need for a well-managed water industry that is capable of improving services and exporting its services, free from political control, to the Third world. They appreciate that all that is urgent.

I wish to make a point that I made in Committee on amendment No. 148, which has been tabled by my hon. Friends the Members for Daventry (Mr. Boswell), for Stroud (Mr. Knapman), for Gainsborough and Horncastle (Mr. Leigh), for Torridge and Devon, West (Miss Nicholson) and for Rugby and Kenilworth (Mr. Pawsey) and which has the support of my hon. Friend the Member for Pudsey (Sir G. Shaw), who is a former Minister and about whose knowledge of the water industry no one should feel anything but respect.

There is a need for a connection charge because of the inadequate provision made in the Bill for paying for the improvements to the infrastructure that are required to service new developments. As my hon. and learned Friend the Minister knows, the problem at the moment arises in the following way. New dwellings are connected to public water supplies and sewerage systems and they impose a demand on the existing capacity of all elements of the water and sewerage structure. The water supply elements include source works, treatment works, pumps, trunk pipelines, treated water reservoirs and distribution pipes.

The capital costs involved in new developments are high. At the moment, improvements have to be funded by cross-subsidy from existing customers and at the moment the section 52 arrangements are time-consuming and result in uncertainty for developers and water undertakers. Treatment works have to run at the limit of their capacity to justify contributions, which results in a serious risk of failure. There is also inequity between early and late developers of buildings.

After privatisation, the problems are likely to be worse. The costs of meeting the needs of new developments will put an upward pressure on K. The contributions currently obtained from developers by section 52 planning agreements will reduce significantly after privatisation because planning authorities are bound to be less co-operative with private sector companies than they are at the moment.

The problems of cross-subsidy and pressure on K can be overcome by introducing a statutory requirement for developers to pay a connection charge. It would be a capital sum for each dwelling and would be paid before commencement of building works. The charge would be fixed at a standard rate to reflect the average cost of meeting the development needs in each water undertaking area. Application of the charge would be policed by the director general. The introduction of the charge would streamline the planning process and give developers more certainty about their commitments and enable the water undertakers to use sensible and cost-effective planning horizons to remove inequities. The whole basis for the charge is that there should be equity.

My hon. and learned Friend has said that he will look at this issue and, indeed, his officials are considering it. I hope that he can say something in his reply about his attitude to the charge. It is important for equity and would be an important element in the post-privatisation process between the water undertakers and the regulators. My hon. Friends and I look forward to my hon. and learned Friend's reply.

Mr. Howard

Last night we were treated to the extraordinary spectacle of the Labour party pressing to a vote at midnight an amendment that would not have changed the Bill's effect by one iota.

Tonight Opposition Members apparently intend to press to a Division amendment No. 1 which would delete the whole of part II and in so doing deny to the people of this country the considerable improvements in drinking water standards which we wish to see, the control over prices which the Director General of Water Services will exert and the new and unprecedented rights for customers that the Bill provides. Even by their own attitudes and standards, the Opposition's approach is incomprehensible. I shall return to that point later, but first I want to deal with some of the many other points that have been raised during this extremely interesting and wide-ranging debate.

I shall begin with the speech of my hon. Friend the Member for Macclesfield (Mr. Winterton)—as I suspect that he would expect me to. I am grateful to him for the kind remarks that he made about me, although he will understand that I approach them with a degree of caution. He made a characteristically forceful speech in which he urged the provision of a water merger control regime that would apply to all 39 water undertakers to be appointed under the Bill and would extend it in certain other respects.

The purpose of our special water merger provisions is to ensure that the director general has access to all the information that he needs so that he can compare the performance of different companies and make sure that the standards of the most efficient spread to the rest of the industry and that the customer benefits as a result. That exercise will provide a clear incentive to more efficient management and will be a key factor in effective regulation of the industry. The ability to make these comparisons is an advantage available to the Director General of Water Services which has not been available to the regulator of any previously privatised industries. It is one of the main reasons why we can be confident that the customer will benefit from greater efficiency in the industry in future.

9.30 pm

However, for that to be achieved, it is not necessary that all mergers in the industry should automatically be referred to the Monopolies and Mergers Commission—as my hon. Friend would like to see. It is not necessary for this purpose to preserve all 39 water undertakers in independent ownership. To do so would be to tend to freeze the existing pattern of ownership in the industry, and there is no reason to suppose that the existing pattern is necessarily the best or most efficient. My hon. Friend also wanted, in mergers that were referred to the Commission, account to be taken of matters such as the interests of consumers and other sectors of the economy. The Commission would be able to take those matters into account under existing arrangements.

My hon. Friend referred to French investment in the industry. The really important point about French investment is that French companies are showing us what can be achieved in this industry by independent private sector companies taking advantage of the opportunities that are available. There is a huge worldwide market for water services—as my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh) pointed out. The French have a large share of it. We will never be able to compete with them so long as the British water industry is a collection of nationalised industries, operating under all the constraints which are an inevitable consequence of that status. I want the British water industry to compete with the French in world markets to obtain a big share of the business that is available, and I am absolutely confident that when the industry is in the private sector that is exactly what it will achieve.

My hon. Friend the Member for Dorset, North (Mr. Baker) described the effect of amendment No. 148 which stands in his name and the names of a number of my hon. Friends. We debated it in Committee and it proved to be one of the most interesting debates of our entire proceedings. As I explained to my hon. Friend, we are still looking carefully at the evidence. We have been provided with a good deal of information which needs careful examination and I am afraid that I cannot yet announce the outcome of our study of these matters. My hon. Friend knows that I have some sympathy with the points that he makes, but I hope that he will understand that I cannot go further tonight.

Sir Giles Shaw

I fully understand my hon. and learned Friend's position. Is it still his intention to resolve this issue during the passage of the Bill, even if in another place?

Mr. Howard

If it can be so resolved, I should be very happy to resolve it in that time scale.

Government amendments Nos. 94, 95, 141 and 142 arise out of a commitment given by my hon. Friend the Parliamentary Under-Secretary in Committee to consider the possibility of deleting the references to commercial interests in clause 161, which requires the Secretary of State to lay directions made before Parliament, unless to do so would prejudice national security. We have looked very carefully at the effect of the clause since our discussion in Committee, are satisfied that the references to commercial interests serve no useful purpose and have introduced amendments to give effect to that conclusion.

Government amendment No. 25 provides for customer service committees to have a duty to keep under review all matters affecting the interests of customers and to make representations as well as to consult the companies allocated to them about such matters. It follows an undertaking given by my hon. Friend the Parliamentary Under-Secretary to my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) in Committee, who asked for clarification of this point.

My hon. Friend the Member for Torridge and Devon, West also spoke to her amendment No. 96, the purpose of which is to provide for public access to meetings of customer service committees. We have carefully considered the matter and I am delighted to say that we have come to the conclusion that amendment No. 96, should be accepted.

Opposition amendments Nos. 122 and 123 deal with drinking water. The Bill establishes a comprehensive, new system for regulating and safeguarding the quality of drinking water. It represents the greatest legislative advance on this subject that we have ever seen.

The proposals in the Bill fully incorporate the provisions in the European Community's drinking water directive and go beyond it in a number of important instances. This will be the first time that drinking water quality standards have been laid down directly in United Kingdom law.

Mr. Allan Roberts

In the light of recent revelations that pesticides in the food chain are not easily identified, is the Minister still seeking, as he said he was in Committee, a lowering of the EC standard on pesticides in drinking water?

Mr. Howard

The hon. Gentleman knows perfectly well —he has had it explained to him many times—that all we want is a pesticide directive that is based on proper scientific standards. The present directive is not. We think that some standards should be higher and some should be lower than they are now.

Quite apart from the standards, we are specifying minimum sampling frequencies far higher than those in the European Community directive. Our regulations will specify monitoring frequencies for such substances as aluminium, iron and manganese which are at least four times higher than those in the directive. We are also specifying minimum treatment requirements which go beyond those in the Community directive.

To make sure that the companies are kept up to the mark, we are establishing a drinking water quality inspectorate with full powers to carry out thorough and technical audits of the companies' records and procedures. If a company fails to implement an inspector's recommendations, the Secretary of State will be able to make regulations requiring it to do so.

There is a new duty on companies to ensure no deterioration in the quality of their supplies, and there is a new criminal offence of supplying water that is unfit for human consumption. It is punishable by fines or imprisonment.

In Committee, the hon. Member for Dewsbury (Mrs. Taylor) wrongly alleged that the regulations would make it more difficult to monitor samples and obtain information. The truth is exactly the opposite. Information on water quality would have to be made available to the public in a manner that makes it absolutely clear whether supplies comply with standards, and, if they do not, what is being done about that. These information requirements are far more comprehensive than those proposed or enforced anywhere else in Europe.

Dr. Cunningham

Why is it that only the Secretary of State can initiate prosecutions in connection with the matter to which the Minister has just referred? Given the many months of inactivity by the Secretary of State in connection with the Lowermoor incident, in which 22,000 people—possibly more—were poisoned by their domestic water supply, what confidence can the British people have that the Secretary of State will take whatever action is necessary?

Mr. Howard

Since, as I have said, the offence to which I have referred is a new offence which is not on the statute book, I do not understand the relevance of the hon. Gentleman's reference to Lowermoor. He is wrong even in the terms of his own question. It is not only the Secretary of State who can prosecute for this criminal offence——

Dr. Cunningham

Or the Director of Public Prosecutions, which comes to the same thing.

Mr. Howard

But that is an extremely important safeguard—the power is not confined to the Secretary of State. The DPP can also prosecute under this new criminal provision.

Against this background, what do the Opposition propose? They have tabled two amendments which would require water companies to meet quality standards determined by the European Community, but not necessarily those specified in a Community directive. In other words, the requirements that will apply to drinking water in this country could be determined administratively at any time by Community bodies such as the Commission or even the European Parliament. So the Opposition would remove responsibility for water quality entirely from the United Kingdom Government and place it with officials in Brussels. I do not know whether this is to be the model for some of the other rethinking of Opposition policy about which we hear so much these days, but I cannot believe that the hon. Member for Copeland (Dr. Cunningham) is serious about these amendments or has begun to think through their implications.

The true colour of the Opposition's approach to these matters and the extent to which they care for the customer is to be seen in amendments Nos. 128 and 131, which would strengthen the position of local authorities in carrying out sewage work as agents for the sewerage undertakers. The Opposition cling to the view, in the face of all the evidence, that local authorities are the most efficient, the most economical and the best way of achieving the best possible results in the best of all possible worlds. Policy rethinks may come and go, but the slavish devotion of the Opposition to the local authorities which they control, and to the trade unions that control those local authorities, goes on for ever.

Amendment No. 1 would delete the whole of part II. We have waited in vain throughout this long debate for any explanation of how consumers would benefit from the amendment. Part II provides that European Community drinking water standards should be incorporated in regulations—in other words, directly incorporated into British law for the first time. What objection can Opposition Members have to that?

Part II makes it a criminal offence, for the first time, to supply water that is unfit for human consumption. Why do the Opposition want to remove that from the Bill? Part II provides for information on water quality to be published in a way that will make it absolutely clear whether water supplies comply with the standards set out in Government regulations and, if not, what the company concerned is doing about it. Why do Opposition Members wish to deny the public that information?

Part II proposes a new drinking water quality inspectorate with full and unprecedented powers to go in and carry out thorough technical audits of records, actions and procedures. Why are the Opposition opposed to that? Part II proposes a new and rigorous enforcement regime enabling the Secretary of State to specify action to be taken to remedy breaches of drinking water and other statutory requirements, a clear and open process under the scrutiny of the courts. If any Secretary of State unreasonably failed to take action where it was justified, he would himself be vulnerable to judicial review. Why do the Opposition want to remove those arrangements, which would safeguard the quality of our drinking water?

What about the powers of the director general to set prices and the customer service committees and guaranteed standards schemes and automatic refund payments? All those are contained in part II of the Bill. The Opposition's amendment would sweep away all these protections and safeguards for the consumer and we have absolutely no idea of what, if anything, they would put in their place.

Mr. Wigley

The Minister referred to the powers of the director general with regard to prices. Do the Government stick by their line that privatisation, as set out in part II, will reduce water prices in Wales by 25 per cent.?

Mr. Howard

That does not come from the Government. That report refers to the capital restructuring which will no doubt take place in the Welsh water authority, in common with other water authorities, when it is transferred to the private sector. The hon. Gentleman is well aware of that.

By aiming to remove all those protections for the customer, consumer and the citizen, the Opposition are being utterly consistent. Their record on these matters when they were in government was lamentable.

The hon. Member for Copeland used as the centrepiece of his speech the importance of having a coherent, well-planned strategic approach which, he said, we could have only in the public sector. Let us examine the extent to which the hon. Gentleman, as a member of the last Labour Government, was party to such a coherent, well-planned strategic approach to these matters. Let us consider bathing waters.

In 1975, the European Community adopted the bathing waters directive which laid down standards and required member countries to designate bathing waters which would be required to meet those standards within two years. Four years later, the Labour Government left office and not a single bathing water had been designated between 1975 and 1979. That is the coherent, well-planned strategic approach to the industry in the public sector which the hon. Member for Copeland commended.

Where was the hon. Member for Copeland at the time? He was a member of that Government and shared collective responsibility for their actions. The Labour Government had only two years to designate a bathing water, and the hon. Member for Copeland was a member of that Government, but they did not designate one during that time. What did he do about it? What did he say? Where was he?

What about the Control of Pollution Act 1974 which was placed on the statute book by the Labour Government? They inherited that from their predecessors. It looked good on the statute book, but part II dealing with river pollution was not brought into force throughout that Labour Government's term of office.

Totally inadequate and ineffectual regulation was carried out behind closed doors. There was no right of public involvement in decisions on consents to discharge into rivers and no right of private prosecution of polluters. The Labour Government had no idea of the performance of water authority sewage treatment works and they did not even bother to find out. Where was the hon. Member for Copeland? What did he do? What did he say? Where was the coherent, well-planned, strategic approach that one is supposed to find only in the public sector? We all know about the cuts in investment, about river pollution, and about enforcement being left in the hands of the water authorities.

9.45 pm

It is this Government who are tackling the task of cleaning up our water environment. We have embarked on the most comprehensive programme to clean up rivers in our country's history. We are introducing an open system of effective regulation where there was none. We are giving the public the right to be involved in decisions on consents to discharge where there was none. We are the Government who have introduced a system of sewage works discharge consents, and performance standards against which they can be measured, where there was none, and we have opened the whole thing up for public inspection.

We are the Government who have given the public the right to prosecute polluters, and we are introducing for the first time the new criminal offence of supplying drinking water that is unfit for human consumption.

Yesterday, the House debated the National Rivers Authority, which will be at the centrepiece of our new regulatory system. That authority and all the other provisions will count for nothing if we do not transfer the industry to the private sector. That point was made by several of my hon. Friends, including my hon. Friends the Members for Cambridgeshire, South-West (Sir A. Grant), for Bury, North (Mr. Burt) and for Gainsborough and Horncastle and, in an intevention, by my hon. Friend the Member for Wirral, South (Mr. Porter). They all put their finger on it. It is only when the industry is in the private sector and has access to private sector resources and is benefiting from all the efficiency of the private sector that we shall see improvements.

The truth is that privatisation alone will ensure that the environmental achievements we all want to see are made as quickly as possible. The Government will set the standards, the regulators will police the standards, and the companies will deliver the standards using private sector resources. That is the way we shall get fresher rivers, cleaner bathing waters and purer drinking water. That is why the Opposition's amendments are wholly miscon-ceived, and that is why our proposals deserve the wholehearted support of the House.

Mr. Allan Roberts

The hon. and learned Gentleman is becoming a caricature of a Minister under threat. I am not surprised that, except in the closing minutes of his speech, he spent all his time on the minutiae of the Bill and did not address the major issues of principle. We are opposed in principle to the privatisation of water. That is why we have proposed an amendment to exclude part II of the Bill.

The hon. Member for Batley and Spen (Mrs. Peacock) is quoted in the Yorkshire Evening Post for 3 March 1989 as commenting: Water is a natural commodity which cannot be commercially and competitively produced. Rainfall is not an area of entrepreneurial activity. I notice that the hon. Lady is not in her place, but she is one Conservative Member who has got it right.

The Government are in a mess. The Bill has been badly presented. It is badly drafted and ill-conceived. The Government are finding that it is unpopular throughout the country. What do they do? 'They summon up the cavalry to charge to their assistance, ten good men and true—the chairmen of the water authorities, members of the Water Authorities Association—and an independent group if ever there was one. Surprise, surprise—10 supporters of the Conservative party, all appointed by Conservative Secretaries of State, think that privatisation is a good thing. I am not surprised. We know what will happen to the salaries of the directors of water authorities after privatisation. The top executive remuneration in British Airways before privatisation in 1979 was £45,000 at 1988 prices. In 1988 it was £253,000. In 1979 the remuneration of top executives at British Gas was £49,000 at 1988 prices. In 1988 it was £184,000. It has happened in every other privatised industry, so it will happen in the water industry. I am not surprised that the chairmen are in favour of privatisation and gallop to the assistance of a Government in a mess.

Mr. Pawsey

Will the hon. Gentleman tell the House about the increase in profitability and efficiency of the industries that he has just been knocking?

Mr. Roberts

My electorate in Bootle are not too keen on a privatised British Telecom because they are never put through to the right number and they cannot find a call box that works.

Leaving aside the chairmen of the water authorities, there is great concern among Conservative Back Benchers. The right hon. Member for Henley (Mr. Heseltine) galloped to the rescue of the Government and we have heard speeches from other Conservative Members along the same lines of the proposals advocated by the right hon. Member for Henley in yesterday's debate. The right hon. Member for Henley was Secretary of State for the Environment in 1987–88, but he has suddenly discovered the answer to the Government's difficulties. There will be massive increases in water charges to pay for environmental improvements in future. The consumer will have to pay. The right hon. Member for Henley and other Conservative Members have decided that it would be better if those improvements were paid for out of public expenditure, but they have not said that. They have said that the Government should sell the water authorities to the private water companies and then give back the proceeds of the sale to the private companies to spend on environmental improvements.

The right hon. Member for Henley should examine his own record. At 1987–88 prices, using GDP deflators, £1,062 million was spent in water authority capital expenditure in 1979–80. In 1980–81, under the right hon. Member for Henley, the figure was £1,026 million, and in 1981–82 was £938 million. There was a massive cut in water authority capital expenditure while the right hon. Gentleman was Secretary of State for the Environment. However, he tends to have conversions on the road to Conservative party leadership elections.

I must deal with some of the myths that the Government are creating in their attempt to justify the outrageous proposal to sell off our water assets. There is the myth that only privatisation can provide the capital expenditure to carry out all the necessary work. It will cost £3 billion to implement the EEC directive on drinking water and £1.6 billion to deal with sewage discharges above consent level. It will cost £1.3 billion to implement water metering, and the Secretary of State talks about a cost of £600 million to clean up our bathing beaches—and that is just the ones that he has identified. There will be the additional costs of dividends, profits for the shareholders and the servicing of shareholders which are not paid when the industry is in the public sector. There will be flotation and advertising costs, and the directors' fees which, as I have pointed out, will be grossly inflated. Consumers will have to pay corporation tax which is not paid by the public sector industry. All those expenses will have to be paid in addition to the capital expenditure required to clean up our rivers.

What investor seeking a return on capital would buy responsibility for the capital expenditure required to clean up the Mersey and all the other rivers in this country? No one in his right mind will buy into that responsibility if there is no return and no profit to be made from the proposals. The Government say that there will be private capital and that they will release the publicly-owned water industry from the public sector borrowing requirement. Why can they not release the publicly-owned water industry from the public sector borrowing requirement? It would be borrowing the same money from the same source, and for the same purpose—to improve quality and for capital expenditure.

The Government say that the consumer must pay, not the taxpayer or the polluter. Under their proposals, environmental considerations will come second to profit. That is why we seek to delete part II of the Bill. Clause 6 sets out general requirements to achieve profitability, economy, efficiency and return on capital. Clause 7, which relates to general environmental responsibilities, is a secondary consideration and is subject to clause 6. We want to delete part II because prices will rise if it is implemented, partly because of environmental improve-ments but also as a consequence of privatisation and the costs that I have outlined.

We want a proper National Rivers Authority to be given wide-ranging powers over the water undertakers. The attraction for water undertakers and possible investors would fall if that happened and the price that the Government hope to realise through the flotation would be low. The Government are in a flotation dilemma. If the legislation gave the National Rivers Authority power to enforce environmental standards, and if the Director General of Water Services had sufficient power to control prices adequately, no one would buy shares in the flotation. The Government know that if EEC directives on the quality of drinking water had been written into the Bill, as we proposed in Committee, everyone would be deterred from buying shares in the privatised water companies.

Lord Crickhowell, who is chairman of the National Rivers Authority advisory committee and will be chairman of the National Rivers Authority—another independent individual appointed by the Government—is on record as saying: I think I should make it absolutely clear that I see it as one of the priority objectives of the new National Rivers Authority to operate a slim, efficient, cost conscious organisation. That cost-conscious organisation will have inadequate resources to enforce necessary environmental standards and will sub-contract many of its responsibilities to the private water companies, establishing the gamekeeper and poacher as the same body.

The Opposition and the public are offended by the callous disregard shown by the Secretary of State and Conservative Members for those in the greatest need, introducing a regime which will cut off people's water if they have difficulty paying bills without regard to the public health of the nation. If people's electricity is cut off, it is bad for them and their families. If their water is cut off, it is not just bad for them and their families—it is a public health hazard and it is bad for the whole community. The Government fail to realise that. [Interruption.] It is obvious that the Secretary of State has not been drinking much water with his dinner.

The issue of principle for which we are arguing would keep this essential public asset in public ownership. The next Labour Government will take the water industry back into social ownership——

Sir Anthony Grant

rose——

Mr. Roberts

—that is, if the Conservatives ever succeed in floating it in the first place.

I refer finally to the Prime Minister's statement at the weekend: Bag it and bin it and then we will win it. She must have been taking lessons from Dan Quayle, but Mrs. Thatcher is no Dan Quayle. The only way out for the Government and their bankrupt policy for the water industry is to take the Water Bill and bag it and bin it. That is their only hope.

Question put, That the amendment be made:—

The House divided: Ayes 199, Noes 300.

Division No. 132]	[10 pm
AYES
Abbot, Ms Diane	Anderson, Donald
Adams, Allen (Paisley N)	Archer, Rt Hon Peter
Allen Graham	Armstrong, Hilary

Ashley, Rt Hon Jack	Hogg, N. (C'nauld & Kilsyth)
Ashton, Joe	Holland, Stuart
Barnes, Harry (Derbyshire NE)	Home Robertson, John
Barnes, Mrs Rosie (Greenwich)	Hood, Jimmy
Battle, John	Howarth, George (Knowsley N)
Beckett, Margaret	Howell, Rt Hon D. (S'heath)
Benn, Rt Hon Tony	Howells, Dr. Kim (Pontypridd)
Bennett, A. F. (D'nt'n & R'dish)	Hoyle, Doug
Bermingham, Gerald	Hughes, John (Coventry NE)
Bidwell, Sydney	Hughes, Robert (Aberdeen N)
Blair, Tony	Hughes, Roy (Newport E)
Boateng, Paul	Hughes, Sean (Knowsley S)
Boyes, Roland	Illsley, Eric
Bradley, Keith	Ingram, Adam
Bray, Dr Jeremy	Janner, Greville
Brown, Gordon (D'mline E)	Jones, Barry (Alyn & Deeside)
Brown, Nicholas (Newcastle E)	Jones, Ieuan (Ynys Môn)
Brown, Ron (Edinburgh Leith)	Jones, Martyn (Clwyd S W)
Bruce, Malcolm (Gordon)	Kennedy, Charles
Buckley, George J.	Kinnock, Rt Hon Neil
Caborn, Richard	Kirkwood, Archy
Callaghan, Jim	Leadbitter, Ted
Campbell, Ron (Blyth Valley)	Leighton, Ron
Campbell-Savours, D. N.	Lestor, Joan (Eccles)
Cartwright, John	Lewis, Terry
Clark, Dr David (S Shields)	Litherland, Robert
Clarke, Tom (Monklands W)	Livingstone, Ken
Clay, Bob	Livsey, Richard
Clelland, David	Lloyd, Tony (Stretford)
Clwyd, Mrs Ann	Lofthouse, Geoffrey
Cohen, Harry	Loyden, Eddie
Coleman, Donald	McAllion, John
Cook, Frank (Stockton N)	McAvoy, Thomas
Cook, Robin (Livingston)	McCartney, Ian
Corbett, Robin	Macdonald, Calum A.
Corbyn, Jeremy	McFall, John
Cousins, Jim	McKay, Allen (Barnsley West)
Crowther, Stan	McKelvey, William
Cryer, Bob	McTaggart, Bob
Cummings, John	McWilliam, John
Cunliffe, Lawrence	Madden, Max
Cunningham, Dr John	Mahon, Mrs Alice
Darling, Alistair	Marek, Dr John
Davies, Rt Hon Denzil (Llanelli)	Marshall, David (Shettleston)
Davies, Ron (Caerphilly)	Marshall, Jim (Leicester S)
Davis, Terry (B'ham Hodge H'I)	Martin, Michael J. (Springburn)
Dewar, Donald	Maxton, John
Dobson, Frank	Meacher, Michael
Doran, Frank	Meale, Alan
Dunnachie, Jimmy	Michie, Bill (Sheffield Heeley)
Dunwoody, Hon Mrs Gwyneth	Mitchell, Austin (G't Grimsby)
Eadie, Alexander	Moonie, Dr Lewis
Eastham, Ken	Morgan, Rhodri
Evans, John (St Helens N)	Morley, Elliott
Fatchett, Derek	Mowlam, Marjorie
Field, Frank (Birkenhead)	Mullin, Chris
Fields, Terry (L'pool B G'n)	Murphy, Paul
Flynn, Paul	Nellist, Dave
Foster, Derek	Oakes, Rt Hon Gordon
Foulkes, George	O'Brien, William
Fraser, John	Orme, Rt Hon Stanley
Fyfe, Maria	Owen, Rt Hon Dr David
Galbraith, Sam	Patchett, Terry
Galloway, George	Pendry, Tom
Garrett, John (Norwich South)	Pike, Peter L.
George, Bruce	Powell, Ray (Ogmore)
Gilbert, Rt Hon Dr John	Prescott, John
Godman, Dr Norman A.	Quin, Ms Joyce
Golding, Mrs Llin	Radice, Giles
Gordon, Mildred	Randall, Stuart
Gould, Bryan	Redmond, Martin
Graham, Thomas	Rees, Rt Hon Merlyn
Griffiths, Nigel (Edinburgh S)	Reid, Dr John
Griffiths, Win (Bridgend)	Richardson, Jo
Grocott, Bruce	Roberts, Allan (Bootle)
Harman, Ms Harriet	Robertson, George
Hattersley, Rt Hon Roy	Rogers, Allan
Heffer, Eric S.	Rooker, Jeff
Henderson, Doug	Ross, Ernie (Dundee W)
Hinchliffe, David	Rowlands, Ted

Ruddock, Joan	Wallace, James
Salmond, Alex	Walley, Joan
Sedgemore, Brian	Warded, Gareth (Gower)
Sheerman, Barry	Welsh, Andrew (Angus E)
Sheldon, Rt Hon Robert	Welsh, Michael (Doncaster N)
Shore, Rt Hon Peter	Wigley, Dafydd
Skinner, Dennis	Williams, Rt Hon Alan
Smith, Andrew (Oxford E)	Williams, Alan W. (Carm'then)
Smith, C. (Isl'ton & F'bury)	Wilson, Brian
Soley, Clive	Winnick, David
Spearing, Nigel	Winterton, Nicholas
Steel, Rt Hon David	Wise, Mrs Audrey
Steinberg, Gerry	Worthington, Tony
Stott, Roger	Young, David (Bolton SE)
Strang, Gavin
Taylor, Ian (Esher)	Tellers for the Ayes:
Turner, Dennis	Mr. Frank Haynes and
Vaz, Keith	Mr. Robert N. Wareing.
Wall, Pat

NOES
Adley, Robert	Cran, James
Alexander, Richard	Currie, Mrs Edwina
Alison, Rt Hon Michael	Curry, David
Allason, Rupert	Davies, Q. (Stamf'd & Spald'g)
Amery, Rt Hon Julian	Davis, David (Boothferry)
Amess, David	Devlin, Tim
Amos, Alan	Dicks, Terry
Arbuthnot, James	Dorrell, Stephen
Arnold, Jacques (Gravesham)	Douglas-Hamilton, Lord James
Arnold, Tom (Hazel Grove)	Dover, Den
Ashby, David	Dunn, Bob
Aspinwall, Jack	Dykes, Hugh
Baker, Rt Hon K. (Mole Valley)	Eggar, Tim
Baker, Nicholas (Dorset N)	Emery, Sir Peter
Baldry, Tony	Evans, David (Welwyn Hatf'd)
Banks, Robert (Harrogate)	Fairbairn, Sir Nicholas
Batiste, Spencer	Fallon, Michael
Bellingham, Henry	Favell, Tony
Bendall, Vivian	Fenner, Dame Peggy
Bennett, Nicholas (Pembroke)	Field, Barry (Isle of Wight)
Benyon,W.	Fishburn, John Dudley
Bevan, David Gilroy	Forman, Nigel
Biffen, Rt Hon John	Forsyth, Michael (Stirling)
Blackburn, Dr John G.	Forth, Eric
Blaker, Rt Hon Sir Peter	Fowler, Rt Hon Norman
Bonsor, Sir Nicholas	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)	Gill, Christopher
Bowis, John	Glyn, Dr Alan
Boyson, Rt Hon Dr Sir Rhodes	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
Burt, Alistair	Grant, Sir Anthony (CambsSW)
Butcher, John	Greenway, Harry (Ealing N)
Butler, Chris	Greenway, John (Ryedale)
Butterfill, John	Gregory, Conal
Carlisle, John, (Luton N)	Griffiths, Peter (Portsmouth N)
Carlisle, Kenneth (Lincoln)	Ground, Patrick
Carrington, Matthew	Grylls, Michael
Cash, William	Gummer, Rt Hon John Selwyn
Channon, Rt Hon Paul	Hague, William
Chapman, Sydney	Hamilton, Neil (Tatton)
Chope, Christopher	Hampson, Dr Keith
Churchill, Mr	Hanley, Jeremy
Clark, Dr Michael (Rochford)	Hannam, John
Clark, Sir W. (Croydon S)	Hargreaves, A. (B'ham H'Il Gr')
Clarke, Rt Hon K. (Rushcliffe)	Hargreaves, Ken (Hyndburn)
Coombs, Anthony (Wyre F'rest)	Harris, David
Coombs, Simon (Swindon)	Haselhurst, Alan
Cope, Rt Hon John	Hawkins, Christopher
Cormack, Patrick	Hayes, Jerry
Couchman, James	Hayhoe, Rt Hon Sir Barney

Hayward, Robert	Needham, Richard
Heathcoat-Amory, David	Nelson, Anthony
Heddle, John	Neubert, Michael
Heseltine, Rt Hon Michael	Nicholls, Patrick
Hicks, Mrs Maureen (Wolv' NE)	Nicholson, David (Taunton)
Hicks, Robert (Cornwall SE)	Nicholson, Emma (Devon West)
Higgins, Rt Hon Terence L.	Norris, Steve
Hind, Kenneth	Onslow, Rt Hon Cranley
Hogg, Hon Douglas (Gr'th'm)	Oppenheim, Phillip
Holt, Richard	Paice, James
Hordern, Sir Peter	Parkinson, Rt Hon Cecil
Howard, Michael	Patnick, Irvine
Howarth, Alan (Strat'd-on-A)	Patten, Chris (Bath)
Howarth, G. (Cannock & B'wd)	Patten, John (Oxford W)
Howell, Rt Hon David (G'dford)	Pattie, Rt Hon Sir Geoffrey
Howell, Ralph (North Norfolk)	Pawsey, James
Hughes, Robert G. (Harrow W)	Porter, Barry (Wirral S)
Hunt, David (Wirral W)	Porter, David (Waveney)
Hunter, Andrew	Portillo, Michael
Hurd, Rt Hon Douglas	Powell, William (Corby)
Irvine, Michael	Price, Sir David
Irving, Charles	Raffan, Keith
Jack, Michael	Raison, Rt Hon Timothy
Jackson, Robert	Rathbone, Tim
Janman, Tim	Redwood, John
Jessel, Toby	Ronton, Tim
Jones, Gwilym (Cardiff N)	Rhodes James, Robert
Jones, Robert B (Herts W)	Riddick, Graham
Jopling, Rt Hon Michael	Ridley, Rt Hon Nicholas
Kellett-Bowman, Dame Elaine	Ridsdale, Sir Julian
Key, Robert	Roberts, Wyn (Conwy)
Kilfedder, James	Roe, Mrs Marion
King, Roger (B'ham N'thfield)	Rossi, Sir Hugh
Kirkhope, Timothy	Rost, Peter
Knapman, Roger	Rumbold, Mrs Angela
Knight, Greg (Derby North)	Ryder, Richard
Knight, Dame Jill (Edgbaston)	Sackville, Hon Tom
Knox, David	Sainsbury, Hon Tim
Lamont, Rt Hon Norman	Sayeed, Jonathan
Lang, Ian	Scott, Nicholas
Latham, Michael	Shaw, David (Dover)
Lawrence, Ivan	Shaw, Sir Giles (Pudsey)
Lee, John (Pendle)	Shaw, Sir Michael (Scarb')
Leigh, Edward (Gainsbor'gh)	Shephard, Mrs G. (Norfolk SW)
Lennox-Boyd, Hon Mark	Shersby, Michael
Lester, Jim (Broxtowe)	Sims, Roger
Lightbown, David	Skeet, Sir Trevor
Lilley, Peter	Smith, Tim (Beaconsfield)
Lloyd, Peter (Fareham)	Soames, Hon Nicholas
Lord, Michael	Speller, Tony
Luce, Rt Hon Richard	Spicer, Sir Jim (Dorset W)
Lyell, Sir Nicholas	Spicer, Michael (S Worcs)
Macfarlane, Sir Neil	Squire, Robin
MacKay, Andrew (E Berkshire)	Stan brook, Ivor
Maclean, David	Stanley, Rt Hon Sir John
McNair-Wilson, Sir Michael	Steen, Anthony
McNair-Wilson, P. (New Forest)	Stern, Michael
Madel, David	Stevens, Lewis
Major, Rt Hon John	Stewart, Allan (Eastwood)
Malins, Humfrey	Stewart, Andy (Sherwood)
Mans, Keith	Stewart, Rt Hon Ian (Herts N)
Maples, John	Stradling Thomas, Sir John
Marlow, Tony	Sumberg, David
Marshall, John (Hendon S)	Tapsell, Sir Peter
Marshall, Michael (Arundel)	Taylor, Ian (Esher)
Martin, David (Portsmouth S)	Taylor, John M (Solihull)
Mates, Michael	Taylor, Teddy (S'end E)
Mills, Iain	Tebbit, Rt Hon Norman
Miscampbell, Norman	Temple-Morris, Peter
Mitchell, Andrew (Gedling)	Thompson, D. (Calder Valley)
Mitchell, Sir David	Thompson, Patrick (Norwich N)
Moate, Roger	Thorne, Neil
Monro, Sir Hector	Thurnham, Peter
Morris, M (N'hampton S)	Townend, John (Bridlington)
Morrison, Sir Charles	Townsend, Cyril D. (B'heath)
Morrison, Rt Hon P (Chester)	Tracey, Richard
Moss, Malcolm	Tredinnick, David
Moynihan, Hon Colin	Trippier, David
Mudd, David	Trotter, Neville
Neale, Gerrard	Twinn, Dr Ian

Vaughan, Sir Gerard	Widdecombe, Ann
Viggers, Peter	Wiggin, Jerry
Waddington, Rt Hon David	Wilshire, David
Wakeham, Rt Hon John	Winterton, Mrs Ann
Walden, George	Wolfson, Mark
Walker, Rt Hon P. (W'cester)	Wood, Timothy
Waller, Gary	Woodcock, Mike
Wardle, Charles (Bexhill)	Yeo, Tim
Warren, Kenneth	Young, Sir George (Acton)
Watts, John
Wells, Bowen	Tellers for the Noes:
Wheeler, John	Mr. Tristan Garel-Jones and
Whitney, Ray	Mr. Tony Durant.

Question accordingly negatived.