Water Privatisation

HC Deb 16 June 1992 vol 209 cc787-870

Madam Speaker

Before we commence, I should tell the House that I have selected the amendment standing in the name of the Prime Minister.

4.5 pm

Mrs. Ann Taylor (Dewsbury)

I beg to move, That this House is alarmed at the record profits, record dividends and record salaries and perks of top management in the water companies, especially at a time when households are facing record water bills and record levels of disconnections; and calls on the Director General of Water Services to ensure that the interests of water consumers and the environment are given greater priority than the interests of shareholders. This issue is causing increasing concern to many families. Water bills are now at such a level that they are a major item of expenditure for many, and an increasing number of people have found themselves in debt as a result. Many other families and small businesses have found that, in the main, the privatised water companies are unsympathetic to the problems that they have created, and use every opportunity to maximise their profits—from charging churches, mosques and scout huts as commercial operations, to demanding infrastructure charges for the change of use of a property, when no new connection is required. All that is happening at a time of severe restriction on water use.

To add insult to injury, in the year since we last debated the issue there have been further massive increases in the salaries of top management, and we have learnt more about the multi-million pound perks on offer to the favoured few.

Several years ago the present Secretary of State for the Environment—who is absent from the debate—and I served on the Standing Committee on the Water Bill, with other hon. Members. I regret that the Secretary of State for the Environment does not see fit to speak in this debate, as the issue is important enough to warrant the attention of a Cabinet Minister.

The Minister for the Environment and Countryside (Mr. David Maclean)

Who says so?

Mrs. Taylor

Me. The hon. Gentleman should acknowledge that the problems faced by so many people in this country—the problems of the water industry and of water resources—warrant the attention of a Cabinet Minister. It is to the Opposition's credit that we felt that it was appropriate for a member of the Shadow Cabinet to have responsibility for environment protection. It is a pity that the Government cannot take the matter as seriously.

In Committee. the Government always had a majority, but we always won the arguments. The Secretary of State has returned to the Department of the Environment. Despite his absence, we shall remind his junior Ministers and others of what has happened to the water industry since those Committee days.

I shall draw the attention of the House to three main problems. The first is the difficulties that water privatisation has caused to so many people and families and the second is the inadequacies of the present system of regulating the water industry. Thirdly, I shall explain why the Government's obsession with water privatisation has directed attention away from the real and significant problems faced by so many consumers, which was highlighted by yesterday's decision by the National Rivers Authority.

Mr. John Marshall (Hendon, South)

Will the hon. Lady confirm that the water industry needs more investment and that, since privatisation, there has been a massive increase in such investment?

Mrs. Taylor

The hon. Gentleman must bide his time, because I intend to talk about investment in the water industry. I share the concern expressed by the Director General of Water Services that consumers are having to pay too much for that investment. The responsibility for the size of the bills rests fairly and squarely with the Government because of the deal that they did at the time of privatisation.

Throughout the debates on the water industry in the late 1980s, Labour hon. Members warned of the problems on the horizon in relation to water resources. We now know that those problems could be even more severe because of global warming. Had the Government devoted as much energy, not to mention taxpayers' money, to tackling those problems as they did to privatisation, the problem posed by water resources might not be so severe today.

What has water privatisation meant for ordinary families? In Committee the then Minister of State, now the absent Secretary of State, often accused me of scaremongering when we discussed prices and the likely effect of privatisation on water bills. Let me remind Conservative Members of the increases in water bills faced by their constituents since privatisation. The increases range from 35 per cent. in Yorkshire Water to 56 per cent. in South West Water. The average household water bill has increased by 47.1 per cent. since privatisation. Water charges have risen by almost three times the rate of inflation. As I said, the then Minister of State accused me of scaremongering when I suggested such price increases.

I have looked at the Hansard reports of those Committee proceedings, which are very interesting, and which perhaps explain the Secretary of State's absence, because he then said: any price increase will be modest. When he was cornered, he produced his own figures. He claimed that, by the end of the century, the increase in charges … is likely to be between 7.5 per cent. and 12.5 per cent."—[Official Report, Standing Committee D, 26 January 1989; c. 539-42.] I had hoped that the Secretary of State would be here to tell us why he was so wrong and we were so right, but he has failed to turn up to listen and to answer for the consequences of his remarks.

Sir Jim Spicer (Dorset, West)

The hon. Lady said that water charges had risen by 56 per cent. in South West Water. In her calculations has she taken into account the fact that South West Water, like other water companies up and down the country, has had to carry out a massive capital programme, which was forced upon it by edicts from Brussels and elsewhere?

Mrs. Taylor

Conservative Members are searching for somebody else to blame. The simple fact is that at the time of debates on the Water Bill, we knew all about all the anticipated obligations from Brussels and we made our calculations on the basis of all the information that was available. It is such a pity that the Secretary of State sought to mislead the House and the country at that time.

Mr. Patrick Nicholls (Teignbridge)

The hon. Lady referred, fairly, to the cost of water charges in the west country and we will hear more about them today. Is she saying that the work being done in that region to clean up coastal waters is not necessary? While savouring that point, will she reflect upon the fact that if her arguments on privatisation mean that she would want to return the industry to state control, that means that, in addition to the £8 billion that would be necessary to renationalise the industry, she would have to find an extra £25 billion to go ahead with the investment programme? Will she deal with those points?

Mrs. Taylor

The hon. Gentleman is not well known for his patience—[Interruption.] If he exercises a little patience today and stays for some of the debate, I promise to explain why the nature of the privatisation is increasing the cost of that capital investment to the consumer and is causing concern to the director general.

It is not surprising that the enormous price rises should have led to difficulties for many families. Those difficulties have been made worse by the harsh attitude of some water companies, as is clear from the number of court actions for debt taken by companies and by the level of disconnections. It is a staggering fact that in one year alone, 900,000 court summonses were instigated by water companies. That meant about one house in 25, or at least one household in every street, receiving a summons for water debt. Many of those summonses were taken out against people who had never been in debt before. Often they were pensioners or people on fixed incomes, who receive no help with their water bills and for whom the water bill is often larger than the poll tax bill.

In addition to the financial difficulties that water bills have caused, plus the cost of the summons, some water companies have taken the ultimate step against consumers of turning off water supplies—of disconnecting families in debt. Last week's Ofwat report on disconnections showed the tragic consequences of water bills, with 21,000 households having had their water supplies disconnected. That represented a staggering 177 per cent. increase in the number of disconnections in just one year.

We also received last week a National Association of Citizens Advice Bureaux report giving graphic examples of the hardship that has been caused and of the cavalier attitude adopted by some water companies. The company in mid-Kent, in the constituency of the Secretary of State, disconnected a customer who was 80 per cent. disabled. The company then even refused to talk to the CAB representative about the problem.

The CAB in Berkshire reported on a water company that had gone so far as to seek possession of a tenant's home for arrears of £38.63. Yorkshire Water sent those behind with their bills incorrect information claiming that the DSS would make an allowance for those on benefit who were having difficulty paying their water bills. That statement was not true.

Disconnections on such a scale are not acceptable. I was informed—I checked the information—that 19 of 80 flats in a block of flats in Sandwell had their water disconnected last year. That is the scale of the problem. The Director General of Water Services has expressed concern about the issue. He should be concerned. So should the Secretary of State for Health. But it is not good enough simply to be concerned. The Government should be intervening to give protection to consumers facing such problems.

The water companies' licence should be amended to ensure that no one is disconnected unless they wilfully refuse to pay. Ministers should re-examine with a sense of urgency the arrangements for helping those on benefit, who receive inadequate assistance with their water bills at present.

All those problems for individuals and families must be viewed against the background of the water companies' financial performance. As the Minister of State, the hon. Member for Penrith and The Border (Mr. Maclean), acknowledged in Rio, this country is in a deep recession. One of the consequences of the recession has been the record number of business failures and the downturn in profits for so many previously successful companies. Indeed, only last week we heard that Pilkington's profits had halved and companies in every sector, from construction to motor manufacture, have suffered because of the recession.

However, that has not been the case for the water companies, which is not surprising, as each of them has a private monopoly of an essential service. Ministers always object to our quoting water company profits, which is not surprising either when one looks at those profits. Thames Water announced recently that its profits were up to £236 million and North West Water's profits stand at £230 million. But in some respects, I agree with the Minister.

Mr. Nick Hawkins (Blackpool, South)

Does not the hon. Lady accept that North West Water's investment programme for badly needed environmental improvements is substantial? It is therefore inappropriate for the hon. Lady to criticise North West Water when it is clearly doing much to improve water quality, particularly in my constituency, and to combat the serious problems that were caused over many years by lack of investment by the Labour party.

Mrs. Taylor

I suggest that the hon. Gentleman consult Blackpool landladies and ask them what they think of their water bills. If he is proud of the investment programme, he should look at the salary of the chairman of North West Water and the share option perks that he has received, for which consumers are paying.

I was going to say that I agree with the Minister that profits do not tell the whole story. We should also look at dividends and share prices and at how the water companies' performance compares with that of the stockmarket as a whole. In general, water share prices are 80 per cent. above their level at the time of flotation in December 1989. Dividends were 16£3 per cent. more than predicted in the flotation prospectus in the first year alone. Such a performance by the water companies should not surprise us. After all, the Government rigged the system so much in favour of the water companies at the time of privatisation that those results were inevitable.

Even City analysts accept that that is so. If the Minister and Conservative Members do not believe me, they may believe Credit Lyonnais Lang. In its assessment of the water companies, it says: we think that investors in water shares will earn a very high total return. But this high return will be because the taxpayer has sold the industry cheap". It was not the taxpayer but rather the Government who sold the industry cheap. When Ministers first talked about water privatisation, the expectation was that it would result in an increased income to the Exchequer of some £5 billion. Ultimately, water privatisation cost taxpayers £3.3 billion. That is the figure which we used and which the National Audit Office verified in its report this year.

The report of the National Audit Office also confirmed our suspicions about perks. If any local authority had misused the money for which it was responsible in the way that Ministers have misused taxpayers' money, it would have been, at best, surcharged, and its officials might well have ended up behind bars.

When the Government made their arrangements for the privatisation of the water industry, they did a deal with the industry's top management, giving them hundreds of thousands of pounds' worth of perks. Three chairmen of water companies have benefited from share options to the tune of £250,000. The lowest benefit available to a water chairman is £62,000, at a time when record numbers of consumers have had their supplies cut off. How can the Minister defend that?

Mr. James Molyneaux (Lagan Valley)

In her list of beneficiaries, does the hon. Lady include those in charge of the publicity for water services and regional boards? I recently wrote to the chairman of the Water Services Association and received a reply, not from him, but from an obscure publicity officer who clearly felt that I was about to trim his empire. Does the hon. Lady agree that the amount of junk mail arriving through our mail boxes, even this week, seems to have multiplied? It has now reached a level where every water board bombards us with completely useless and expensive literature.

Mrs. Taylor

The right hon. Gentleman makes a fair point. Individual water companies have bombarded us with information, most of it useless, and, as the right hon. Gentleman says, junk mail—misinformation. It is a sign of the water companies' weakness that they feel it imperative to defend themselves by going over the top and employing so many public relations companies.

At the time of privatisation, we warned what would follow, and we gain no satisfaction from being proved right, especially when the cost to so many people has been so great. However, the problem does not merely involve prices. We also warned that access to old water authority land would be restricted or charged for after that land had passed into private hands, without any compensation being given to the public to whom the land belonged. Both warnings have proved correct.

Yorkshire Water has restricted access to land such as Wessenden Head moor, where it has taken steps to block public access, at the insistence of its grouse-shooting tenants. Now, North West Water is drawing up plans for widespread charging. A document available from North West Water given to me at the weekend makes it clear that North West Water is planning a new charge structure for recreational activities on its land—from fell running to canoeing. It is even considering charging for birdwatching. The one decision that North West Water has made is that it will not charge for hunting, which shows whom it wants to keep in with.

Mr. Allan Rogers (Rhondda)

Is my hon. Friend aware that the Welsh water authority has gone into the hotel business in a big way and made huge investments in it? It has also bought 15 per cent. of South Wales Electricity, at a time when the number of Welsh Water customers being disconnected has reached record levels.

Mrs. Taylor

My hon. Friend is right. The record of diversified activity by the water companies is incredible. As he said, Welsh Water has invested in a chain of hotels. In addition, one water company has purchased a stake in a television franchise—so much for its priorities.

Mr. Roger Knapman (Stroud)

Can the hon. Lady confirm that in socialist France the private water companies are encouraged to diversify? So why would a socialist Government in this country think differently?

Mrs. Taylor

France has a completely different system of public accountability in the water industry. That is what is so clearly absent in this country since privatisation.

Accountability brings me to the position of the watchdogs established at the time of privatisation. I will come to the role of the Director General of Water Services in a moment, but first I want to discuss the drinking water inspectorate—a rather grand title for the 20-odd civil servants at the Department of the Environment who monitor the information about drinking water quality given to them by the companies themselves. The last report of the inspectorate revealed more than 32,000 incidents of contamination. Such incidents are bound to happen from time to time, although with modern techniques and fail-safe devices they should be infrequent and minor. They are not always so, however.

What does the drinking water inspectorate do when there is a major incident? During debates at about this time last year, I asked the Minister about the outbreak of cryptosporidium in Humberside between December 1989 and May 1990, when 477 people were infected. It was clearly caused by the decision of Yorkshire Water to bypass the slow sand filters at Barnby treatment plant. Those affected have still not had a proper response from the drinking water inspectorate. The Yorkshire customer services committee has been pressing the Minister for action. He has refused action: he will not tell us in parliamentary answers what he intends to do.

Section 54 of the Water Act 1989 empowers the drinking water inspectorate to recommend that a supplier in these circumstances be prosecuted. Will the Minister take this opportunity to tell us whether such a recommendation has been made by the inspectorate and what he is doing to look after the interests of the people who were affected by the outbreak in Humberside? Either the drinking water inspectorate is toothless or the Minister is gutless and will not take on the privatised water companies.

Privatisation has meant record bills, record hardship and record disconnections. Where do we go from here to obtain proper protection for consumers and to deal with the essential problems of resource management? The role of the regulator is crucial in all this. We have said from the start that he has a difficult task. First, he is asked to serve two masters, the shareholder and the consumer, when what we need is a clear voice for consumers.

The second difficulty facing the director general stems from the initial deal that the Government gave the water companies. It was so generous that it is difficult for the director general to plough it back. That Government deal set the framework for what has followed—the debt write-off, the green dowry and the assumptions about the financial regime of the water companies. I refer especially to the assumptions about the ratio of debt to equity, which were far too generous to the water companies. So desperate were the Government to be rid of this industry that they did a ridiculous deal with the companies, as the report of the National Audit Office shows.

The director general has rightly raised the issue of the cost of capital. He has issued a consultation document about that cost, which clearly shows that water company investment could be financed in other and cheaper ways. The director general says: There is no reason why investors in the water industry should be rewarded with returns in excess of those generally available in the finance markets. The Government's priority was privatisation, and not the easiest or the cheapest way to bring about some of the necessary improvements. Their priority was the triumph of privatisation dogma, even over common sense.

The financial regime of the water companies means that today's consumers are paying not only for underinvestment in the 1980s but for the assets that will benefit future generations. Those assets should be funded over a longer period and the Director General of Water Services should demand that the water companies invest more through borrowing and not at the immediate expense of today's bill payers. The director general recognises that and must pursue the matter. It would help consumers if the Government backed him.

Last year, the Director General of Water Services took some action on the windfall profits of the water industry, which were higher than they would otherwise have been because construction costs fell significantly. Unfortunately, consumers benefited from that action to only a limited extent. The estimated balance of savings on operating expenditure was £132 million. The director general negotiated a voluntary abatement with the water companies on their K factor of just £40 million. That left a big gap of £92 million, which was used to boost the return to shareholders. What is worse, the deal between Ofwat and the companies was struck in private and no one was able to ensure that the public interest was protected.

The Secretary of State should oblige the director general to give a full account of the way in which that clawback was calculated. After all, the Ofwat annual report stated: The regulation of an essential public utility can only be successful if it wins the trust and support of the public and the industry. The basis of this trust is transparency in decision making and the involvement of the general public and industry as far in possible in that decision making process. That public need to have confidence in the regulator, and such confidence does not exist. Part of the problem is that the Government have abdicated their responsibility and have opted out of treating water as a vital natural resource. They are treating it as a marketable commodity. Water is too important in individual and public health simply to be left to the market.

That brings me to my third area of concern, the resource management of water. The Government recently announced that they intend to issue a consultation paper on water conservation. Perhaps we shall hear more about that in the debate. That action is at best a bit late in the day. It would have been better if the Government had addressed such problems in the late 1980s rather than pursuing their obsession with privatisation. The fact that they intend to act is, I hope, an acknowledgement—albeit a tacit one—that they cannot leave everything to the market.

Yesterday, the National Rivers Authority announced that it was stepping in to tackle the problem caused by the water companies abstracting too much water from rivers and ground water sources. It is right for the NRA to be concerned about that, although it is strange that, while that action is being taken, some water companies are being allowed to supply water to owners of race tracks so that horses can have ideal conditions on which to practise. Golf courses are also receiving abundant supplies. The NRA was right to act, but it should not make decisions without a national strategy for water management and, without a Government lead, there cannot be such a strategy.

It is too easy for the NRA to make decisions affecting water companies' costs and for the companies then to apply to the regulator for cost pass through and for the customer to end up paying even more. That shows again the priority that ought to be given to someone who can speak up for consumers.

Water metering is the most obvious example of an apparent solution to water shortages which could create more problems than it overcomes. The case for metering on conservation grounds is not proven. Countries using metering generally have average higher consumption than Britain. Furthermore, increased water usage is often at the luxury end of the market—dishwashers, jacuzzis, garden sprinklers, and even swimming pools. Those who can afford such fixtures can probably afford to make an extra payment. At the other end of the spectrum, the impact of metering on large families and those who need extra water for medical reasons can be severe.

I read in the newspapers recently—perhaps I should not use the word "newspaper" in connection with The Sun, but similar reports appeared in other newspapers—that Ministers favour water metering. An unnamed Minister was quoted as justifying metering in this way: There is no excuse for draining the Lake District so that people in the south-east can fill their swimming pools and dishwashers. I do not know whether the Minister for the Environment and Countryside, whose constituency is adjacent to the Lake district, was responsible for that comment. It would be helpful if he would tell us.

We are told also that the director general favours metering, and from my own discussions with him I believe that that is the case. As a northerner, I am not in favour of draining the Lake district, but it is simplistic in the extreme to seek compulsory universal metering as the answer to water shortages. It would be very costly. Estimates vary, but it is put at about £2 billion, and it would create problems for many. Incidentally, I am concerned that the survey on the social impact of the metering trials has not yet been published. Perhaps the Minister can tell us more about that.

Metering has also been promoted with the argument that rateable values will not exist after the year 2000. I do not like the council tax, but it would be better than putting people on compulsory metering. It is strange that a Government who talk about choice should even consider compulsory metering and will not offer the consumer a choice between it and banded charging. The compulsory metering of new properties has already created many problems. My hon. Friend the Member for Blackburn (Mr. Straw) provides an example from his constituency. He has even given me photographs, but I cannot show those to the House. In one clearance area of Blackburn, the same type of new properties have been built on the same site by both the local authority and a housing association.

The local authority homes were completed first, and their tenants receive water bills according to the properties' rateable values—typically of £170 a year. At the other end of the Calder Bank development are to be found the housing association properties, which were completed slightly later. The average water charge to their occupiers is double that paid by local authority tenants.

Mr. George Howarth (Knowsley, North)

The figures given by my hon. Friend the Member for Blackburn (Mr. Straw), whose constituency is served by the same water authority as that which operates in my constituency, correspond almost precisely with figures currently being cited in respect of housing association properties in the Kirkby area. My hon. Friend's example is not unique, but is typical of the effect of water metering in the north-west.

Mrs. Taylor

It is not just North West Water that is creating such problems. They exist also in Yorkshire. Most water companies are stinging the owners of new properties. The experience of water metering generally is that it produces much higher bills and a great deal of hardship. I hope that before anyone goes headlong into promoting water metering, they will pause to consider the problems that it creates.

Sir Jim Spicer

Does the hon. Lady accept that for many people, especially elderly people living alone, water metering may seem an attractive option? She seems to have entirely written it off.

Mrs. Taylor

The hon. Gentleman has clearly not been listening. I was advocating choice. Those who want water meters should be allowed to opt for them; what I object to is compulsory metering by water companies for people who will gain no benefit and, indeed, will pay more.

Let me issue a word of warning to the hon. Gentleman. He should not mislead many elderly people living alone into thinking that their bills will be reduced automatically as a result of metering. Owing to the structure of payment, the standing charge is often so high that the total bill is substantial.

When we discuss water resources, we should bear in mind one of the industry's most significant problems, the easing of which would help to increase those resources. I refer to the problem of water leakage from the infrastructure. Figures from "Water Facts" show that, in 1990–91, leakage amounted to 29.3 per cent., or 97 litres per head per day. That far outweighs any likely saving from water metering and is of great concern to those who are currently subject to restrictions on water use.

Unfortunately, there is no incentive for the privatised water companies to decide, on the basis of common sense, to make leakage control a priority. That is no way in which to make decisions about our vital resources. The Government and the director general should insist that leakage is tackled, rather than pushing for compulsory water metering.

It is clear that water consumers face many problems, relating to both the level of charges and surety of supply. The Government should not sit back and leave the problems to the market: water is too important to each and every one of us. What is needed is proper public accountability, along with proper public decision making. It will be a sad look-out for every consumer if the Government turn their back on the problems.

4.47 pm

The Minister for the Environment and Countryside (Mr. David Maclean)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'congratulates the Government on its highly successful policy of privatising the water industry, which will lead to £28 thousand million investment on water and sewerage infrastructure, maintaining the quality of drinking water, improving rivers, and reducing discharges into the sea, thereby benefiting customers and the environment alike; and welcomes the action of the National Rivers Authority to safeguard the water environment and the role of the Director General of Water Services as the powerful independent regulator to provide effective protection for the interests of all the industry's customers.'

The House may fairly ask why we are debating the water industry today. We are debating it because the Opposition are in a muddle: they are devoid of a leader, and devoid of policy or direction. In such circumstances, the Opposition always fall back on their old instinct to attack industry, enterprise and other people's successes.

No doubt in due course the right hon. and learned Member for Monklands, East (Mr. Smith)—who has now left the Chamber—will initiate yet another policy review, commission a few more opinion polls, consult even more gurus in the shadow communications agency and conclude that Labour can win the next election only if it supports the free market economy and private investment and rejects the renationalisation of industry, including the water industry. Until that uncomfortable truth eventually dawns on Her Majesty's Opposition yet again, however, they will continue with their old prejudices—prejudices which they have aired in the Chamber today.

Mr. Knapman

Will my hon. Friend be fair to the Opposition, and pay tribute to the hon. Member for Derby, South (Mrs. Beckett)? Although the hon. Member for Dewsbury (Mrs. Taylor)—and, for that matter, the hon. Member for Carlisle (Mr. Martlew)—were keen for the industry to be renationalised, the hon. Member for Derby, South was doubtful whether the party would be able to afford it in the foreseeable future. Opposition Members are not entirely agreed about that.

Mr. Maclean

That is absolutely true. There is quite a bit of confusion about Labour's plans for renationalisation of the water industry. I note that we have not heard from the hon. Member for Dewsbury (Mrs. Taylor) exactly what was meant by taking the water industry into "public control", but I may touch on that later.

Mr. Richard Burden (Birmingham, Northfield)

How does the hon. Gentleman square his comment about renationalisation with the fact that, as far as I know, the only Government ever to nationalise the water industry were the Conservative Government, who did so in order to privatise it a couple of years later?

Mr. Maclean

That is rather too subtle even for an Opposition Member. It is clear that there was total confusion during the election campaign as the Leader of the Opposition said one thing, the hon. Member for Dagenham (Mr. Gould) said another and the hon. Member for Dewsbury said yet another. The truth did not emerge then, nor has it emerged today, but we may touch on it later.

The Opposition have chosen to debate the water industry today, not because they are concerned about the real water issues but because they can think of nothing better to do than indulge in some private enterprise bashing. What have they chosen to highlight? Is it the massive investment programme of £28,000 million? No, they pooh-pooh that. Is it the management of water resources and conservation—the most important long-term issue facing us? No, all we had was a little bit about that tacked on at the end of the hon. Lady's speech. Is it the drought in the south-east or the EC directives on drinking water quality and bathing beaches? No, none of those things, infinitely important though they are, appear in the Opposition motion today.

Instead, at a time when they want to distract attention from their internal squabbles and failings, they have fallen back on the old socialist certainties of knocking profits and dividends without having the nous to realise that there is no investment without profits, and without dividends there would be no shareholders to invest in the first place.

Mrs. Ann Taylor

I appreciate that the Minister is new to his Department and thus may not recall that the Opposition had a similar debate earlier this year, which proves that we are consistent in our concern about consumers and the environment. The Minister has attacked our motion, so do I take it from that that he is happy to defend the level of salaries, dividends and perks paid to water authority chairmen?

Mr. Maclean

I do not mind being patronised. I have broad enough shoulders to take it. I shall refer to the level of salaries later. The Opposition always complain that they do not have enough Supply days. This is only their second this Session and they have a paltry 25 Members present to launch their attack. [HON. MEMBERS: "How many do the Government have?"] This is an Opposition day. It is not a Government day. We are supposed to be on the back foot defending a major Opposition attack. That is the level to which the Opposition have sunk.

Mr. Clive Soley (Hammersmith)

Will the Minister give way?

Mr. Maclean

No, I want to continue a little further.

We shall address the real issues. The fact that the Opposition do not know what they are is a measure of just how confused they are on this as on other policies.

Mr. Soley

Will the Minister give way on the real issues?

Mr. Maclean

I will come to the real issues myself.

For many years the water industry was held back from doing what needed to be done by the fact that it was part of the public sector. Time and again, the amount that it could invest was subject to severe limits or even, as happened after 1976, to savage cuts. It is hardly surprising that serious backlogs developed.

The water industry could never compete with the national health service or education in public expenditure rounds.

Mr. George Howarth

Before the Minister broadens his argument so much that he loses sight of the arguments put by my hon. Friend the Member for Dewsbury (Mrs. Taylor), will he explain to me the justice in a new three-bedroomed housing association property in Southdene in my constituency being charged twice as much through a meter for its water as a three-bedroomed council house just over the road whose charge is fixed on the basis of its water rates?

Mr. Maclean

I shall not comment on individual cases in different water authorities. That is the job of Ofwat and its director general, who has a broad over-view of how metering may work and how water companies fix their charges. The hon. Gentleman falls into the standard Opposition trap of pretending to like independent regulatory agencies, but at the slightest excuse he wants Ministers and politicians to rig the system, to fiddle it, to pull strings. That we will not do.

The water industry has had severe under-investment over the past 20 or 30 years. Privatisation solved that problem. Transferring the water industry to the private sector has given the industry the freedom to invest and to manage its investment programme in the most efficient and economical way. Necessary investment no longer has to be put off because of more pressing public priorities. The programme will involve expenditure of £28,000 million at 1989–90 prices in the present decade.

There were many doubts about whether such an enormous increase in capital expenditure could be achieved so quickly. Last year it is estimated that expenditure increased by a further quarter to £3.1 billion, improving on the planned levels. That investment is more than double the total retained profits of all the companies put together.

Mrs. Ann Taylor

On the question of past investment, will the Minister accept the figures which have oft been quoted in the House that the average investment in the water industry under the last Labour Government was £1,254 million per year and the average investment pre-privatisation under the Conservative Government was £922 million per year? That is a fact.

On the cost of capital, will the Minister say clearly whether he accepts the statement of the Director General of Water Services about the balance between equity and debt? Does he accept the questions posed by the director general in his paper on the costs of capital, which showed that if the financial regime of the water companies were different, investment could be provided at a lower cost to consumers?

Mr. Maclean

The hon. Lady is always scrabbling around for statistics to try to justify the huge cuts that the last Labour Government had to make in their investment programme. She has to rake over history to try to justify their position. I accept that under all Governments investment in the water industry was not good enough, but at least we had the sense to recognise that only through privatisation could we achieve the massive level of investment that we require. The hon. Lady is now trying to suggest that if the water industry were restructured, there would be more investment. The hon. Lady's policy is to take public control of the water industry. I shall not take lessons from her on how to raise investment for a privatised water industry when it is her policy to take control of it.

Mr. D. N. Campbell-Savours (Workington)

Will the Minister give way?

Mr. Maclean

No, I want to make some progress.

I have said that our investment in the water industry has been £28,000 million. That is a magnificent achievement by any standards. It is an indication of the Opposition's lack of confidence in the subject matter for today's debate that they cannot acknowledge that, but simply try to pooh-pooh it.

Mr. Nicholls

I acknowledge everything that my hon. Friend has said so far. Will he reflect on a particular difficulty that has arisen in the west country? Because that area has far more coastline than any other water authority, about 2 per cent. of the population are supporting 10 per cent. of the nation's coastline. Does my hon. Friend agree that, although it is understandable that that consequence could not have been foreseen, now that water charges are to rise well in excess of 15 per cent. for the next five years and for the foreseeable future it will require a unique solution and may have to be dealt with by central funding? My hon. Friend is aware of the representations that I have made to our right hon. Friend the Minister. Can he comment on it?

Mr. Deputy Speaker (Mr. Michael Morris)

Order. That is far too long for an intervention.

Mr. Maclean

I understand my hon. Friend's concern because of the problems that have arisen in the west country. I hope that the Director General of Water Services will be able to look at this carefully when he reconsiders the K factor to see whether a unique solution can be found. However, although I accept that those circumstances are special, the west country is not unique. There are problems in other parts of the country. The Anglian Water area has the unique problem of high levels of nitrates in the water, and a considerable amount of investment needs to he made to remove those. In the north-west, cleaning up the Mersey basin requires billions of pounds of investment. That must be funded locally. Each area has particular, unique and special circumstances which require water charges to rise to pay for cleaning up the local environment.

I mentioned the magnificent investment records of the privatised water companies. The Government made that possible, but the private water companies and their managers have risen to the challenge. The Opposition are always telling us how much importance they attach to investment—although not today, of course—and especially investment to improve the infrastructure. The performance of the water industry stands comparison with the rest of the private sector, and with the best of the private sector.

The total investment being undertaken by the industry represents more than 50 per cent. of turnover, compared with large market leaders such as ICI, BP and RTZ, whose investment as a proportion of turnover is less than 10 per cent. If I remember rightly, the hon. Member for Dewsbury quoted Pilkington's, which has one of the better investment records—10.5 per cent.—yet the water industry invests more than 50 per cent. The Opposition seem quite unable to recognise a success story when they see one. They want to manipulate, to meddle and to rig controls which would prevent such essential investment.

Before the election, we heard much from the Opposition about an investment plan to kick-start the economy. My hon. Friends will remember the £1 billion that was to be the salvation of our industry. Let me tell the Opposition that the water companies invest that amount every four months.

I will give the House some examples of the projects now being built throughout this country. In the north-west, £100 million has been spent at the Davyhulme works in Manchester. That much-needed modernisation will bring improvements to the Mersey and Manchester ship canal.

Mr. Campbell-Savours

Will the Minister give way?

Mr. Maclean

I will give way to the hon. Gentleman from Cumbria at the end of this section. If he listens carefully he might hear some news about his area.

When the London ring main is completed, it will deliver 285 million gallons of water daily to 6 million people in London. It will replace inadequate water mains, which far too often have burst and disrupted traffic, and it will enable supplies to be switched, as necessary, between the Thames valley and the Lea Valley. When completed, it will have cost £250 million and be 50 miles long.

Thames Water is spending £450 million on treatment plants to improve the quality of drinking water. North West Water has already completed, or will shortly complete, five major plants in east Lancashire at Cowpe, Laneshaw, Mitchells House, Loveclough and Ashworth Moor near Rochdale.

In Cumbria, North West Water is spending £6 million this year on two projects that, in total, will cost more than £30 million to improve water quality at Barrow-in-Furness.

Across Yorkshire, water investment is proceeding apace to provide the improvements that customers are demanding. Yorkshire Water is spending £25 million on an incinerator in the Calder Valley to dispose of sewage sludge. It will have the lowest gas emission performance in Europe—the highest standards in Europe.

In the constituency of the hon. Member for Dewsbury and surrounding areas, Yorkshire Water is spending £71 million on water quality and £35 million on security of supply. In addition to the Calder Valley incinerator, Yorkshire is spending more than £50 million on improving sewage treatment standards. It has entered into a contract with ICI to treat effluent through ICI's Huddersfield works. That is a substantial investment for a small part of Yorkshire Water's operational area.

Mr. Campbell-Savours

The Minister was pressed by my hon. Friend the Member for Dewsbury (Mrs. Taylor) on the need to borrow money to fund all these commendable projects, which we support because we welcome this investment. Why do not the water companies borrow more money as against raising it from consumers, who in these difficult times cannot pay the increases? Why do not they simply borrow more on the markets, as normal business men do?

Mr. Maclean

Once again, the hon. Gentleman betrays the Opposition's irresistible desire for politicians to tell companies how to operate. He asks why we do not tell the water companies how to raise their finances.

Mr. Campbell-Savours

I only asked.

Mr. Maclean

And I have given him the answer—they must judge how to fund their investment. They can borrow if they wish. Our water industry's investment programme is second to none, and it must be funded. I regard it as perfectly acceptable that consumers should pay a major share of that investment.

Mrs. Ann Taylor

Does the Minister have an opinion on the document issued by the Director General of Water Services on the cost of capital?

Mr. Maclean

I have opinions on many documents, including those issued by the Opposition. The point is that we have set up independent and tough regulatory machinery. I am not in the business of second-guessing or criticising our regulators.

I give another example—

Mr. John Marshall

My hon. Friend mentioned the London water ring main being built by Thames Water. Will he join me in congratulating Thames Water on the fact that the project is ahead of schedule?

Mr. Maclean

I should be delighted to do so, but my hon. Friend should not assume that that is a unique achievement—many of the investments by water companies are ahead of schedule. They are pressing on apace, and I look forward to being present at the opening of many more sewage and water treatment works and watching investment take place for the benefit of the consumer.

Mrs. Alice Mahon (Halifax)

rose—

Mr. Soley

rose—

Mr. Maclean

I must make some progress. I have have already given way many times.

My hon. Friend the Member for Hendon, South (Mr. Marshall) mentioned Thames Water's investment. Thames Water is investing nearly £400 million a year, and there are a considerable number of other investments across the country which I do not have time to mention now.

Mrs. Mahon

On a point of order, Mr. Deputy Speaker. Is not it a custom of the House that when a Minister mentions one's constituency, he usually has the courtesy to give way? The Minister mentioned the Calder Valley and Calderdale, and Halifax is right in the middle.

Mr. Deputy Speaker

That is not a point of order for the Chair.

Mr. Maclean

I thought that I had been very generous in giving way. I gave way four times to the hon. Member for Dewsbury (Mrs. Taylor), although I did not intervene in her speech.

My hon. Friends will want to know how British contractors and British plant manufacturers are benefiting from the investment. It is all very well to quote the figure of £28,000 million but it represents work being done by our constituents across the country and investment by British firms.

The National Economic Development Committee for the construction industry made a special analysis of the situation and confirmed that British contractors and plant manufacturers have benefited considerably from the programme. For example, John Brown Engineering, Trafalgar House Construction and John Laing are benefiting and playing their part in the provision of new infrastructure. I should like to know how many tens of thousands of jobs are dependent on those construction projects, the ones that the Opposition are pooh-poohing. What is the £28,000 million being spent on?

Mr. Campbell-Savours

How wonderful.

Mr. Maclean

If the hon. Gentleman thinks that it is wonderful, he should tell the hon. Member for Dewsbury so that she can praise it occasionally.

What is the money being spent on? What benefits is it bringing to customers and consumers? In the years to 1995, forecast expenditure in the water industry will be £17.2 billion. Better treatment of drinking water accounts for £2.5 billion of that money. That accords directly with the priorities of customers. In the recently published survey carried out by MORI for the Office of Water Services, 98 per cent. of customers thought it essential or very important that tap water should be safe to drink.

Mrs. Mahon

Will the Minister give way?

Mr. Maclean

That is what the money is being spent on. A further £3.9 billion is to modernise and renovate water distribution systems. There is no point in sending out clean water from the treatment works unless it reaches the customer through clean pipes. Renovation also reduces leakage. New water resources and other works will account for another £1.8 billion.

An even greater proportion of the programme—£9 billion—is accounted for by renovation and repair of the sewerage system. That includes £2.4 billion for building new sewage treatment works and for improving existing ones.

Mrs. Mahon

Will the Minister give way?

Mr. Maclean

No.

Mr. Soley

Will the Minister give way?

Mr. Maclean

I give way to the hon. Gentleman.

Mr. Soley

The Minister has been generous in giving way and I am grateful. The debate should be about the quality of service as we are talking about a monopoly supplier. What troubles us is the issue of sewerage and I will give an example from my constituency. In my constituency, pipes apparently come near the surface and cause backflows in heavy storms such as we have had recently. There are at least half a dozen houses in which the basements have been flooded with sewage, one on three occasions. This is why they trouble the Minister on the issue. Why is the answer from Thames Water that it cannot even provide help-line advice? It says that it can provide no compensation, that it cannot pump out the sewage, and that it cannot do anything. If British Gas were involved, one could get something done.

I have constituents who are literally ankle deep in sewage in their living rooms because the pipes are too near the surface. All they have been told is that they should ensure that they insure against such an event in future. Will the Minister give the House a commitment that he will check with all water authorities to ensure—

Mr. Deputy Speaker

Order. This intervention is too long. I make a plea to the House. Many hon. Members want to contribute. Interventions are acceptable, but they should be short.

Mr. Maclean

The hon. Gentleman raises a good point which goes to the heart of the investment programme about which we are talking. There is a huge backlog of work which needs to be carried out on sewerage systems throughout the country. Thames no doubt has its priorities. Providing the London ring main for fresh water is one of the top priorities. I cannot give the hon. Gentleman an assurance because I should not want to interfere or to direct Thames into priorities that I as a politician would impose. Thames must service its customers and that is what Ofwat is there to ensure. I hope that as it clears the backlog of its major works and priorities, Thames will be able to direct attention to other important problems.

I am not surprised that we need to spend an enormous amount on sewerage and sewage treatment. The amount is substantially more than needs to be spent on water supply. Vital though it is, sewerage has been an invisible and unappreciated service—unless and until something goes drastically wrong. As a more responsible attitude to the environment develops and spreads, the old attitudes are changing. In the MORI survey, 88 per cent. of customers said that it was essential or very important to have sewage treatment to EC standards.

I emphasise that much of the expenditure is needed so that the United Kingdom can comply with EC legislation, and rightly so. By 1995, £2 billion will have been spent by water companies to achieve compliance with the standards in the EC drinking water directive. We have accelerated our programme to achieve compliance with the bathing water directive and to bring the great majority of bathing beaches into compliance by 1995. The total cost in England and Wales until 1998 will be £2 billion.

In this area, as in all others, improvements must be paid for. The Opposition always seem to fail to grasp that point. They want control of the water companies—

Mrs. Mahon

Will the Minister give way?

Mr. Maclean

I want to make this point. The Opposition want control of the water companies. They would either buy them back at the market cost of £8 billion or they would carry out the sinister threat of the hon. Member for Dagenham, who said: A Labour Government would take action to regulate the water industry which would reduce the profitability of the privatised water companies and, therefore, would be likely to depress the share price.

Another option trailed by the Opposition is to "take control", without spelling out what that means. We have not heard a single word from the Opposition today about what they mean by "taking control" or "taking over" the companies. Whether that distorted thinking prevails, or the hon. Lady's, at election time, the Government, in either scenario, would have to find the £28 billion for investment and Labour Members are now telling us that they hate the thought of the PSBR rising. The £28 billion investment programme is the equivalent of £130 a year for every household in England and Wales, which is more than £67 million per day, or more than £5,000 per minute of every day, for 10 years. In the time that the hon. Member for Dewsbury was speaking, the water companies invested £235,000.

The water companies need to make profits to finance that programme. The Director General of Water Services, Ian Byatt, recognised that when he published his annual report in June. He said: Many customers criticise the profits made by water companies … It is important that the companies should be profitable otherwise investors will not provide the funds essential for the completion of the £28 billion investment programme. Our surveys show that customers want safe, clean drinking water and clean rivers and beaches. Over 70 per cent. of these profits are reinvested in the water business to achieve this.

The Opposition have again ignored that point today, concentrating instead on bosses, salaries, no doubt believing there are votes to be gained in the process. We have always made it clear that salaries are a matter for the shareholders and that the best people are needed to manage that huge investment programme, but that companies cannot expect the workers to exercise restraint unless management does so likewise.

Before the Opposition get totally hooked on knocking the water companies, they should remember that more than 50 per cent. of water workers own shares and benefit from the enterprise they work in. Total investment last year is estimated to have been twice the companies' pre-tax profits. That is an exceptionally high proportion by any standard.

Mrs. Mahon

Will the hon. Gentleman give way?

Mr. Maclean

I want to make progress. I have been generous in giving way.

If the hon. Member for Dewsbury does not want water companies to make and spend those profits, which elements of the investment programme does she want to sacrifice? Does she want raw sewage to go into the sea? Does she want us to continue to dump sewage sludge at sea? If she wants to freeze water bills and profits, what schemes would she cancel—which of the 595 on-going projects in South West Water area, which of Anglian Water's 210 sewage works that are being improved? How about the Severn Trent £20 million scheme at Stoke Bardolph, which is an investment of £40 for every adult and child in the Nottingham area?

Perhaps she would have stopped the £30 million refurbishment of the Knostrop sewage works in Leeds—[HON. MEMBERS: "No."] I am grateful to the Opposition. They do not want to cancel any of those things. Of course not. The hon. Member for Dewsbury is always berating us for not doing things faster. The Opposition seem incapable of grasping the confusion and contradiction of their position. Without those necessary profits, there would be no investment in the first place.

Benefits have to be paid for, but the hon. Member for Dewsbury begrudges the margin needed to attract the necessary funds, which would have to be found from the consumer to raise the funds, if it were a public sector investment, as she wants, and if the water companies were taken into public ownership.

Of course water charges are increasing in order to pay for that investment. Charges are planned to increase by 63 per cent. in real terms by the end of the century, because that is the only way to pay for the improvements that the public have clearly said that they want and expect. There is no secret about the increase—it was set out clearly in the prospectus issued for privatisation—but the figures are not carved in stone. They are liable to change if the relevant circumstances change.

The House should remember that when we are considering proposals for further environmental improvements, and new European Community environmental legislation, we must not fall into the trap of thinking that every possible environmental improvement is costless of, at least, easily afforded. Sooner or later, hard choices will have to be made. We are certainly not making light or the increases that are necessary in water charges or the difficulties they may, perhaps, cause for a small minority of customers.

The fact that water charges are increasing may well have contributed to the increase in complaints about water companies received by the director general, and, possibly, to the rise in disconnections of customers, which he has reported. [Interruption.] I shall come to that matter later.

Bills must, of course, be paid. The power of companies to disconnect customers must remain as a legitimate last resort to deal with those who do not pay their bills. It would be entirely wrong that people who pay should have to subsidise those who do not. In fact, a substantial proportion of customers disconnected, almost three quarters, are reconnected within 48 hours because the bill has subsequently been paid or arrangements made for the arrears to be paid by instalments. Almost 10 per cent. of disconnections are made to households that have "gone away" leaving unpaid debts for others to pick up. For the small minority, who have genuine difficulty in paying, the director general is encouraging companies to review and improve their procedures to ensure that every possible assistance is provided.

It is hardly surprising that the number of complaints to Ofwat should have increased because this is the first time that the water industry's customers have had an independent regulator to whom to complain. He has set out deliberately to ensure that customers know that they can refer their complaints to him and that they can be sure that they will be listened to. We have published a citizens charter, which encourages them to expect and demand higher standards of service. We are proud of that. Consumers are taking advantage of that opportunity. The complaints naturally cover a whole range of matters, but about 63 per cent. of them are about charges or billing.

The same MORI survey for Ofwat shows that 80 per cent. of customers are satisfied with the overall service that they received. I am certain that companies want that percentage to be higher and will take steps to achieve that.

Yet another success of the system we introduced in 1989 is the framework of independent regulation of the industry. We saw that at work yesterday. The National Rivers Authority—NRA—is exerting its influence, and, if necessary, its authority, to protect rivers from excessive abstraction. The water companies—indeed, ultimately the water consumers concerned—may find that painful.

Mr. Michael Ancram (Devizes)

I am grateful to my hon. Friend for being more generous in giving way than the hon. Member for Dewsbury (Mrs. Taylor) was when I tried to intervene in her speech. Does my hon. Friend accept that many Conservative hon. Members accept that the preservation of river environments is an important part of water usage and that we very much welcome yesterday's statement? I do not know what influence my hon. Friend has over the chairman of the NRA, but will he ask him to extend his review of rivers to include the River Kennet in my constituency? At present, it is at severe risk, but it is not included in the present list.

Mr. Maclean

I am sure that the chairman of the NRA will want to read this debate carefully. By the action that the NRA took yesterday, it has shown that it is a good independent regulator which can take the necessary action without any prodding, prompting or kicking from me or any other politician. We should leave such action to the good sense and judgment of the independent regulators. No doubt my hon. Friend will draw his concern to the chairman's attention.

Equally, the Director General of Water Services is a tough and independent regulator of prices. His influence has been seen in the way in which most companies have chosen to contain their price increases below their permitted K factors. It has been seen also in his proposals for reducing the allowance for the cost of capital. He has not hesitated to ensure that the water consumer is not disadvantaged by diversification by the parent companies. He has not hesitated to criticise where necessary. I am sure he will do so again—for example, when he publishes, in July, his overall review of the companies' annual results.

Opposition Members seem incapable of accepting that the framework is working as we intended. They want us to dictate to the independent regulators how to do their jobs. They cannot resist reverting to the failed policy of Government interference.

Several Hon. Members

rose—

Mr. Maclean

I agree with the hon. Member for Dewsbury that water is an important national resource. In our climate, people tend to think that there is rather a lot of it and that it should be delivered free. The truth is that some parts of the country are very short of it. It costs a lot to deliver to EC standards, and even more to treat the sewage that we do not all like to think or talk about. All the water delivered to our homes is of drinking water standard, but only 2 per cent. is used for drinking, and each year our annual consumption of water increases by 1 per cent.

The Government take the view that we need a proper debate about the long-term management of our water resources. So we shall shortly issue a consultation paper which will look at the merits of water conservation and discuss options for the management, custody, distribution and use of our water resources. I want to see a wide range of responses, not just from those areas short of water but also from areas which are perceived as having plenty of it. The Government will then consider action in the light of those responses.

Mrs. Mahon

rose—

Mr. Maclean

I do not know where the hon. Member for Dewsbury gets the idea that the Government are backing compulsory metering. It is one option which will be considered in the consultation paper. The hon. Lady should not jump to hasty conclusions.

Because of the unavoidable increase in charges, the customers, the consumers, of a privatised water industry are benefiting from an unprecedented investment programme to raise standards of service and improve environmental quality.

Several Hon. Members

rose—

Mr. Maclean

I have been generous in giving way to Opposition Members. I must make progress.

Mrs. Mahon

Will the Minister give way?

Mr. Maclean

No, I am sorry. Having given way generously to Opposition Members, I have tried to restore the balance by giving way occasionally to my hon. Friends.

We have seen an unprecedented investment programme which has raised standards of service and improved environmental quality.

That investment is being managed by companies which, because they are subject to private sector discipline, are achieving progressively greater levels of efficiency and, therefore, economy. They are protected for the first time by powerful independent regulators in the form of Ofwat, the National Rivers Authority, and the drinking water inspectorate.

The hon. Member for Dewsbury fails to understand the concept of the drinking water inspectorate, which performs an audit inspection task of the water companies. I shall not prejudice its decision on the cryptosporidium case. It is a complex issue and any prosecution that it might wish to take would need to be very well founded indeed.

Water services in Britain are among the best in Europe, but water charges in Britain are among the lowest. They average only 46p per household per day for the combined cost of water supply and sewerage. That is the price paid by an average family of two adults and two children for the delivery of nearly 1,000 pints of water and taking away the same quantity of sewage. It is substantially less than the French, the Germans or the Italians have to pay for their water services. It is a penny a day more expensive than The Times or The Daily Telegraph but less than the cost of a cup of coffee outside this place. I reckon that that is a magnificent bargain, and as the benefits of privatisation are fully realised, it will become an even better bargain.

In the two months since their election defeat, Opposition Members have clearly not learnt from their mistakes. Their internal analysis document of their defeat said that Labour was seen as a party of the past with a set of negative and off-putting associations and too much baggage from the late 70s and early 80s to persuade people that they can really trust us".

In this debate, where they picked a subject to deflect attention from their present failings, they have merely highlighted their prejudices, which are deeply rooted in the past. They are still saddled with the renationalisation baggage that their union masters will not let them jettison, and they have shown why they still cannot be trusted. I commend the Government amendment to the House.

5.29 pm

Mr. Jimmy Wray (Glasgow, Provan)

I am disappointed in the Minister because he would not give way to my hon. Friend the Member for Halifax (Mrs. Mahon).

Several organisations have asked me to speak in this debate, but it would be unfair of me not to look at the position in England and Wales. I listened carefully to the Minister when he spoke about privatisation and who the shareholders were. He said that 50 per cent. of the shareholders were workers in the industry but he did not say how many shares the workers had compared to managers and directors. That matter was a scandal and a national disgrace. Indeed, the privatisation of the water industry was the sale of the century.

I remember when we were debating the matter in the House in 1988. The Government sold the public assets of this country, worth £27 billion, and 435,000 acres of prime land. They sold land and property worth some £3 billion and made a profit of some £745 million. Various organisations warned us about that. My hon. Friend the Member for Dewsbury (Mrs. Taylor) mentioned one of those organisations—the Central Council of Physical Recreation, which warned us about section 7 of the Act referring to relevant bodies. The relevant bodies turned a blind eye to the Central Council of Physical Recreation, which had been in operation for some 40 years. The relevant bodies defined in the Act include the National Rivers Authority, the water undertaker and the sewage undertaker. Section 7 has eroded the protection of access rights for the public since privatisation.

I was worried when the Government told us about French interest in British water supplies. Three French companies were interested in water and its treatment—Lyonnais, Generale and Saur—and that interest was shown for the first time in the deal between Trafalgar House and Saur. Three months after Saur and Trafalgar House had entered into a deal, the business was sold on to Generale at a vast profit.

The Council for the Protection of Rural England is still worried about the selling off of the Welsh valleys by private developers, who will rape the unspoiled landscape and sell it for a profit. That is what it is all about.

The high water charges are a national disgrace. The Minister has the nerve to stand at the Dispatch Box and tell us that this is about purifying water. Profits in 1988 were £745 million. In 1991–92, they are £1.5 billion. What an increase. By 1992–93, water companies are expected to show bumper profits of some £1.65 billion.

Mrs. Mahon

I thank my hon. Friend for giving way. He shows much more gallantry than the Minister. I shall help my hon. Friend, because 1 was trying to be helpful to the Minister when he was talking about the price of water. Those paying for the increased profits are people on benefits. I looked into the matter today and found that, in my constituency, people on income support, receiving as little as £66.60 a week, were paying more than £3 a week out of that benefit for water.

There have been massive increases in charges since privatisation and the Minister should be aware of the percentage of people's benefits being paid for water. I shall put my findings on the board for him. Those people are the real payers for the profits in the privatised industry.

Mr. Wray

I am grateful to my hon. Friend, and glad that she has been able to make that point.

The Government have deceived the Scottish electors. During the general election campaign Conservative Members spoke of the privatisation of the Northern Ireland water industry, but did not mention the privatisation of the Scottish water industry. We know what there have been meetings between the Scottish Office and Ofwat about the possibility of privatising the nine regional and three island water authorities in Scotland by setting up six water companies, which will be hived off to private enterprise. Why has that plan not been discussed with us?

Why has there been no mention of the meeting proposed in the near future between Scottish Office officials and financial analysts from NatWest? The Government mentioned nothing about that—indeed, they denied it in the Scottish press. The Scottish Office said that it had no plans to do so, but it is on record as planning to have such a meeting.

I have read the report produced by Strathclyde water committee three years ago that stated clearly that, if the waters of Scotland were to be privatised, £4 billion would first have to be invested in Scottish water to meet European Community standards. Strathclyde, one of the biggest regional water authorities, is on record as saying that it would have to spend £800 million over the next 15 years to bring its water up to EC standards.

The Transport and General Workers Union, the GMB, the Labour party, the nationalists and the Scottish people are all against privatisation of water. One reason we are against it is the number of disconnections that have taken place in England and Wales, where last year there were 21,000 disconnections, compared with 7,673 in 1990–91. How does that tally with what the Minister has to say? Complaints have increased to 10,635—a 130 per cent. increase. I would not be happy with such an increase if I had set up a water authority consumer protection service.

We are worried about water metering; we do not want the very food of life to be cut off from the people we represent—people whose only fault is poverty. It is a cardinal sin for water or electricity supplies to be cut off.

One of the major worries in Scotland involves the Greater Glasgow health board, which is now putting forward plans to regional authorities on the fluoridation of public water supplies. We are worried because we thought that the local authorities hired directors of water to treat water to make it wholesome, not to treat the people who drink the water. In 1975, we took the case to the Court of Session on moral, medical and legal grounds, and won. The matter was ruled ultra vires, and the Government had to introduce an Act to give permission to local authorities to fluoridate and mass-medicate the nation.

Mr. John Marshall

Will the hon. Gentleman give way?

Mr. Wray

Once I have finished my speech, I shall give way.

We believe that fluoridation takes away the fundamental right of freedom of choice in medical matters. We have often asked the Government to state whether fluoridating public water supplies comes within the terms of medicinal products as defined by the Medicines Act 1968. Section 130 of that Act clearly states that any substance mixed with an element and administered to an animal or human being to prevent disease is a medicine—the disease in that case being dental caries. So fluoride in this case would constitute a medicinal product, and before a local authority could give its permission to put fluoride in the water the proposal would have to be passed by the Committee on the Safety of Medicines.

Under the Sale of Food (Weights and Measures) Act 1926, mixing fluorides with foodstuffs is prohibited. Incidentally, fluoride is a poisonous byproduct of an aluminium smelter's waste. When it enters the water, it does not become fluoride; it becomes acid. It then goes directly into the body, where I am told it is attracted to calcium and teeth. I did not invent the diseases with which fluoridation of water is associated—chronic fluoride poisoning and skeletal and dental fluorosis. Not being a medical man myself, I am worried by the differing views that we have heard on this subject in recent years.

I should like to repeal the Water (Fluoridation) Act 1985 if I ever have the chance to introduce a Bill. That would certainly be one of my priorities.

I hope that, after examining the privatisations of all our national resources, a Labour Government would take them all back into public ownership, to ensure that we take profits from the very few and distribute them to the many.

5.42 pm

Sir Giles Shaw (Pudsey)

I commence by declaring an interest, as a non-executive director of a water company. It is high time we had the opportunity to discuss this industry. The fact that it has been attacked by the Labour party for being successful probably denotes an accolade for the industry. If so, that proves that we have come of age in two years—not an unreasonable track record.

The House will forgive me if I do not follow the hon. Member for Glasgow, Provan (Mr. Wray) and his analysis of the problems, as he sees them, in Scotland. I shall confine myself to the main issues related to the industry today.

I was disappointed that the hon. Member for Dewsbury (Mrs. Taylor)—perhaps typically—designed such an oddly worded motion. It talks of being "alarmed" at the record profits, record dividends and record salaries in the industry. I do not see why that should be a cause of alarm to the hon. Lady. She has always been extremely anxious that improvements should be carried out quickly, and that as many innovations as possible should be effected in the industry.

She was one of the first to say that there should be no derogation for sewerage systems in Yorkshire. She said that they should all meet the required standards by the due date. She was one of the first to welcome new European directives and to demand that they be instantly absorbed in our water industry. She would be the first to recognise that a huge onus has been laid on the industry since privatisation to deliver change as quickly as possible. That is why there is record investment leading to record levels of improvement. Record levels of improvement mean record levels of customer satisfaction.

Mrs. Ann Taylor

The hon. Gentleman mentioned his role with Yorkshire Water. Is he prepared to comment, where the Minister was not, about the director general's suggestion in the cost-of-capital paper? What is his view on restructuring the investment programme?

Sir Giles Shaw

I shall not give that view today, but I agree that all companies will have to adopt a considered approach to a review of capital investment. I remind the hon. Lady and the hon. Member for Workington (Mr. Campbell-Savours), who did not appear to recognise the fact, that, quite apart from capital investment out of profit, there is investment through large borrowings. Some £1.5 billion profit in the industry in 1991–92 contributed to an investment of £3 billion during that year. On average, 70 per cent. of profits are ploughed back into investment.

It is not correct for the hon. Lady or the hon. Member for Workington to assume that the consumer is carrying the load for capital investment. Consumers make a contribution to profit, a significant amount of which is invested. Every company must ensure its credit-worthiness, and the share price of a private utility reflects the company's worth, enabling it to engage in low-cost borrowing. Every board must review borrowing year by year and event by event, because it must meet its costs.

The Minister gave an admirable tour d'horizon of the way in which the industry is coping. I emphasise the speed with which the industry has to move. People say that borrowing can be spread over a long time, but the industry must meet deadlines for the implementation of entirely new standards for water quality, and that requires an enormous effort in a short time. Yorkshire Water has about 4,500 employees and it is therefore not huge in terms of manpower, but it is a high-quality company and needs significant resources in technical and qualified manpower to deal with contracting and sub-contracting, and must acquire the necessary talent speedily to develop the investment processes.

The privatisation programme was about the only way to develop the nation's assets above ground and subsequently below ground. Those are entirely different phases. Most companies are currently investing in above ground assets, such as sewerage works, reservoirs and treatment plants. However, as the Minister said, another great tranche of investment will be required for the review of underground assets, and I suspect that it will be beyond the £28 million programme of which he spoke. All those programmes must be skilfully managed to time, and above all to cost, and the water companies have shown themselves capable of achieving highly desirable results.

Since privatisation, there has been a real shift in price, and I entirely accept Opposition suggestions that that has brought hardship to some people. However, as the Minister said, the absolute price for water of 46p per household is not high. We and our fathers inherited the belief that water was not only a natural resource but was free and that delivery costs were absorbed by other commodities. The old domestic rating system was undoubtedly the vehicle for that, because it contained the water rate, which was not easy for the householder to determine. The rate element for sewerage has always been much higher than that for water.

We have a major task in taking the public with us while maintaining speed of development. We must ensure that the quality of service is satisfactory and appreciated and that people understand the necessity for the investment that has led to higher charges.

Mr. Derek Enright (Hemsworth)

Can the hon. Gentleman explain the unfairness imposed by the very board on which he serves, whereby a single-person household has to pay three times as much as a neighbouring one comprising a family of six? That arises from the disgraceful way in which Yorkshire Water meters water. Does not that go against all the tenets of the hon. Gentleman's forefathers and foremothers, who provided water at an affordable price because they knew that it was good for the public's health?

Sir Giles Shaw

I accept the hon. Gentleman's conclusion that the public will ultimately have to accept that water is good value for money. In terms of the method of payment, obviously a range of alternatives is available. There is some metering, but the majority of domestic bills are still based on the old rateable values formula, which gives rise to much more grief than metering would in respect of the single owner-occupier.

I am sure that a correct method of charging will eventually be found, and that, after the immense rush of capital investment that has been made for the reasons that I gave, the price of water will stabilise at a level that is bound to be acceptable to the public.

The question of debt and disconnection was raised by the hon. Member for Dewsbury, as well as implied by the hon. Member for Hemsworth (Mr. Enright). Yorkshire has an Ofwat of its own, which states: We continue to be concerned at the numbers of people who experience difficulty in the paying of their water and sewerage bills … The number of domestic premises suffering disconnection in the region has continued to rise to a total of 1,931 in the year ending 30 September 1991. We have monitored the systems employed by the Yorkshire company and by Yorkshire Water before disconnection occurs, and are satisfied that the code of practice is being correctly applied. Disconnection is a threat and a last resort. As the hon. Lady said, court action is involved—but that is prior to disconnection, as part of the process of ensuring that it does not occur without proper statutory backing. It is not necessarily something that stands in its own right.

Water prices are rising faster than inflation because the rate of capital expenditure is passing through an extremely rapid phase.

Mrs. Mahon

Does the hon. Gentleman agree that people on low incomes—£66 per week if they are a couple on income support, or £86 per week if they are a pensioner couple—suffer disproportionately because of rapidly rising water prices? They receive no rebate, and so pay a disproportionately high price.

Also, coming as I do from a local authority background, I find it difficult—

Mr. Deputy Speaker

Order. The hon. Lady should confine her intervention to one question. She asked one very fair question, but she cannot have two bites of the cherry.

Sir Giles Shaw

I accept the hon. Lady's point about the difficulty of making up the payments. There is a strong case for ensuring that water is encompassed by the benefits system in the same way as electricity and gas. I have strongly argued with the Department of Social Security that that should be so. Water is an essential service, as is power, heat, and light. The hon. Lady makes an important point, and I would certainly support efforts to win DSS recognition of it.

The scale of investment is high in national terms, and also in relation to Yorkshire Water. We are currently spending about £2.5 billion, and that figure is likely to increase by the end of the year, and by another £1 billion or so before the end of the current capital programme is reached. The capital programme is therefore roughly two thirds the size of the company's entire annual turnover. That is a substantial amount for a company to find.

Mr. Martlew

Surely Yorkshire Water is one of the authorities that cannot supply consumers with the water they require. Yorkshire has water shortages. What is Yorkshire Water doing about that?

Sir Giles Shaw

Fortunately, the management of Yorkshire's water resources is not a matter for me; I am a non-executive director. As the hon. Gentleman probably knows, the problem occurs in the Hull aquifers, and the present climate has caused a reduction in the water-bearing rock. The Yorkshire grid, however, transfers resources from most parts of the county to where they are needed, and water is currently being extracted from the River Derwent and sent to Hull.

Despite four years of exceptional weather of one kind or another, most parts of the country have succeeded in managing water resources. In the past, there has been insufficient investment in collection and storage, and probably insufficient examination of methods of moving water from one area to another. Such examination is needed now.

There is also the question of leakage of resources. I accept that there is an onus on the industry to reduce the amount of water that is wasted from the pipework, preferably to an insignificant level. Underground renovation on a huge scale will be needed, as the hon. Member for Dewsbury will appreciate; that will be part of the next phase of major capital investment.

Some companies have already managed to reduce leakage, however. Anglian Water, for example, has achieved a reduction from 22 per cent. to 18 per cent., and Thames Water a reduction from 25 per cent. to 18 per cent. That shows that the problem can be corrected, and I hope that it will be; but we should also recognise that a large proportion of leakage may occur on domestic customers' own premises, where ancient pipework is now porous.

Obviously, the regulator will determine the way in which the industry progresses. A review of the regulating formula is currently under discussion, and I have little doubt that debates such as this represent an element of the evidence that he will seek in relation to both prices and allowances. It is clear, however, that most companies have been able to make progress without applying the full increase allowed by the regulator, and that should be recognised as a mark in their favour.

The fact remains that the industry is in the early stages of renewing the nation's assets for the distribution, consumption and treatment of probably the most important substance that mankind can have. We should appreciate that we are blessed with an extremely high quality of water for household use—much of it not for drinking, but able to be put to the many other domestic uses that are possible in the modern dwelling. We have a world resource, and we have world standards of conservation to observe. Only a high-quality, profitable and well-managed industry can deliver that resource to our people.

5.58 pm

Mr. Paul Tyler (North Cornwall)

The core of the debate is the difficulty—nay, impossibility—of introducing any element of competition into a natural monopoly. I am disappointed to see not just that there are comparatively few Conservative Members but that they are not dressed in sackcloth and ashes for what surely must be the privatisation programme's one huge failure.

It must be apparent at the outset that the legislation has failed to distinguish between a natural monopoly and one that can be mitigated by competition. That was why I and my hon. Friends tabled an amendment which, sadly, has not been selected, relating to the organ grinder, the Minister, rather than the monkey, the director general.

In the 1989 legislation it was impossible to introduce a positive commitment to competition and the use of market mechanisms. Instead, it simply followed the Thatcherite path of negative opposition to public ownership of a public utility. Had the Government taken on board the rhetoric of competition and produced some realistic solution, we might not be having this debate. Instead, they were more concerned with selling off the family silver than providing effective consumer control.

Sadly, we cannot start again and it is already apparent from the contribution from Opposition Members this afternoon that although some now wish to do a U-turn, or perhaps a U-bend, there are others who wish to find some form of renationalisation, however prohibitive the cost.

We must now consider how some element of competition or, in default of competition, some form of effective regulation on behalf of the public interest, can be introduced into what otherwise will inevitably continue to be a monopoly.

Surely we can learn some lessons from the other regulators. Ofgas has referred the gas industry to the Monopolies and Mergers Commission, but there has been no such reference, except on a minor issue, in the water industry. That might be a route to be explored. The Minister might wish to consider that.

Oftel has had some success in introducing an overall price cap and, perhaps even more important, in disaggregating the basket of charges and costs, looking at them individually. That would be a major benefit if it were applied by Ofwat to the water industry.

An extremely effective step would be if Ofwat were enabled to consider the range of connection charges, which vary enormously from one part of the country to another without apparently any rational basis.

Perhaps most important of all, Ofwat should be looking at the notorious standing charge which encourages households to use more water, which must be against all conservation principles. The average standing charge in the south-west in 1991–92 was £27.50, a not inconsiderable amount for such a low-income area. We certainly wish to abolish all standing charges for pensioners.

Mr. Nicholls

Even billionaire pensioners?

Mr. Tyler

Certainly, I do not believe that they should be excluded from such a benefit; nor, I understand, does the hon. Gentleman.

Mr. Nicholls

Will the hon. Gentleman give way?

Mr. Tyler

I shall not give way again on that point.

One way in which the director general could make a substantial difference is if he were permitted to transfer his consideration of charge increases, to look at them in terms of rate of return. The problem about a rate of return basis is that it is backward looking. It takes into account historic costs and demands, but the K factor looks forward to future demands and productivity improvements. It also has the disadvantage that it can be a disincentive to cutting costs and improved productivity. On balance we must agree that the K factor, if properly used, is more likely to be effective than a rate of return regulation.

What we could do is to ensure, as happens in the United States, that the process by which that regulatory decision is taken is carried out in the open with the support and encouragement of consumers and consumer representatives, enabling the utilities to put their case so that future charges can be scrutinised in public. If there is a capital underspend, Ofwat should automatically be able to curtail the intermediate price increases.

There has been much discussion today about alternative methods of paying for water. Clearly a new method must be found before the current rateable values are disallowed in the year 2000. The proposed bands for the council tax will not prove an effective instrument. They will be a blunt instrument. But whatever advantages there are in metering in monetary and environmental terms, they must be set against the considerable difficulties that have been referred to this afternoon, if for no other reason than that the cost would be astronomical. The original estimate based on the Isle of Wight pilot area was about £4 million and the actual cost could well be £12 million. In those circumstances, we must analyse the present situation, not just wait for a new system of charging which we think would be a great deal better.

It was originally anticipated—this is what has changed since the original legislation was enacted—that the K factor would be a minus figure. As the Minister said in answer to the hon. Member for Teignbridge (Mr. Nicholls), the changes that have taken place in those three years in terms of increased environmental responsibilities and, therefore, increased costs, have been so dramatic that it must now be evident to everybody that the basis of the original calculation is wildly out of date. The Act is no longer relevant.

That is also true of the way in which the drinking water inspectorate's role has changed dramatically. The inspectorate is still hidden in the bowels of the Department of the Environment. It has never instigated any prosecution or attempted any public exercise to ensure that we meet EC standards. There have been widespread failures in attempting to meet the EC standards.

It is anecdotal, but I am told that the pigs at the food and farming festival in Hyde park a few weeks ago refused to drink the tap water and water had to be brought from Harrods. They may not be the arbiters of taste, but there surely comes a point when we must consider carefully whether the effective regulation of water standards in rivers by the National Rivers Authority is not rather higher than the quality of tap water.

The problem is that the regime set up in 1989 is too inflexible. There are all sorts of examples that hon. Members can quote showing what has changed since then. In his latest report the director general says: The requirement to meet new environmental obligations, mainly the acceleration of the Bathing Waters Programme, announced by the government in November 1990 in order to meet European Community obligations has resulted in an increase in customers' bills in the South West this year of some 16 per cent., and will involve further heavy spending largely concentrated during the next three years. It is of concern that the estimates submitted to me by South West Water in October 1991 were considerably in excess of those made to the Secretary of State in October 1990. The director general himself is not satisfied with the quality of information available to him in making his determination.

We need two major changes. Clearly we need legislation to increase the powers of the regulator to protect the consumer and, at the same time, we clearly need a recognition that there needs to be an injection of public and EC money to pay for the improvements that we all demand.

It seemed to be apparent—I hope that the Minister will make it abundantly clear when he replies—from the answer given to the hon. Member for Teignbridge that no further Government money will be available to help areas such as the south-west with its enormous new obligations.

Two weeks ago, in a minor dress rehearsal to the debate, I initiated an Adjournment debate. At the end of it, the Under-Secretary was asked a number of specific questions. As he has had time to consider them a little further, I hope that this afternoon I will receive more detailed replies than I did on that occasion.

I first asked whether he was satisfied with the powers available to Ofwat. On that occasion he seemed to be over-satisfied, but we have to wait and see. Secondly, I asked whether he was satisfied that the customer is adequately protected from excessive water charges. The Under-Secretary seemed to think that it was perfectly acceptable that the average household in the south-west was paying 62p per day for its water. We have heard today that the national average is 46p per day. That differential already calls into question whether it is a fair system of charging. When it is set against the average household income, 62p in the south-west is very high.

Thirdly, I asked the Under-Secretary whether he would reintroduce Exchequer support by way of equalisation to deal with problems such as those referred to by the hon. Member for Teignbridge—our long coastline and comparatively small resident population. He did not say no, but he did not say yes. This afternoon the Minister seemed to say that the answer was probably no.

Another question related to the eligibility of the privatised companies for public funds from the European Commission. I asked whether the Minister would ensure that the rural development fund of the European Commission was available to the privatised companies. He said yes, but he did not seem to accept that that would require a degree of additionality from Whitehall. I asked whether he was aware that Ofwat powers to prevent distracting diversification—such as, for example, into shareholding in television companies—were unacceptable to the public. There was no answer to that. Finally, I dealt with the issue of chairmen's perks. Today the Minister seemed to be unaware of or unworried by that.

Last weekend, a retired couple in my constituency aged 71 and 66 spoke to me. They live in a modest bungalow in Bude which, ironically, until recently was within a few hundred yards of a discharge point into the sea for raw sewage. They told me that their poll tax for two people was £530.34 and that their water charges for the current year are £510.92. That is the scale of the problem and hon. Members on both sides of the House must come across the same problems in their postbag and surgeries.

The Minister claimed today that the Act is working as the Government intended. Was that what hon. Members voted for and what they intended in 1989? We believe that the Act needs to be reviewed and overhauled urgently. If it is not, the water charges in this country will bear far too heavily on far too many people who simply cannot afford them.

6.13 pm

Sir Jim Spicer (Dorset, West)

Like my hon. Friend the Under-Secretary I think that we heard just what we expected from the Opposition. In other words, they hear no good, see no good and speak no good. That will be the tenor of all that we hear during this debate from them because it is sour grapes on their part. What has happened in the water industry has been done by our Conservative Government for the good of the country. I want to speak up loudly and clearly for the water companies, especially Wessex Water.

Mr. Eric Martlew (Carlisle)

The hon. Gentleman probably owns it.

Sir Jim Spicer

I do not own it. If I played any part within that company, I would declare it. I hope that the hon. Gentleman will accept that.

Wessex Water is a fine company and it has done a great job since privatisation. Since privatisation, 80,000 samples of drinking water have been taken every year and are subjected to over 1 million tests for purity. A total of 99.6 per cent. of the legally required tests complied with United Kingdom and European Community standards last year. One cannot do much better than that. There have been no water restrictions in Wessex since 1976 and I would give a pretty firm guarantee that there will be none this year.

In this decade, Wessex Water is committed to spending over £350 million on improving already high drinking water standards. A total of 98.2 per cent. of Wessex Water's sewerage treatment works meet compliance standards. Six years ago, that figure was 85.7 per cent. Bathing water standards are of great importance in a constituency such as mine. The figure for meeting compliance standards is up from 71 per cent. in 1987 to 92 per cent. last year.

Mr. Mike Hall (Warrington, South)

Is the hon. Gentleman aware that Wessex intends to spend £70,000 to establish the life of a meter, when Welsh Water has already established that that life will be seven years? Does the hon. Gentleman think that that is a good way of spending money?

Sir Jim Spicer

Yes. In Wessex we are cautious people. We do not necessarily accept all that has been done in Wales. In fact, we take it with a pinch of salt. We want to do our own investigation. As the hon. Gentleman will know, we have already carried out the largest tests in the entire country on the Isle of Wight. So the hon. Gentleman should give some credit to Wessex Water for knowing a little more about metering than any other authority.

I am sorry that the hon. Member for Hammersmith (Mr. Soley) is not present, because he raised the point about four or five properties being flooded with sewage. In Bridport, a town served by Wessex Water 24 terraced houses have faced flooding with sewage three or four times a year over the past 50 years. The people in those properties have lived in fear for all that time. I have been horrified and shocked over the years when, time and again, I have gone to the old nationalised company only to find that no work was contemplated.

Immediately after privatisation, I went to Wessex Water and said, "This will not do." That fear has now been lifted from those people. They have a marvellous scheme. Although the cost per household has been astronomical, Wessex Water felt that it was its duty to do what was required for those people.

I sometimes think that we spend our time in this country saying how dreadful we are. However, 90 per cent. of our rivers reach European Community standards compared, with 45 per cent. in the rest of the Community. We know the situation in that great city of Brussels. It does not even have a decent sewage works. It should get on to that and improve its standards dramatically.

From 1975 to 1979, I served on the Public Health Environment Committee of the European Parliament. That was in the heady days when we were passing resolution after resolution, regulations were being approved and the Commission was demanding higher air and water standards left, right and centre. At that time those of us in the Community lived in an ivory tower and agreed with all those regulations, because we believed that we should aim for total perfection within the Community. We believed that that was what it was all about.

However, with compliance figures now of 99.6 per cent. and so on, I wonder whether it is right and proper for us to search for that total perfection when we know what horrors exist outside the European Community. That 0.5 per cent. improvement within the Community would cost billions of pounds, always assuming that everybody did what they said they would do. Yet even a small fraction of that sum could be spent in eastern Europe, Russia or Africa and could produce so much more for our world and for us because we are part of that world.

My hon. Friend the Minister said that improvements must be paid for. By all means let us have improvements, and let all of us be prepared to pay for them, but let us not go for perfection at whatever cost.

Costs of £28 billion in this decade have been mentioned. Some people say that, if the flood of directives continues from the Community, with its constant searching for perfection, that figure could double. I beg Ministers carefully to consider what we are being required to do within the Community to see whether it is absolutely necessary. If we could transfer to the third world just 10 per cent. of the money that we shall spend this decade, all the promises that have been made at Rio would come true tomorrow. That applies to water, to air pollution and to every other aspect of our environment about which we are worried.

I am sick and tired of people who, on a heavy day in London, stick five or six checkpoints down Mile End road and then say "It is disgraceful; we have not got a high enough air quality." They should go to China, Africa or eastern Europe and see for themselves the conditions in which people are not living but dying and, despite all the problems that we must solve, contrast that with the unbelievable world of plenty and purity in which we live today. We do, after all, live in the same world.

6.21 pm

Mr. Eric Martlew (Carlisle)

I agree with much of what the hon. Member for Dorset, West (Sir J. Spicer) said, especially towards the end of his speech. We are debating the effects of privatisation on our constituents.

In December 1988, in the Second Reading debate on the Water Act 1989, I said that privatisation would not work and that 80 per cent. of people opposed water privatisation and that it was the one privatisation measure that they would not accept at any price. They were right then and are right now. No hon. Member believes that water privatisation was a vote winner for the Conservatives at the last election.

Mr. Knapman

rose—

Mr. Martlew

I shall give way to the hon. Member, who mentioned me earlier in the debate, despite the fact that I had not spoken.

Mr. Knapman

I was with the hon. Gentleman on the Committee that considered the Water Bill. What privatisation has he ever supported?

Mr. Martlew

I make no apologies for the fact that I was not too worried about the privatisation of Cable and Wireless. If the hon. Gentleman is asking whether water should be taken back into public ownership, the answer is yes.

We have heard much today about the amount of investment that has been made in the industry. The same amount could have been invested under public ownership and, by cutting the profit margin, bills could have been reduced by a third. In Committee, it was said that privatisation would send prices sky high. That has happened. It was said that the service will worsen. That has happened. It was said that there would be a massive number of disconnections That has happened. We said—there has been little mention of this by Conservative Members—that there would be water shortages in many parts of the country. That has happened.

Privatisation has made a national strategy for water impossible. If people in the south-east, who, funnily enough, tend to support the Government, but were more reluctant to do so at the last election, are without water it is not the fault of the Labour party. We would have been quite happy to ensure that water from the north and the north-west—the area that I represent, where there is plenty—was sent to people in the south. That will not happen now because of privatisation.

I represent Carlisle, and the Minister, the hon. Member for Penrith and The Border (Mr. Maclean), represents a constituency in the area. Inflation is 4.5 per cent., but our bills increased 9 per cent. this year. No other company in the north-west, except Norweb, has been able to make such increases. There is no competition because the water authorities have a private monopoly. No company offers me an alternative tap in the bathroom. The House created a private monopoly without safeguards—a licence to print money. Any fool can run a company that has a monopoly in a product such as water. North West Water cannot go bankrupt, because without it the people of the north-west cannot survive. We created a money-making machine for the stock exchange and for shareholders.

The Minister defended the massive increase in the salary of the chairman of North West Water, which seemed reasonable to him. The chairman was not head-hunted; he did the job for about £54,000 before privatisation. He is now being paid £146,000 for doing the same job. That does not seem reasonable. In addition, he was given a share option worth £250,000. I understand why he favours privatisation.

Mr. Hall

I have a letter from a constituent who lives in Great Sankey, the headquarters of North West Water. He tells me that the chief executive has had a monogrammed carpet installed in his office. Is that what the profits of water companies should be used for?

Mr. Martlew

I am grateful to my hon. Friend for exposing what is going on with our money. I am sure that my constituents are not happy about lavish amounts of money being spent on carpets for a new privatised industry that was supposed to improve the service. The service has not improved. Complaints have increased by 130 per cent. I am sure that hon. Members receive more complaints about the privatised water companies than they did about the publicly owned companies. Admittedly, 50 per cent. of the complaints will be about the price of water, which is a major concern to my constituents.

It is nonsense to suggest that privatisation has helped to clean up our beaches. I am sorry that the hon. Member for Penrith and The Border is not in his place. While he was in Rio, trying to wreck the world environment conference, a report was issued showing massive pollution in his own backyard on some of the beaches of the Solway. What hope have we of solving world pollution when the Minister cannot clean up beaches in his own area?

The hon. Member for Blackpool, South (Mr. Hawkins) mentioned North West Water's plans for beaches in the area, but 23 of the 33 bathing beaches do not meet the EC's standards for bathing water. Seventy per cent. of beaches in the north-west are not up to standard. Privatisation has not helped.

Mr. John Marshall

Is the hon. Gentleman aware that since privatisation North West Water has invested £511.6 million, compared with £188.8 million five years ago? Is not that helping to solve the problems?

Mr. Martlew

I am well aware of the fact that the hon. Gentleman's party was in power five years ago and kept the water authorities short of resources. It brings nothing but shame on the hon. Gentleman to mention the Government's record. We know where the extra money is coming from—the consumers. Consumers in my area wonder why North West Water has investments in Malaya and Canada. We are worried that the money is being taken out of the area to be invested throughout the world.

Disconnections do not seem to bother Conservative Members who appear to be happy to continue a two-tier society and to create an underclass. We shall reap the whirlwind sooner or later. The number of disconnections has increased to about 22,000, which is approximately the number of households in my constituency. I wonder whether hon. Members know—and perhaps the hon. Member for Stroud (Mr. Knapman) might remember this fact, which we learned in Committee—that it is a criminal offence to give a cup or bucket of water to anyone who has had his water disconnected. We hope that there are enough compassionate people who will risk the threat of prosecution by ensuring that such people are provided with water.

I am not in favour of people not paying their bills, but the bills have become too large because the profits of the water companies are too high. There has been talk about water metering being a way to solve the problem, but compulsory water metering would be an appalling mistake. It is a system of rationing by price rather than by need. The rich would still water their gardens, buy dishwashers and fill their swimming pools. They would not be affected, but metering would have a drastic effect on the poor.

The money that we are talking of spending on water meters should be spent on providing a national water grid. That would make a lot of sense for areas such as mine. I hope that Scottish Members will not accuse us of stealing their water as they accused us of stealing their oil, but there is ample water in Scotland. It is ridiculous that we have no system of getting that water from the north and the west of the country to the south-east and to Yorkshire. A perfect example is the Kielder reservoir in Northumberland, which was built to feed the steel industry which has since declined. There are major water shortages in Yorkshire 100 miles to the south, but we could solve the problem if we could transport the water. We must consider the issue in a United Kingdom context, but, by privatising water, the Government have made that almost impossible.

We said that the Government were wrong about privatisation. We said that the people of this country would pay through the nose and that is what they are doing. The Government deny any knowledge of that—we heard from the Minister who said that it was nothing to do with the Government and that one must consult the regulator. The regulator is a waste of time. Anyone who has read any of its press releases will realise that it has very limited powers and uses them very rarely. The Government and the regulator have a Pontius Pilate attitude—they are washing their hands of a natural resource which is important to everyone.

6.34 pm

Mr. Patrick Nicholls (Teignbridge)

First, I commend my hon. Friend the Minister for the Environment and Countryside for the way in which he opened the debate. He set the context in which all our contributions must take place.

For many years the water industry had been starved of investment. It was the one industry to which the Government could always look for the economies that they needed for more pressing demands. In the end, that had to stop. Whatever else I may say, I fully acknowledge that that process had to stop. It is clear from what the Minister said that massive sums of money are now available to be spent on investment in the water industry, and it is unrealistic to deny that.

I shall make a more local contribution and provide what might be described as a gloss on what the Minister said. Understandably, the Minister spoke about averages and the average cost of water to people in this country. The difficulty is that I do not represent the country—I am a west countryman born and bred and I represent a west country constituency, so my knowledge of the average is restricted to how it applies to my area and especially to my constituency.

In Teignbridge the average water charge is about £227 a year, but the west country has a curious feature—it is an area of comparatively low wages but comparatively high rateable values. That produces some interesting distortions. It means that when one goes out on the stump in the streets of Teignbridge, people will say that their water charges are now higher than their community charge. One cannot draw a simple correlation between the two and say that if one charge is higher than the other, it tells us something immutable, but the difference surprises many people. People in relatively average accommodation can pay more in water charges than in community charge.

There is no mystery about how that happens. The west country has more coastline but fewer water charge payers than any other area in the country. To pay for the coastal clean-up in the west country, the K factor combined with the rate of inflation means that the average west country water charge will rise for the next five years—and, realistically, for the indefinite future—by between 15 per cent. and 20 per cent. per annum.

Let me explain what that can mean in practice. As I said, in west country terms the average is a misleading figure, but on average the £227 per annum will amount to about £700 by the year 2000—and that is not very far away. It is a remarkable figure, and I am sure that many hon. Members will be surprised by it.

Certainly, the privatisation programme has been a success because it has produced £25 billion or £26 billion to spend now which should have been spent a long time ago. It would be unfair, though tempting, to criticise the Government for not being able to envisage the minutiae of policy in advance because that would be asking too much. However, having been shown how things have worked out in practice in a particular region, I do not think that it is too much to ask the Government to consider some fine tuning.

It is not the fault of the people in the west country that they have to clean up what is essentially a national asset. It is not their fault that people in Brussels are anxious to pass regulations which they know that we shall enforce because the good old Brits always play the game. It is not the fault of my constituents that people in Europe are far keener to impose obligations on other people than to meet those obligations themselves. It is not my constituents' fault, but they must cope with the consequences.

It would be tempting for the Minister—although it would not be in character—to say, "You have set out the problem, so you produce the solution." I am open to offers, but that is not my job. As a Back Bencher, it is my job—

Mr. Tyler

rose—

Mr. Nicholls

I shall deal with the hon. Gentleman in a moment.

It is not my job to identify in every particular how one should solve the problem that I have outlined. As a Back Bencher representing my constituency, it is my job to bring to the House my experience of what needs to be remedied and then perhaps—

Mr. Tyler

rose—

Mr. Nicholls

I shall deal with the hon. Gentleman in a moment—and then to suggest ways in which it might be possible to deal with the problem.

Mr. Tyler

Is the hon. Gentleman now saying that he made a mistake when he brought his experience to the House, to use his own words, and voted for the Water Act 1989? Or is he saying, as I said earlier, that the circumstances have changed since that Act and it should therefore be reviewed and amended?

Mr. Nicholls

If the hon. Gentleman had listened to what I said, he would not have needed to ask the question. I will repeat briefly what I said, just for the hon. Gentleman. I accept that the policy has been successful. There can be no doubt about that. I am saying that in the light of experience we need to know when that successful policy has to be fine-tuned to take account of local circumstances which can now be seen in operation rather than merely being forecast. To take account of the extraordinary position whereby a tiny number of people are responsible for maintaining the nation's coasts, some sort of extra input is necessary, whether through Whitehall, through Europe or through a combination of the two. The problem needs to be addressed.

It is not such a unique problem. In the 17th century, Hampden went to court and said that he did not see why he should have to make a contribution towards ship money because he came from an inland area. He said that he was not troubled by pirates or by other such matters and asked why he should have to pay taxes to maintain the Royal Navy. He was told in no uncertain terms that the kingdom in those days was a seamless entity and that he, too, benefited from the security and safety of the coasts. Some things change over 300 years, but that does not.

We are entitled to say that there is an extra dimension at present which needs to be addressed. It is simply unfair and unrealistic to think that as time goes by a national asset will continue to be maintained on a local basis. We do not maintain the coastguards on a local basis, we do not maintain the Royal Navy on a local basis, and ultimately, we cannot maintain all the west country coast on a local basis.

Any debate, no matter how serious the subject, should have some light relief, and I pay full tribute to the hon. Member for North Cornwall, (Mr. Tyler) for providing that. It is extraordinary for the Liberal Democrats to come to the House and say, "We can solve it for you. We have worked out how to do it. Here is the macro-solution from the man from North Cornwall. He says that pensioners should not have to pay standing charges." That is a relief, is it not, Mr. Deputy Speaker? Already one can hear the thundering of feet as millionaires head towards North Cornwall. Doubtless the people in front will be the Dowager Duchess of Westminster and my right hon. and noble Friend Baroness Thatcher. They will all flood down to Cornwall, North now because they know that under Liberal Democrat policy the working poor in North Cornwall and Teignbridge will be responsible for paying their standing charges. That is an extraordinary proposition.

From time to time, it is rather nice to be a Liberal Democrat because the idea is that one does not have a record. In fact, the Liberal Democrats do have a record. The time when capital investment in the water industry was slashed was between 1974 and 1979, when it was reduced from £1.6 billion to £1.1 billion. Who kept the Government in power? The answer is the hon. Member for North Cornwall and his merry friends.

Mr. Tyler

After the Adjournment debate the other day, I had to point out that the Minister had his dates wrong. I think that the hon. Member for Teignbridge (Mr. Nicholls) was not in the House at the time. My party did not support the Government at the time to which the hon. Gentleman refers. During the short period in which we supported the Government, there was an increase in capital investment in the industry. Perhaps the hon. Gentleman will check with the Minister to see whether he has the correct date.

Mr. Nicholls

The record of the Liberal party in keeping the Labour Government in office is clear enough. It is a matter of record.

Mr. Tyler

That is not true.

Mr. Nicholls

The hon. Gentleman bawls from a sedentary position that it is not true. He was here briefly before and he will be here briefly on this occasion. He may care to check the facts. As time is short, I will not go through all the years in question. I merely point out that in 1974–75, the first year of the Labour Government, investment was £1.634 billion. By 1978–79, investment was down to £1.128 billion. Those are the facts.

It is puerile populism for the hon. member for North Cornwall to say, "If I cannot get the dowagers to deal with the problem, I have another idea." He talks about the salaries of the water authority chairmen. Yes, the salaries are large. Ridiculously enough—this is a slightly different comment—some of them earn more than the Prime Minister does. Is the hon. Gentleman going to go to the west country at the weekend and say that he can solve the problem for water charge payers by abolishing the salary of the chairman of the South west water authority? That would be literally a drop in the ocean compared with the present £2 billion capital investment programme.

It would be thoroughly unfair and unrealistic for me to say to my right hon. Friend the Secretary of State for Wales that I expect him to come up with a blueprint to deal with the problems that I have set out. He knows, however,—he will have been briefed—that west country Members, of whom I have been in the forefront, have said to Ministers recently, "This is the way it is working out in practice." It would be asking too much of my right hon. Friend to demand that he should come up with a solution tonight.

The Opposition motion makes no mention of investment; instead it whinges on about perks. On the basis of the motion, there is no doubt which way hon. Members should vote. However, I hope that when my right hon. Friend the Minister replies to the debate we shall see the start of a process. 1 hope that he will at least acknowledge the effect of the problem on the west country. I hope that he will at least accept from me the feelings of outrage and indignation when people see how a successful policy affects them in a particular area. I do not expect my right hon. Friend to come up with a solution today, but an acknowledgement that there is a problem which must be addressed would be extremely helpful.

6.45 pm

Mr. Bryan Davies (Oldham, Central and Royton)

The speech by the hon. Member for Teignbridge (Mr. Nicholls) revealed some special pleading. The hon. Gentleman supported the principle of the organisation of the water authorities, yet when the shoe begins to pinch in terms of the hon. Gentleman's constituency, he asks for dispensation. There is a suggestion that the Government might come up with some redress, which is exactly the basis of our case.

This is my first speech in the House for 13 years, and my first speech as the Member for Oldham, Central and Royton. I am aware that such speeches are often not interrupted and that one has the opportunity to make some uncontroversial statements. It is unlikely that I shall be able to avoid making any controversial statements, and I do not mind if hon. Members intervene, if they help to advance my argument.

I have always thought that we needed a powerful political campaign to destroy three political metaphors. The first, which is constantly used by hon. Members of all parties, is that we need a level playing field. Any sportsman can tell us that a level playing field is not needed for any sport. If the field is tilted, one normally plays against the conditions in one half and with them in the next half. I have never understood why people, especially politicians, think that a level playing field is such an advantage. I say that especially as the parliamentary football team played on a level playing field today and lost 3-0 to the Press Gallery, our old enemies. It did not do us much good.

The second phrase that I should like to see abolished from the parliamentary lexicon is the "kick start" to the economy, which the Minister used earlier in the debate. The phrase reflects a time when the motor bike industry was British-owned. We persisted with the kick start while the Japanese exported motor bikes with electronic ignition, which wiped out the motor bike industry in Britain. I have never understood why Conservatives suggest that there can be industrial recovery through a kick-start mechanism, as kick starts are an outdated technique.

The third phrase, which I should especially like to abolish, is used when referring to hon. Members who return to the House for a different constituency after a lapse of time. They are referred to as "parliamentary retreads". I think that the phrase was conjured up by my dear friend Andrew Roth, who is responsible for the pen portraits which appear so often in his books. The phrase gives an image of burnt-out rubber, of someone who is decayed and of limited second-hand value, and of limited service to a constituency. I propose that those of us who are privileged to come back to the House after a lapse of time should henceforth be referred to as "recycled" Members. It makes us sound greener, environmentally friendlier and of greater value to society. That is how I should prefer to be identified.

I am exceedingly proud of my new constituency. I am proud of the fact that Oldham and the adjoining town of Royton were the cradle of the industrial revolution. The mills that Blake referred to as "dark" and "satanic" were constructed in Oldham, but I pay tribute to the architecture of the past. Much about those mills has stood the test of time. They were well built, many were extremely light, and they provide excellent premises for new industrial enterprises, of which we have a range in Oldham and Royton.

Industrial and domestic catering machinery is now produced in one of those mills. Ferranti operates from the Cairo mill in my constituency, whose name everyone will recognise, as it had such great significance for the cotton industry. Ferranti carries out the highest level of technology in a building which is more than 150 years old. There is a danger that Ferranti may transfer its processes elsewhere, and I make a plea that the Ferranti board's decision should be in favour of Oldham and of maintaining work there for my constituents.

Oldham was not only the cradle of the industrial revolution but of parliamentary democracy because the constituency was created to redistribute political power from the south to the north of England—to give working people in the new industrial towns of the north some representation. Although the Reform Act 1832, proved to be a great disappointment to so many working people—especially in Oldham, where the Chartist movement was inspired as a protest that the Bill did not go far enough to enfranchise them—it was a significant redistribution of power from the south to the north. That balance still has to be redressed.

Oldham succeeded in giving some powerful political voices to this country. The first two Members of Parliament were William Cobbett—he of "Rural Rides", who identified the needs of the poor—and Henry Fielden, who would not have commended himself to the Conservative side of the House. He was in favour of restricting the working day to 10 hours. He was the predecessor of those arguing within the European Community and on the Opposition Benches for some restriction of the working week, which the Conservatives choose to oppose. Those two men portrayed the horrors of laissez-faire and of the free market capitalism of their day. How they would shudder at the impact of Government policies today, especially on the community that they represented.

Many of my constituents are finding life tough during the second recession in little more than a decade, and the water industry is not making their lives any easier.

Before I identify the water industry's abuses and its depredations on my constituents, I must pay tribute to my immediate predecessor, James Lamond, who was the Member of Parliament for Oldham, Central and Royton for 22 years. James was essentially a modest man, although he was proud to be in the tradition of Cobbett and Fielden, and of the radical Winston Churchill, who represented Oldham at the beginning of this century. However, James would never have put himself in that category. He took great pride in the fact that he represented his constituency well, and he was greatly respected there and in the House.

I have no doubt that the people of Oldham and Royton greatly miss their former Member of Parliament, who presented strong views, which were not entirely uncontroversial. I did not entirely share his view of the virtues of the state centralist planning of the Soviet Union, a country which he visited many times. However, he was historically accurate when he argued in the House that a massive vested interest—aggressively represented on the Conservative Benches and in the wider western world, especially the United States—greatly exaggerated the Soviet threat to our position in Europe. He argued that the military industrial complex of western Europe had a vested interest in dramatising the Soviet Union's power, which was much weaker than it was portrayed.

I do not think that there is any doubt that history has proved that the Soviet Union never possessed the power, even if it may for a short time have had the will, to carry out imperial adventures against western Europe. James Lamond was right to argue that the archaic industrial regime that was the Soviet Union had a limited capacity to cause the sort of damage predicted.

James was not only a critic of the Government's strategic policy on east-west relations. He was a master of the short, sharp question, which permits less evasion by Ministers and is therefore more effective, although it is deployed all too rarely in the House. He was also a master of the sedentary intervention, which is a more difficult art form. With his strong Aberdonian accent, he could be heard all over the House, and successive Speakers and Deputy Chairmen were somewhat tolerant of his caustic wit, which often caused Ministers to reply.

He also served as a member of the Chairmen's Panel, and I believe that he chaired sittings of the Water Bill, so it is right to mention him in this debate. In his constituency, he was regarded as the most considerable and helpful of Members of Parliament, and during the two years that I have campaigned in my locality, I have been told that I shall do well to match him. I shall certainly try.

First, I shall try to defend my constituents against the rapacity of private exploitative monopolies, created by this Administration. This is a debate about water, but today the North Western electricity board, has announced that its profits doubled last year. Who can provide an alternative competitive mechanism to contrain that exploitation of ordinary people? Water is an equally grim example.

How does the party that talks of the virtues of laissez-faire, which has a so-called think tank called the Adam Smith Institute—the party of Sir Keith Joseph and Margaret Thatcher—justify that private monopoly power? Surely Adam Smith made it clear in the 18th century that consumers would be exploited if private monopolies were created. Surely 19th-century economists—those patron saints of the Tory party—emphasised that too.

Is it not the case that, in the 20th century, Hayek and Milton Friedman pointed out the dangers of monopoly power? It is true that those economists often railed against the state, but at least its monopoly power is answerable to the people. It is answerable in the House, whereas the Minister is disavowing any responsibility for the strategies pursued by the water authorities.

The water companies are monopolies with a captive market. They will set out to make excess profits, and it will be difficult to deter them. That is what has been going on. Since privatisation, the excess profits of all the water companies have increased substantially, especially those of North West Water.

Even in the midst of the bleakness of recession, when all our manufacturing industry is going to the wall, when virtually no one can make a decent profit and all our enterprises are suffering, the public utilities are coining money because of their monopoly position.

What else did we expect from exploitative monopolies but that the people at the top would be the beneficiaries of their exploitative power? Have not the chairmen and key executives of the companies benefited from water privatisation in a way that no one else could conceive of doing? How can Conservative Members justify it when a man doing a job earns one rate in one year and, three years later, triples that salary? It is claimed that that is somehow related to his performance, but his earnings are related not to performance but solely to the exploitative powers of the water companies.

How are such increases paid for? Labour Members know the answer, and some Conservative Members are beginning to appreciate it, too. Prices have gone up by more than three times the rate of inflation. Since privatisation, prices have risen by 41 per cent. in the north-west.

What has been the corollary of the increase in prices? It has been the staggering, shameful growth in disconnections. Should an industry that provides such an essential commodity to our people see the number of disconnections rocket into the thousands this year because people cannot pay for the supply of water that they need? Where will price increases end? North West Water has begun to charge fell runners for the use of land that it controls.

How will the national grid for water operate? What will Conservative hon. Members ask of North West Water, which is replete with resources, given the average rainfall on Old Trafford and on points to the north and west of it? What will happen when the drought-ridden lands of southern England make a supplication to North West Water for the transfer of water resources? Will North West Water charge the exact market rate? Will it exploit consumers in southern England by charging them through the nose for the water supplies that they desperately need? We cannot have a rational policy for the distribution of water in this country, despite the growing anxieties expressed in constituencies in southern England, while we leave the powers of the northern water companies unfettered.

It will be necessary in the short term, before we can do anything more dramatic when the Labour party comes to power again, to strengthen the power of Ofwat, the regulatory body. By our scrutiny of its role, we must insist that the water companies are more answerable to our constituents. Labour hon. Members must harry and harass the Government, who have created the exploitative monopolies, so that they answer the case.

7.2 pm

Mr. John Marshall (Hendon, South)

I congratulate the hon. Member for Oldham, Central and Royton (Mr. Davies) on his inaugural speech as the Member for that constituency. I know that he was highly regarded when he was in the House before, and I am sure that he will make a great success of representing his constituency.

I also support the tribute the hon. Gentleman paid to his predecessor, because Jimmy Lamond and I served on Aberdeen town council many years ago. He was known there as an effective debater and as a man of principle. He was highly regarded by members on both sides of the civic chamber. When I joined the House, I was not surprised to find that he was also highly regarded here. In Aberdeen we had a civic toast—the toast of Bon Accord—which went "Happy to meet, sorry to part and happy to meet again." I am sure that the hon. Member for Oldham, Central and Royton and other hon. Members would be happy to drink that toast to Jimmy Lamond.

I was interested to hear the hon. Gentleman say that we no longer have a British motor car industry. When he was previously in the House, the Meriden co-operative existed, which was financed by large amounts of public money. There is a lesson to be learnt from that—one cannot pour large sums of public money into a venture and assume that it will be a success.

It has been an interesting debate and some Labour Members have said that they would renationalise the water industry. Let them remember that that would mean spending £8 billion to buy the shares back and that they would be forgoing hundreds of millions of pounds of revenue in corporation tax. Let them remember that that would mean a vast increase in expenditure on investment, which would be paid for by the taxpayer.

The first contribution from the Opposition Back Benches came from the hon. Member for Glasgow, Provan (Mr. Wray), which was particularly interesting because Scottish Labour Members always tell us that English Members should not speak on Scottish issues. This debate relates to England and Wales and, therefore, it was surprising that a Scottish Labour Member should seek to trespass on our issue.

We then heard a typical speech from the hon. Member for North Cornwall (Mr. Tyler), who has now disappeared from the Chamber. He spoke of the need for a new method of paying for water, but, as so often happens with the Liberal Democrats, the nature of that new method was not described to the House. No doubt it will be revealed two days after the next general election.

When I was told that we were to have a debate on water, I thought that it would be a debate of congratulation. I thought that we would congratulate the water industry on doubling its investment since privatisation and on spending more money in investment than it has made in profits. I thought that we were going to congratulate Thames Water, which has invested £1,200 million compared with profits of £700 million. I thought that we would congratulate the water industry on having better standards than those of the European Community, and that we would congratulate it on the level of water charges. The average water charge is 46p for each household per day—less than the price of a loaf of bread.

Mr. Win Griffiths (Bridgend)

God knows where the hon. Gentleman buys his loaf of bread.

Mr. Marshall

I am afraid that I do not go to Food Giant to buy my bread. It may cost less in Food Giant, but in many shops a loaf costs more than 40p. The cost of water is well below the price of a pint of beer, and I know which gives better value for money. In the area covered by Thames Water, which supplies Hendon, the average price of water is only 40p per household per day.

When we debated the privatisation of water in 1988, there was general agreement that the standard of our beaches was too low, that our rivers suffered from excessive pollution, that the quality of drinking water in Britain was not as high as we would have liked and that the problem of water shortage needed increased investment. The only difference between the two sides was in trying to find a solution to the problems. Our opponents said that the then structure of the water industry had led to all of the problems, but what did they intend to do? They did not intend to change the structure of the industry. Although they said that the problems had been caused by the structure of the industry, they said that they would solve them by keeping the industry in the public sector.

Conservative Members recognised that the water industry's failure resulted from a lack of investment. In any public expenditure round, the water industry, if in the public sector, had to compete for resources with hospitals, schools and transport. It never did very well. The water industry had to be privatised so that it could tap the resources of the market.

Today's debate has revealed the Labour party's paucity of thought. It said that, under public ownership, the water industry had failed the nation, but what does it say now? It says that the industry should be returned to public ownership—no doubt to fail the nation a second time. No wonder that, the other day, The Times said that the Labour party has no new thoughts and that anyone looking at the House from the outside would think that the real Leader of the Opposition was the hon. Member for Bolsover (Mr. Skinner). I began to fear that the hon. Gentleman would become a cult Establishment figure and lose his traditional role.

Opposition Members live in a fool's paradise. They think that we can have increased investment without somebody having to pay for it. Individual water companies have an excellent record. Anglian Water's investment in 1989–90 was £190 million. The projection for 1993–93 is £380 million, double the 1989–90 figure. That company should be congratulated on that achievement.

In 1987–88, investment by Thames Water was £146.2 million. In 1991–92 it is £400 million, more than double the previous sum. Opposition Members should commend Thames on that achievement. Severn Trent Water invested £205 million in 1988–89 and £585 million in 1991–92, an extra £380 million to improve the water services in that area.

We have heard a certain amount about South West Water. Its investment in 1986 was £55 million. In 1990–91 it is £172 million. Some Labour Members complain about North West Water. That company has increased its investment from £188.8 million five years ago to £511.6 million. Opposition Members should be on their feet commending the water industry for those massive increases and for all the extra jobs that it has created.

I agree that the present pricing system is unfair, but that is because it is related to rateable values. There was no greater nonsense than the old rating system. In those days, we tried to measure the fair market rent of a property and say that that would be its rateable value. But there could never be a fair market in property, because we had a system of rent controls. Likewise, the rating system tried to measure what did not exist. The rating system is an unfair means of measuring water charges. It bears no relation to ability to pay or to consumption. It is inefficient because there is no incentive to conserve water.

The only effective way to charge for water is a system of water metering which relates the price paid to the level of consumption. It encourages the more economical use of water, as we saw in the Isle of Wight. Some will say that it creates hardship for large families, but that is no argument against water metering. It is an argument for giving additional help to families hit by it and for a generous system of family credit. It is not an argument for maintaining a system which is riddled with distortions and encourages an excessive demand for water.

Opposition Members are critical of the price mechanism and we have heard much about rationing by price. Is not virtually every commodity rationed by price? The only commodities of which there will be shortages are those that are not rationed by price. For years, we had a lack of rented accommodation in the private sector because the Labour party said that we should not have private-sector housing rationed by price. Instead, we were told that rents must be low, with the result that there was no private-sector rented housing. The same applies to water. Without a pricing mechanism, there are bound to be shortages—[Interruption.] There is a shortage of water now because we have not had rationing by price. We have had an artificial system of water pricing, which is why we should go over to a system of water metering.

The debate has highlighted the opportunistic humbug of Opposition Members. They have said time and again that we need more investment in the water industry, but they have never said how it is to be financed. They claim that it should not be paid for by the consumer. If it is to be paid for by the taxpayer, they refuse to admit that the taxpayer is, in any event, the consumer in another guise. It is no good saying that the Government will pay, as though that is a panacea, because people must pay the taxes which the Government raise to pay for such investment. We all pay taxes—

Mr. Jimmy Dunnachie (Glasgow, Pollok)

Some people dodge taxes.

Mr. Marshall

The hon. Gentleman, from a sedentary position, talks about people dodging taxes. I find that rather rum coming from a Scottish Labour Member, when a number of Scottish Labour Members told the people of Scotland in the 1980s not to pay the poll tax—[Interruption.]—and I think I hear the hon. Gentleman saying, "Quite right." Obviously, he thinks that it is right for people to try to dodge that tax. It shows that he is a member of a party which favours tax dodging and fiddling. It shows how responsible the hon. Gentleman is. He is not fit to be a Member because—[Interruption.]

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. It might be advisable for the hon. Member to return to the subject of the debate, rather than to criticise other hon. Members.

Mr. Marshall

I apologise, Mr. Deputy Speaker. I was led astray by the sedentary intervention of an Opposition Whip. Whips are supposed to be silent. Had the hon. Member for Glasgow, Pollok (Mr. Dunnachie) remained silent, I would not have been led down that byway.

Opposition Members do not say how investment in the water industry should be financed. They have failed to produce a new pricing system that would be fair and would abolish the wasteful use of water. They have no idea how to react to the problems of the water industry. Instead, they censure the industry, despite the remarkable progress it has made since privatisation. They also censure the Government, even though we have been willing to face the problems of the industry with the aim of improving the quality of our water, our rivers and our beaches and to bring British water up to date in a way that would never have been achieved had the industry remained in the public sector.

7.16 pm

Mr. Richard Burden (Birmingham, Northfield)

Before coming to this place, I spent a large part of the 1980s trying to alert people to Conservative plans for privatisation of the water industry. I had no doubt that there was a secret agenda, for several years prior to its being announced in the 1986 White Paper, to privatise the industry. Following that announcement, I spent much time warning people about the implications of that move.

I intervened earlier to point out that a Conservative Government first nationalised the water industry. The Minister appeared not to know that. As he seemed confused, I will explain. The assets of the water industry were inherited from local authorities and belonged to the people. The last Conservative Government seized those assets in order to acquire the right to sell them. The fact that that Government did not own the industry in the first instance blew off course their first attempt at water privatisation in the mid-1980s. I was pleased that when they finally got away with privatising the industry at the end of the 1980s, more than 80 per cent. of the British public had the good sense to oppose their plans. The fact that the Conservatives ignored that opposition destroys any claim that they wished to listen to the wishes of the people.

Ministers have echoed the claim of the water industry that privatisation has been a great success. They claim that water quality is at its highest level ever, they point to the fact that more sewerage works are meeting European conditions, and they applaud the standard of sewage being discharged into our rivers. There is no doubt that investment in the industry has been impressive in recent years. There has also been massive investment by those who work in the industry by ensuring that improvements have taken place. Little is said by the Conservatives about that contribution.

Before we get carried away by the improvements that have been made, however, let us pause to consider where they came from, and why the investment was necessary. Some of the Government's most strident claims are about the way in which privatisation freed the industry from the shackles and the dead hand of Government. The biggest dead hand was put on the industry by the very same Government who then sought to privatise it. Those shackles were part of the pre-privatisation process. To claim credit for removing those shackles is a bit like King Herod trying to claim credit for the expansion of Christianity.

For example, there is no doubt that investment in the industry has always been too low, but in the early 1980s there was a deliberate Government policy to hold back investment and force water authorities to accelerate the pace of servicing and paying off inherited debts. In the case of Severn Trent, the water authority which covered my constituency, more than £80 million a year, which could have gone into improving the quality of water services, had to go towards servicing debts. At that time, many of us appealed to the Government to write off those debts and allow water authorities to spend the money that needed to be spent, but the Government shrugged off those calls.

It is not surprising that, now that the industry is privatised, all those views have been turned on their heads. The debts, amounting to some £5 billion, which the Government said could not be written off when the industry was in the public sector suddently became easy to write off once the industry had been privatised. Not content with that, the Government then gave the private sector industry a cash hand-out of £1.5 billion. Why could they not have done that for the public sector water industry? How was it suddenly possible to do so for the private sector?

Not content with that, the Government then gave the private sector water industry tax allowances amounting to some £7.7 billion to ensure that it had an easy ride for the first few years of its existence. Still not content, they sold off assets valued at more than £30 billion for about £5 billion. As though that were not enough, they gave consumers and taxpayers the dubious privilege of subsidies to the tune of several more million pounds for the sale of the water industry through a massive advertising campaign.

Are consumers—or, to use the current jargon, customers—to be grateful to the Government for such a deal? I doubt whether they will be grateful when they consider the massive profits that the water companies are now making and how water charges have gone up. The impact of those charges is real enough for the 22,000 people whose water supply has been disconnected in the last few years.

Just up the road from my constituency, South Staffordshire Water has the worst disconnection rate in the country. I am pleased that Severn Trent has been more modest than the national average in that respect, but disconnections in its area have still increased. Severn Trent says that it has come up with a novel idea to ensure that fewer families are cut off. It is called a pre-payment water meter. It is an interesting idea, a bit like the coin-operated gas or electricity meter, except that customers use a smart card, which is charged up in advance and provides them with a certain amount of water. Perhaps it measures the volume, but I suspect that the charge is made for a certain period of time.

Severn Trent says that the cards will help low-income families with their budgeting. To an extent, that will happen because if the budget goes wrong or the family cannot afford to charge up its card, the water will be cut off. I agree that that will help, if that is what is meant by budgeting, but some dangers may arise. When water was privatised, numerous codes of practice said that water could not be disconnected without a court order. Minister after Minister assured the House that court orders would be needed before so-called customers could be disconnected. With pre-payment meters, disconnections will happen because people will be unable to charge up their cards, and they will never get near a court. It seems that in the trial operations which are to take place with the use of pre-payment meters, when families have their supplies cut off there will be no obligation even to inform the local environmental health department.

To add insult to injury, it appears that a charge of some £26 will be made for those meters. Is that not an interesting idea? Low-income families with budgeting problems will have a meter installed and pay for the privilege. If their debt amounts to some £100, which is fairly standard, they have to pay £26 to have a meter installed. An interest rate of 26 per cent. to help the local water company improve its cash flow is rather steep. I hear today that Severn Trent is prepared to waive the charge but, surprisingly, Ofwat, which is meant to be the consumer's champion with responsibility also to shareholders, insists that the charge should remain. The most ridiculous aspect of pre-payment meters is that when a card runs out—when people have budgeting problems and lose their water—it does not mean that the debt stops. They will still incur water rates for the time when they have no water. That is a crazy idea.

If the water companies and the Government are worried about the impact on low-income families of massively rising water charges of the kind that we have seen recently, I make a couple of suggestions. If they go ahead with the pre-payment meter trials, I hope that the problems that I have raised will be dealt with first. Two more constructive suggestions are, first, that the Government should make regulation work. They should ensure that water bills do not go through the roof and families do not fall into such a trap. Secondly, the Government should reverse the ridiculous social security changes that they pushed through in the 1980s, removing help with the payment of water bills. If they reinstitute that help, it will go some way towards alleviating the problems of low-income families.

The only long-term solution is to restore to the water industry something that it should never have had taken away in the first place—democratic control.

7.26 pm

Mr. Roger Knapman (Stroud)

Some time before the 1987 election, my predecessor, who had been in the House for 32 years, asked me what my specialisation would be in the House. He seemed to be thinking of Attlee's dictum that one should specialise and keep out of the bars. When I told him that I was a chartered surveyor, he frowned and said, "Oh dear, they'll have you talking about drains. I advise you immediately to get an interest in foreign affairs or defence." He was Chairman of the Foreign Affairs Select Committee and able to get to Cyprus and Hong Kong at short notice. I should have listened to him because, shortly afterwards, I found myself on the Standing Committee discussing the privatisation of the water industry.

Many of the arguments rehearsed in Committee have been rehearsed again today, and some interesting suggestions have been made. The hon. Member for North Cornwall, (Mr. Tyler), who is in his seat, suggested that pensioners should be exempt from paying standing charges. We should have further details of that policy before long because, although I can see how people living alone could benefit from that exemption, what about those living with families who are not pensioners? How can legislation provide for them?

In Committee, as one might expect, the Bill was bitterly contested by the Labour party. The arguments went along the line just advocated by the hon. Member for Birmingham, Northfield (Mr. Burden). Opposition Members said that God gave us the water and that we had no right to privatise it. We had to point out that He—I say "He" despite recent newspaper reports that God may be female—did not provide the stopcocks, pipes, reservoirs and so on. That was precisely the point in Committee and is still relevant now. Nevertheless, the Labour party still has a manifesto commitment to renationalise the water industry.

The formula advocated in Committee involved poachers and gamekeepers. The poachers—the water companies—were to be overseen for the first time by gamekeepers, or regulators. One was separated from the other. That is the essential difference between private companies with a regulator and a state-owned authority. With a state-owned authority and a regulator, there are merely two Government Departments, resulting in massive regulation and red tape. That does not allow for advancement.

The hon. Member for Dewsbury (Mrs. Taylor) said that she had won some of the arguments in Committee. It seems that time dulls the memory as, to my certain knowledge, my right hon. and learned Friend the present Secretary of State for the Environment won hands down on all the arguments, as was widely acknowledged.

Despite the Opposition's experience in Committee, on Second Reading and during the rest of the Bill's passage, they have tabled today's motion. According to the Leader of the Opposition—for a while yet, anyway—and his colleagues, "this House is alarmed". The House may be alarmed, but it does not seem that many Opposition Members are alarmed. One could fire a double-barrel shotgun in the Chamber without hitting many. Today is an Opposition Supply day, and next Thursday the hon. Member for Copeland (Dr. Cunningham) will say that it is disgusting that no time has been allowed for various debates.

However, today is an Opposition day and the Opposition Whips must be saying, "Thank God for the two or three new faces that we see here." New Opposition Members have been busy writing their little speeches to keep the debate going until 10 o'clock—such is the alarm. The only one showing alarm—and not for the first time today—is the Opposition Whip, the hon. Member for Glasgow, Pollok (Mr. Dunnachie).

Mr. David Evans (Welwyn, Hatfield)

They are all in the Cafeteria.

Mr. Knapman

Yes, that is where they are.

Companies in the water industry are successful. It is no shame to be showing record profits, and no disgrace to have record dividends or salaries. As has been widely reported, customers pay, on average, 46p a day for the delivery to the tap of 200 gallons of water weighing a ton or more, at a time when capital expenditure of about £28 billion is being promised.

Mr. Evans

The debate is unreal.

Mr. Knapman

My hon. Friend the Member for Welwyn, Hatfield (Mr. Evans) says that it is unreal to suggest that the House is alarmed when the industry has such a record with which to commend itself to the House. That record shows just how much more efficient the private water companies are than their predecessor authorities.

I think that my right hon. Friend the Chancellor will be pleased that companies are showing record profits. It is only if companies show record profits that people pay record tax demands, which allow for record sums to be spent on the national health service and other sectors.[Laughter.] The hon. Member for Pollok laughs, but that is why there is privatisation in Poland, Hungary and the USSR. Before long, there will be privatisation in Albania, but the Opposition Front-Bench team will still be unable to see the advantages and will continue to believe in everything being state owned. The Labour party will soon be the only party, not just in Europe but in the world, with its own peculiar view on that subject. With such thinking, it should be preserved as a museum piece.

My constituency is partially served by the Severn Trent water authority and partially by the Wessex water authority. I shall use the Severn Trent authority as an example, as have one or two of my hon. Friends. Last year it spent £300 million running the business and at the same time ploughed £585 million into new capital investment projects. It spent more than it received from customers in any one year. That shows the need for the RPI plus K formula that was set up. If it is inadequate, it can be altered with the agreement of the regulators—indeed, on their instructions. The company's planned expenditure for the four years from 1990–93 is more than the amount allowed to the water authorities in the previous 10 years. I believe that the same may be true of other companies. Now, a business decision is taken in co-operation with the regulators.

I hope that my right hon. Friend the Secretary of State for Wales will acknowledge the legal ring fence around the core water businesses. It is important to retain that ring fence, and there should be no cross-subsidisation. However, such companies must be granted the freedom to manage themselves and diversify if they wish. Some have already done so successfully and should be allowed to continue to do so. That is the case in France and other countries, even those with socialist Governments where private companies are encouraged. Standards have not slipped in the Severn Trent water authority, where there is a 99.6 per cent. pass rate on drinking water and a 99.8 per cent. compliance rate with effluent standards. That authority's record is jolly nearly perfect.

According to the motion, the House is alarmed, but my constituents and those of the Severn Trent district are so "alarmed" that only 15 customers in every 10,000 complained last year. I hope that that statistic puts matters into perspective. It may be that, as people are now clearer about how to complain, more are encouraged to do so. They also know that complaints made to a private company might result in action, whereas it was not much use complaining to a water authority that was essentially a Government Department. That factor may account for some additional complaints, but a rate of 15 out of every 10,000 is not too bad.

The motion has nothing to do with Labour's concern about public interest, but everything to do with the party's traditional hatred of successful companies and capitalism in general. Its arguments do not change and I suppose that the £28 billion can be found from the public sector. Is that the Opposition's promise? If so, we should start to calculate the total of all their pledges for the next election in four years' time. If the Labour party really is committed to expenditure on such a scale, it should say so clearly. It should not pretend that all the improvements can be carried out and no one will actually have to pay for them.

It is marvellous that such a level of services can be provided for 46p a day. Demand for water will certainly increase greatly as more people use dishwashers and the number of two and three-car families increases. Instead of a negative motion that does not even appeal to Opposition supporters—I suppose that it will soon be said that I have thinned them out still further—the Opposition should state how they will provide for the increased demand. Reference has already been made in the debate to reducing leakage, using more modern and efficient sewage plants and the need for vast capital expenditure.

In the 1980s, a considerable number of abstraction licences were granted. I am uneasy about whether treating all the bogs and water collection areas as a sponge that can be squeezed as hard and often as possible is necessarily in the public interest. In chalk regions, in the south and, not least, the south-east, many of the upper reaches of rivers and streams are drying up—the Avon and Darent are well-publicised examples of that. If my hon. Friend the Member for Dorset, West (Sir J. Spicer) were here, he might say that the River Piddle was well named. I am not sure that the effect of large-scale underground abstraction is fully understood and I should be grateful if my right hon. Friend the Secretary of State should refer to the latest thinking on that subject in his wind-up speech. It will be interesting to see which farmer will sue first for loss of crops due to the drop in the watertable, as levels continue to drop.

May we have the latest thinking on the possibility of charging by meter? I do not think that anyone is seriously suggesting pre-payment meters, which were mentioned by the hon. Member for Birmingham, Northfield (Mr. Burden). The basic proposition that one pays for what one uses is a sound philosophy and, moreover, can be justified on environmental grounds. Is it correct that the introduction of metering might result in a 10 per cent. decrease in consumption? Simultaneous increases in demand would act to nullify that trend. If it is environmentally sound to use less water, then the presence of meters is a regular reminder in the form of a bill that people should use water sparingly.

Far more water is lost, however, through leaks. I understand that 25 gallons in every 100 from the reservoirs are lost, and because of increased expenditure that huge loss will be greatly reduced in the next few years. That can be done only with private capital. Of the 25 gallons leakage, about 15 may be lost between the reservoir and the stopcock. I am sure that water companies will deal with that, but it appears that the other 10 gallons are lost between the stopcock and the tap in the domestic property. That problem must be looked into; we must ask whether metering will help to reduce the loss of one gallon in 10.

Unless people are directly responsible for paying for what they use, they are unlikely to want to go to the expense of repairing their pipes. I hope that the Government will think along those lines. I suspect that the present system, under which all new properties must be metered and anyone else who feels disadvantaged without a meter has a choice, represents the right approach.

The hon. Member for North Cornwall (Mr. Tyler) made an interesting speech, in which he drew attention to his constituents in Bude. He said that an elderly couple spent more on water than on rates. I wonder whether he pointed out to them their right to a meter if that was to their advantage. He hinted that they did not use much water—

Mr. Tyler

I did point out that option to them, but as the cost of a meter is £200 and there is an additional cost of £200 before it starts metering a single gallon, that would not be to their advantage.

Mr. Knapman

The hon. Gentleman will realise that the couple's method of payment was not changed by the Act. This method of charging has been followed for a great number of years, including during the Lib-Lab pact. The Government are now looking at varioius methods of charging, and have acknowledged that there are anomalies. I am glad to hear that the hon. Gentleman tried to help his constituents, but I am surprised that he did not mention that in his speech.

Another option is to provide new reservoirs. It is reasonable to argue, whether we have meters or not, that, because of increasing demand and consumption, more reservoirs will be necessary. That could be an argument against metering. I asked about the cost of metering the whole Severn Trent area; the answer bears out what the hon. Member for North Cornwall said: it might be as much as £700 million. But the cost of the Carsington reservoir, which was opened by Her Majesty a few weeks ago, was £100 million. Thanks to the benefits of an integrated system—yet another benefit since privatisation—water can flow to almost any area served by Severn Trent. If metering costs £700 million as against a new reservoir costing £100 million, Ministers may believe that constructing more reservoirs is cheaper and more efficient than metering.

Politics is always a question of priorities. I wonder what the Minister's thoughts are. If we are to reduce demand, we need metering in some areas. We must reduce waste of water; that is already happening in many areas and has been promised by most water companies. Alternatively, we can increase supply by storage in reservoirs. Again, it is a question of priorities, although we must recognise that the whole idea is not to have politicians running the business any longer.

Today's motion notwithstanding, it was absolutely right to privatise the industry. The companies are strong and profitable, and most importantly of all, they are regionally based. Many of the companies used to be based in London. It is important to the areas concerned that water and electricity companies be regionally based.

The House should be grateful to the Opposition for raising this issue, because it gives us the chance to congratulate the water companies, which are looking after their staff, their shareholders and—by improving standards—their customers. Those customers are supplied with an average 200 gallons a day for 46p. That being so, the House need not be as alarmed as the Opposition suggest.

7.44 pm

Ms. Diane Abbott (Hackney, North and Stoke Newington)

I want to talk about the effects of privatisation of the water industry on my constituents. I want to talk about the grotesque pay rise awarded to himself by the chairman of Thames Water; about Thames Water's profiteering; and above all about Thames Water's asset-stripping to enhance its profits at the expense of Hackney's environment.

Throughout the 1980s, privatisation was sold to the British public in terms of efficiency and service. In fact, it was always about profit, not people, and about big salaries for the few and higher charges for the many. Water privatisation is a perfect example of what was wrong with all the privatisations that the Government pushed through in the 1980s.

Thames Water, which covers my constituency, has 17.5 million consumers. Since privatisation, they have seen the salaries of the bosses of Thames Water shoot up. For instance, the salary of Roy Watts rose from £34,000 in 1988 to £160,000 in 1991. Conservative Members may wonder why that matters, but if they earned the average salary of one of my constituents and saw one man's salary shoot up without justification, they might be shocked too.

The highest paid director in Thames Water earns £209,000. Salaries for the top management have shot up, with no justification on grounds of productivity or any other criteria. Charges have risen, too. In 1986, the average domestic consumer in the Thames Water area paid £82.24 a year. Now, he pays £139 a year. Complaints have risen as well: last year, there were more than 10,000 of them. In the meantime, Thames Water has diversified into property speculation, to the concern of the regulatory authorities.

Stoke Newington's two reservoirs are a matter of anxiety to Hackney people and to me, because they show the way forward for other water authorities. They show the sort of profiteering and asset-stripping that water authorities throughout the country will go in for under the new regime.

We have a 93-acre reservoir site in Stoke Newington. The site became redundant because of the new London ring main. It is the size of Regent's park, a sort of secret garden in the middle of Hackney. On it stand four listed buildings, including a remarkable pumping station built to look like a Scottish castle. The site of the two reservoirs has plants, wild flowers and fish and 16 species of bird including smew, Bewick's swans, tufted ducks, gulls and grebes. There are also gerbils. All this is remarkable in one of the poorest and most built-up inner city areas in the country.

This open space, this nature reserve, serves 26,000 people, including my constituents on the huge Woodberry Down and Lincoln Court estates. Few of them have back gardens. There is much unemployment, there are many elderly people and young children, and there is a terrible shortage of open spaces. We in Hackney want this precious site redeveloped for need, not greed.

Local people have come up with several suggestions for the site: a nature reserve, a site for sailing, canoeing and sports—important in an area of such high youth unemployment; a leisure centre; an alternative technology centre; a garden centre; a workshop space. A site of this magnitude will not fall vacant in Hackney again; nor will the opportunity to provide such amenities come round again.

But what is Thames Water thinking of doing? It goes almost without saying that rational planning in the public interest is not on the agenda. Thames Water's plans involve expensive redevelopment, mostly for houses. It will keep one reservoir as it is and might allow some limited sailing, but it will not allow any other leisure activities. At the other reservoir, there is a proposal for a housing development of 70 to 90 units on a two-and-a-half acre site. The remaining 19 acres will be covered in housing.

Thames Water is not interested in leisure or nature or in the wishes and priorities of local people: it is interested only in maximising its profit. It ought to know the end result of such speculative development, because it has the example of Canary Wharf, a major site that currently has no proper public transport and few facilities. No thought was given to local people when it was being developed, and now it is a huge white elephant. However, Thames Water presses on regardless.

I and my constituents oppose a massive private housing development on the site, because the houses would be completely out of the reach of the ordinary people of Hackney. The development will not meet their housing needs. It will be a yuppie housing stockade in the middle of one of London's poorest areas. The people of Hackney need play spaces for their children and recreational space for young people and retired people. For a privatised water industry that is completely profit-led, such facilities are apparently out of the question. As I have said, Thames Water is not interested in local people or in nature conservancy. The new management have awarded themselves grotesque pay rises and are interested only in the bottom line.

Future legislation should provide for poor families to be helped with their water bills. Conservative Members could scarcely contain their boredom and derision when Opposition Members opposed the abolition of social security help with water charges. With their MPs' salaries and, is some cases, big consultancy fees, they do not understand what water charges mean to pensioners and people on fixed incomes. The decision to abolish social security help for water bills is a retrograde step.

I invite the Prime Minister and the Secretary of State for the Environment to visit Hackney. John Major and Mr. Howard went all the way to Rio to talk about the environment. They should come to Stoke Newington to look at our environment. I invite them to speak to people on Woodberry Down estate, to go to the top floor of Lincoln Court and admire the view over the reservoirs and the wildlife, and see how that would be ruined by Thames Water's redevelopment plans. I urge them to talk to mothers and young people on the estates about the need for play space and recreation areas. If they did that, they would find that the need to protect our environment is every bit as pressing as the need that they found in Rio. They might find it in their hearts to ask Thames Water to reconsider its plans for greedy property speculation.

Hackney needs open spaces and homes to rent, and the water authorities should not be allowed to award their managers ludicrous pay rises or to engage in profiteering. Above all, they should not be allowed to asset-strip our environment in the search for profit. Thames Water is a major landowner in London, with over £1,000 million-worth of property. If it is allowed to implement its plans for the reservoir site, it and the other water companies will see it as the green light to continue asset-stripping. Before privatisation, water authorities saw themselves as custodians of the environment. The people of Hackney wish that the privatised water companies would take their responsibilities seriously.

7.54 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

This is an important debate about the future of an industry with responsibility for the very essence of life. Since privatisation, as many hon. Members have said, investment has been high and will be about £28 billion over the next 10 years. That amounts to £5,000 for every minute of every day. All hon. Members agree that capital projects must be paid for by the consumer or by the taxpayer. Labour's manifesto made it clear that a Labour Government would return water company assets to common ownership. A Labour Government would pay not only for that, but to keep water bills down, and the taxpayer would be faced with a double whammy.

I am concerned about the delivery of quality water. European directives have increasingly imposed more stringent demands on the water companies. Nitrate limits have been lowered from the World Health Organisation's approved level of 100 parts per million to 50 parts per million and may shortly be further lowered. The companies are also being obliged to meet other stringent demands. The limit for pesticides is down to 0.1 microgrammes per litre. That is such a low level that sophisticated techniques are required to detect it, and such techniques are expensive. The water companies deserve help from public authorities to meet those standards and British Rail, local authorities and farmers must use pesticides responsibly.

The water companies will also have to meet the European directive on lead. The demand will be stringent in, for example, Wales and the north of England. Lead levels must be kept at not more than 50 parts per million. Should the taxpayer meet the bill, or should the consumer be obliged to put his water pipes in order? Water must be treated as a precious resource. Anglian Water recently estimated that over the next 30 years the demand for water will increase by a staggering 41 per cent. We must look diligently at how that increase in demand can be met. Will we abstract more from our rivers and build more reservoirs? Thames Water is about to face a massive public inquiry over a proposal for a big new reservoir just outside Didcot. There may come a time at which supply cannot meet demand.

I welcome the initiative by the Secretary of State for the Environment in calling for a careful examination of the use of water resources. I also welcome yesterday's news that the National Rivers Authority is investigating the levels of about 40 key rivers. I hope that it will examine the levels of three key rivers in my constituency, the Churn, the Coln and the Windrush.

Over the next 10 years or so, there must be a new method of charging. The new council tax will provide an ideal opportunity to look at new methods more closely related to the size and value of properties. It will also provide an opportunity to examine water charges for one-person households. Larger properties do not always contain more occupants, although that is usually the case. The cost of universal metering could not be fully justified. Most water companies now require metering for the major industrial users and large hotels, commercial premises and agricultural users. They also require all new houses to be metered. Partial metering is the best way forward, with changes for other consumers based on the new council tax.

Given the inexorable rise in demand, there is a need to rectify leakage, which averages 17 to 20 per cent. in most water company pipes. Before privatisation, leakage in Thames Water was 28 per cent. so privatisation has forced the water companies to consider carefully the amount of water that is being lost. Thames Water recently introduced a sophisticated technique to monitor water flow by computer. In the past three months, it has reduced leakage by 3 per cent. That is to be welcomed, and I urge other water companies to consider whether they cannot adopt that technology to their benefit.

It is not only in water company pipes that leakages occur. About 10 per cent. of all water supplied is lost in consumers' pipes. The average householder uses 28 gallons a day, and a leaky tap could lose almost the same amount.

The use of hosepipes and water sprinklers should also be carefully reviewed. While the average consumer uses 28 gallons of water a day, a sprinkler can use 200 gallons an hour. Water companies should consider introducing a licensing system for hosepipes and sprinklers. Hosepipe use is a social activity rather than a necessity. If one walks down any street in this country, one can see people watering their gardens. The moment someone comes along they want to talk to, they stand still, drop the hosepipe and start chatting.

Privatisation has been an outstanding success. Despite the fact that the water industry is one of the most regulated of all in the country, it still produces a level of service second to none. Investment, productivity and quality is up. Why else would the canny French want to invest in our industry, and to bottle our own excellent water?

8.1 pm

Mr. David Hanson (Delyn)

I congratulate my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) on his maiden speech. This morning, I had the pleasure of joining him in a game of football between the parliamentary team and members of the Press Gallery, which we lost 3-0. My hon. Friend the Member for Cannock and Burntwood (Dr. Wright) also made a sterling effort in that game. In the same way that we lost that match, I am sure that we will lose today's motion in the Division, but, having heard the speeches of my right hon. and hon. Friends, I am confident that we have won the argument.

When water was privatised in 1989, the Government's objective was to ensure that private investors had a say in controlling the new companies. A resource that was once owned by everyone in this Chamber and throughout the United Kingdom was transferred to the ownership of a selected few. The influence that I and my constituents once had on the industry's future direction was lost for ever.

Presumably the Government believed that water services and standards would be improved by privatisation, but, as every Opposition speaker has said, there has been a noticeable drop in standards—and, thanks to Government policy, some of the poorest of my constituents are denied water services.

My objections to water privatisation are summed up in the Opposition's motion, which mentions the record levels of disconnections, rising prices, the inflated salaries of management and the increasing sham of investment.

Water charges in my constituency have increased sharply since privatisation. In 1988–89, Welsh Water charged £147 per annum. By 1990–91, that figure increased to £168; in 1991–92 to £195; and this year, to £212. That is equivalent to annual rises of just over 9, 14, 10 and 8 per cent. respectively—a total of nearly 42 per cent. since privatisation. At the same time, the retail prices index rose by only 19.5 per cent. Welsh Water charges have increased by 23 per cent. over and above every other commodity.

Conservative Members argue that investment is important, and that it accounts for the initial prices rises, but why should the whole burden fall on consumers—many of whom are poor and face other pressures at this time? The cost of investment could have been met by borrowing, to be repaid over a period of time. Perhaps the Minister will explain why the whole burden of investment costs has fallen on the consumer.

Many of my constituents ask out loud why Wales, which is blessed with water and is an exporter of water, has to meet price increases of 42 per cent. One of my constituents living in a village near Mold in Clwyd is an 82-year-old widow who has a one-bedroom flat. Just before the election, she wrote to me asking why she has to pay £212 a year—the same as an incomed family living in a five-bedroom house down the road. There can he no justification for that.

The director of the National Association of Citizens Advice Bureaux said: Water is a vital service, and action should be taken to ensure that it remains available to vulnerable sections of the community. The citizens advice bureaux are handling 55,000 water debt cases a year throughout the United Kingdom. My constituents very often cannot afford to pay their water charges—it is not that they do not want to pay. When a water charge of £212 is coupled with the poll tax and a mortgage or a higher council rent, and given that the Government will not introduce a minimum wage, many of my constituents find themselves under tremendous financial pressure.

In 1989–90, which was the first year of privatisation, 1,356 consumers had their water services cut off. Last year, the figure rose to 2,951. I ask the Minister to compare Welsh Water's record with the rest of the United Kingdom. For every 10,000 Welsh Water customers, 26 were cut off—but the figure for England was only 10. What is the reason for that discrepancy. Why are Welsh Water's customers served so badly? Why have I, as a Member of Parliament, no say in that performance of that company, which operates a monopoly?

Cut-offs are occurring because of price increases, and because council tenants are having to meet separate water charges for the first time, and homes are being repossessed.

Mr. Hall

Does my hon. Friend agree that Welsh Water's charges are expensive by comparison with other companies? Is not that the reason for the higher number of cut-offs in Wales?

Mr. Hanson

I thank my hon. Friend for that observation. However, not everyone in Wales is fortunate enough to suffer disconnection. The chairman of Welsh Water, John Elfed Jones, has seen his salary increase to £143,000, and with shares and other perks worth £200,000 he has enjoyed a 211 per cent. rise in his salary since privatisation.

This year, Welsh Water will make a pre-tax profit of £143 million, which is 11 per cent. higher than last year. According to weekend newspaper reports, bonuses worth £290,000 are heading Mr. Jones's way. That is insensitive and obscene when the company over which he presides is doubling and trebling the number of disconnections in my constituency.

Whom am I to turn to? Am I to turn to Ian Byatt, Director General of Water Services? He said: If they consider their executives are worth a lot of money, that is a matter for the shareholders and not for the regulator to challenge. How can I explain to my constituent in Mold who must pay water charges of £212, and who may shortly join the list of those who are disconnected, that I have no power through the regulator to challenge the massive salary increases given to the chairman of Welsh Water?

We are told that higher charges are to pay for investment. In the final three years of the last Labour Government, investment in the Welsh water industry in real terms totalled £129 million, £133 million and £103 million. In the first 10 years of the Tory Government, that investment dropped to the lower end of £60 million, £70 million, and £80 million. Only since privatisation has Welsh Water's capital expenditure returned to the levels at which it was when my party left office in 1979. When I asked the Leader of the House about that during Prime Minister's Question Time last week, he failed miserably to answer.

Our approach to Welsh Water should not be entirely negative, although we are very concerned about price rises, capital expenditure and cut-offs. I favour an element of public control, which would give my constituents and me a line of accountability. Like 70 per cent. of the Welsh people who voted on 9 April, I should like an elected Welsh assembly, and I should like it to control the water service. The Conservatives will disagree with that; let them go to Wales, where 27 Labour Members were elected on 9 April, along with other Opposition Members who took Conservative seats. Welsh Water should be brought into line with other services: it should be placed under the control of an elected assembly, so that it is accountable.

In Wales and elsewhere, water services are not accountable to hon. Members and the people whom they represent. There is no way in which we can influence the policies of water companies. If the Government vote against the motion—as they will—they will be avoiding their responsibility to stand up for the poorest of my constituents, who face the imposition of cut-offs by an insensitive company. They will be avoiding their duty to put down a marker—to say, "Whatever our political differences, we know that it is insensitive of water company chairmen to accept such large bonuses and salaries while presiding over a rundown in capital expenditure, and allowing services to be disconnected."

If you go into the Lobby and vote against the motion, you will demonstrate to the people of Delyn, and the people of Wales in general, that you are not concerned about their water services—

Madam Deputy Speaker (Dame Janet Fookes)

Order. The hon. Member should remember that he is addressing me, and I am not going anywhere.

Mr. Hanson

I am sorry, Madam Deputy Speaker. I have done that before, and I shall probably do it again.

If Conservative Members vote against the motion, they will let down the people of Wales. They will he endorsing large price rises and high salaries, and they will show the people of Wales why there was an overwhelming vote for alternative Governments on 9 April.

8.12 pm

Dr. Tony Wright (Cannock and Burntwood)

An earlier speaker began by declaring an interest as a director of a water company. I declare an interest as a consumer, and as one who represents 3,500 people in south Staffordshire whose water supply has been disconnected in the past year. That figure is seven times the national average, and more than twice as high as that applying to the next worst company.

People in my area feel very strongly about what is happening to the water industry, and especially strongly about disconnections. I should add that in the past year the company concerned has achieved an 11 per cent. increase in turnover, and a 42 per cent. increase in profit after tax. It has achieved a dividend increase of 642 per cent. since the time when, at 4p per share, it declared as a statutory water company. Now, having converted to plc status, it declares at 40.2p. We are not dealing with a company that is strapped for cash.

I declare another interest. People keep mentioning a K factor. That talk of "RPI plus K". When my constituents ask about the scale of water charges, I have to explain how those charges are calculated. As Conservative Members have instructed, I talk of "RPI plus K", telling them that they need K to pay for all the capital spending. My constituents then ask, "May we have some of this K? We have a lot of capital spending to do. Why do only the water companies have K? Is that what pays for all the salaries that we keep hearing about? Where does it come from?" They have heard of Special K and they know that it does good things, but this is ridiculous.

All that focuses attention on the history of the subject that we are discussing. Hon. Members have mentioned leakage from pipes and water company investment. In the 1980s, Opposition Members argued that infrastructural investment was needed because, as well as improving the service, it would help the economy. The Conservatives, however, said that they did not want that, and they are having to act now only because of European directives about higher standards.

The tragedy is that with a different policy we could have embarked on all those measures over the past 10 years, and they need not have been financed directly through consumer prices—which, of course, affects poor consumers most. Conservative policy has led to the making of a strategic choice: the Government have been forced to act in this way because they turned off the tap of infrastructural investment for so many years.

My main point has been touched on by a number of other hon. Members. It relates to the question of accountability—the question of who is now answerable for prices, disconnections, corporate salaries and all the other matters that we discuss in the House. What can the House do about that? What can Members of Parliament do for their constituents? The answer, I am afraid, is nothing.

What, indeed, can be done by Ofwat and its assorted arms? Again, the answer is nothing. Ofwat can snap at the companies, but the companies can snap back. Unless a licensing system and a code of conduct are introduced which will make the companies work genuinely in the public interest, there will be no reason for them to do so.

Ministers tell the House, as a Minister has told us today, that they are not responsible for the matters about which hon. Members have spoken, but in a sense Ministers are the public relations arm of the water companies. They are saying, "These are splendid organisations—go out and buy some shares." When we advance criticisms, they say, "The regulators are there, and they are independent."

There are problems with the regulators and with the regulatory regimes that they operate. The way in which they are appointed is a problem. The idea that regulation solves the accountability problem is all wrong. After all, we are talking about monopoly suppliers of essential services. Hon. Members want to ask the Government about such matters as pricing, but the Government simply say, "Do not blame us—it is not our fault. These splendid companies are doing these things, and the regulators are keeping an eye on them." That is a profoundly unsatisfactory answer. There is a vacuum where accountability should be: one kind of accountability has been removed, and nothing has been put in its place.

Let me offer a practical suggestion. If the House were less supine in relation to the Executive, it would not tolerate such a position. It would not tolerate the creation of what are essentially private governments, delivering essential services to our constituents on a monopoly basis with no accountability. It would demand to be involved in that process, to appoint the regulator, perhaps on a short-term contract, to have a regular review of the regulatory process and to be centrally involved in that. But I am afraid that it will not have that. It will have the kind of thing that we have seen today, and the upshot of that will be that as the issue becomes one of who speaks for the consumer and the public interest, people will increasingly see that it is Opposition Members who speak for the consumer and the public interest and that it is Conservative Members who have abdicated such responsibilities into other hands—remember again, monopoly suppliers of essential services.

The Government, softening us up for privatisation, had a water awareness campaign. They had to remind us that there was a thing called water. They thought that people had forgotten that, that they needed to spend several million pounds of our money to tell us that there was a thing called water so that we might go out and buy some shares in companies that would sell it to us—our company that they had taken. It was a nice little idea.

The end of the story is that the Government are now engaged in a non-awareness campaign, trying to make people not aware of what has happened to the process and to the companies so that people will not be aware of pricing levels, real investment records, corporate salaries, disconnections, or the realities of life when public services are provided in that way. In particular, they will not be aware of the vacuum of accountability around the process. People will look to the Government and to the House to do something about what has been talked about today. The Government will say, as they have said, that they can do nothing about such things and people will therefore increasingly look to Opposition Members to do something.

Mrs. Mahon

On a point of order, Madam Deputy Speaker. Earlier this evening I intervened in the speech of the hon. Member for Pudsey (Sir G. Shaw) and asked him how much he received as a non-executive director of Yorkshire Water. I have now learnt from Hansard that that has been wiped from the record. I should like your advice, Madam Deputy Speaker, on whether that can be possible when a Member has asked such a question in the House and what I as a Back Bencher can do to have it put back on the record.

Madam Deputy Speaker

The hon. Lady will appreciate that I was not in the Chair at the time. I shall ensure that inquiries are made. As I am sure the hon. Lady will understand, I cannot take the matter beyond that point now.

Mr. Barry Jones (Alyn and Deeside)

Further to that point of order, Madam Deputy Speaker. I distinctly heard my hon. Friend the Member for Halifax (Mrs. Mahon) put that question.

8.22 pm

Mr. Nick Hawkins (Blackpool, South)

I rise to address the House on this subject because investment in pollution control is of great importance to my constituents in Blackpool, South. Hon. Members may be aware from adverse publicity that for a number of years Blackpool has had a considerable problem of sea pollution which I am glad to say is now being addressed by urgent measures which are being taken by North West Water.

It seemed appropriate today to recognise the great achievement of North West Water in tackling the problem, first by a disinfection scheme which is due to start during this bathing season and, secondly, by a construction of a new sewage treatment plant which is expected to be operational by 1995. I stress that it is only the success of North West Water that has enabled it to make investment. The need for such investment requires that it be a successful company, as it is, earning the profits that it does.

In speeches made by Opposition Members, including the hon. Member for Dewsbury (Mrs. Taylor), there seemed to be an attempt to suggest that profit is a dirty word. It is the dirty water that the profit is combating. It is essential that water companies such as North West Water continue their investment in pollution control because only then will tourism, on which my constituency depends heavily, be able to recover from its current difficulties.

I hope that Opposition Members, particularly those with connections in the north-west, will bring whatever influence they can to bear on the Labour leader of Lancashire county council who has made a crusade of blackening the reputation of Blackpool, stressing the pollution that has unfortunately occurred due to under-investment in pollution control when the Labour party was in power for many years rather than concentrating on efforts to eradicate that pollution. The Opposition need to concentrate much more on constructive measures to control pollution rather than on criticising the problems which, in many cases, can be laid at their door. It is only since the Government came to power and introduced the measures that they have in relation to the water industry, that we have had the investment that was so badly needed to control that pollution.

It is important to consider the progress that is now being made on the cleanliness of bathing waters around Britain's coastlines and to recall that an independent body such as the Consumers Association has stressed that many continental European countries are far less scrupulous than Britain about testing their bathing waters. Opposition Members and their colleagues outside the House have stressed the problems of European Commission prosecutions of the United Kingdom Government for water pollution. However, they should recall that 11 of the 12 EC countries are currently facing prosecution by the Commission for dirty bathing waiters. The only reason why the 12th, Portugal, has not been prosecuted is that the EC directive concerned, under which such prosecutions are brought, will apply to it only later this year.

Because Britain's testing methods are more scrupulous and scientifically accurate, we are providing ammunition to the European Commission which is not provided by many other EC countries. Therefore, it is far from the case that we have the dirtiest bathing waters in the community, as I am sure any of my constituents and any other hon. Members' constituents who travel abroad will be only too well aware.

Standards of United Kingdom waters are improving all the time and when testing is continued later this year during the tourist season we shall see the fruits of that. The EC blue flag symbol will be displayed at far more British beaches. It is important for me, as the Member of Parliament for an important tourist resort, to stress that Blackpool's bathing waters are improving all the time. I hope that that will encourage more and more tourists to visit my constituency.

However, the water industry has other priorities which also involve my constituency. The Minister may be aware that my constituency has an extremely successful manufacturing company involved in the production of water treatment plant. My right hon. Friend, his colleagues and the Director General of Water Services have been in correspondence with me about the importance of ensuring that that company can sell and distribute its products as widely as possible in order to earn important income from exports and continue important business development in Britain. I am extremely grateful for the help that the Minister, his colleagues and the director general have given. I am particularly grateful for help with the problems caused by the variability of water pressures set by local authorities when new housing developments are planned.

There has been a difficulty with which my hon. Friend the Minister assisted my constituency company. Often, local authorities specify a range of water pressures that are very different from the water pressures that can actually be expected. Wide ranges of pressures have been specified by local authorities and the equipment that my constituency company has been encouraged to develop and produce cannot be ordered because the range of pressures specified is too wide, even though it could be used. I urge my hon. Friend and his ministerial colleagues to continue the work that they have done in encouraging local authorities and others to specify the exact water pressure to be expected on different housing developments. That would assist companies such as that in my constituency.

I also urge my hon. Friend the Minister to continue his discussions on coastal zone protection with our right hon. Friend the Minister of Agriculture, Fisheries and Food. I hope that when the new environmental protection legislation comes before the House it will incorporate continued firm policies to improve coastal zone protection. That issue is extremely important in my constituency, particularly for hotels near the sea front. We need a programme of sea defences in areas such as mine which suffer the extremes of tide and wind which can cause flooding problems at very high tides. We have been fortunate in recent years not to have had those high tides but businesses in my constituency have suffered from serious flooding in the past. I am aware that the coastal zone protection document produced recently by the Minister of Agriculture, Fisheries and Food was widely welcomed in my constituency. I trust that the Departments involved will continue with those policies.

I support the continued investment in all aspects relating to water. It is so important in my constituency and I hope that my right hon. and learned Friend the Secretary of State will continue with his successful policies.

8.32 pm

Mr. Cynog Dafis (Ceredigion and Pembroke, North)

In a newspaper article, John Elfed Jones, the chairman of Welsh Water, said that he was adamant that his company gave "value for money". He insisted that water was relatively cheap, and gave figures to suggest that people were getting a fine product for a low price. On the surface, his argument seems perfectly plausible. Water is an essential and it is a wonderful thing which just comes to our taps. For most of us, the price is extremely reasonable. However, it may be that even those of us who are on good salaries will be squealing in a few years as the K factor leads to what will probably be a 50 per cent. increase in the price of water in real terms by the end of the century.

For low-income families, a sum of £200 or so a year is a serious burden. That point has been made more than once today, but it needs to be made again. It is not good enough to talk constantly about this wonderful commodity that is provided at a reasonable price. The fact that it can be a serious burden is reflected in the increasing level of disconnections.

The statement by the chairman of Welsh Water is somewhat complacent. The situation that he described conceals serious injustices—the sort of injustices that have been typical of government in Britain since 1979. The people of Wales have had to endure Tory government since 1979, despite the fact that that party has had less than 30 per cent. support in Wales for all that time.

The injustice is clearly linked to the creation of privatised monopolies. That term has been used several times, but it is true. The injustices is seen in the increased profits of Welsh Water over the past few years. Profits have increased from £95 million to £128 million up to £138 million over the past three years, and hefty dividends have been paid to shareholders.

The injustice is most clearly seen in the increase in prices over and above that required to cover inflation—the notorious K factor about which we have heard so much today. Welsh Water allowed a K factor of 6.5 per cent. To its credit, this year it has used a K factor of only 5 per cent. The purpose of the K factor, as has been said, is infrastructural and environmental improvements. In Wales, it is also to be used to deal with coastal pollution.

There is no doubt that investment is needed to deal with coastal pollution, which is a contentious issue in my constituency in west Wales. Recently, a survey of 20 beaches carried out by the district council on the basis of the EC water directive showed that only two of those 20 could be designated as excellent, five were good and 13 were poor. That is unsatisfactory, and it has serious implications for human health and, perhaps more importantly, for marine ecology. There is considerable evidence that viruses emanating from human sewage persist in sea water for long periods and, as a result, there has been evidence of sickness among sea mammals such as dolphins and porpoises in Cardigan bay.

Sea pollution must also be addressed for the sake of the holiday industry. There is a great deal of dissatisfaction and anxiety in my constituency about the effect of reports of sea pollution on the holiday industry.

Investment is required to deal with that. There must be investment in adequate treatment such as disinfection. Clearly, long sea outfalls are not the answer. In fact, it has been argued that long sea outfalls are worse for marine ecology, and mammals such as dolphins are probably more seriously affected. Human sewage gathering on the sea bed has serious effects on marine ecology generally. It is worth mentioning that, to its credit, Welsh Water has undertaken to provide full treatment in certain circumstances. In the Aberystwyth area, there is to be full treatment with ultra-violet disinfection. Welsh Water withdrew its original scheme for a long sea outfall, which would have met the EC standards for a designated beach at Aberystwyth but would have simply removed the damage elsewhere, either further out to sea or to another beach. The danger of EC designation of certain beaches is that it will simply move the problem elsewhere. As I have said, Welsh Water introduced an excellent scheme, but it did so only in response to intense and well-informed public campaigns and pressure from those who were not prepared to accept the original intention.

Such plans involve large-scale investment, and a great deal more is needed. It is certainly needed in west Wales. We must ask how it is to be paid for. That brings us back to the K factor. It is to be paid for by the K factor, through consumer pricing. It is not fanciful to describe the K factor as a non-progressive tax. Water bills are made up of a standing charge and a payment based on rateable values, which have only a tenuous relationship with people's ability to pay. Environmental improvements are being effected by charging the badly-off the same as the well-off. That gross injustice is all too typical of the policies from which we have suffered in the past 13 years, which found their apotheosis in the poll tax.

My party is convinced that environmental improvements should be funded from general taxation. People have suggested borrowing, which is another reasonable suggestion, but environmental improvements that benefit everybody should be funded from general taxation. Even Conservative Members have made that suggestion.

Welsh Water recognises the force of the argument, as evidenced by its recent application to the west Wales task force for funds for a sewage treatment works at Goodwick and Fishguard. It recognises the need for environmental improvements to be funded not only from itself but from public funds. That is part of the economic renewal programme for west Wales. I hope that it is successful in obtaining the funds, but it recognises the need for funds from general taxation and not simply consumer pricing.

Plaid Cymru takes the principle of social equity further than that. People entitled to income support and housing benefit should be entitled to water charge benefit. That suggestion has been made by hon. Members on both sides of the House and recognised as a possibility. Water, like housing, is a basic need. If there is such a thing as housing benefit, why not water charge benefit?

We advocate a statutory 25 per cent. reduction in water charges for single-person households. That, again, is a reasonable suggestion.

The sense of grievance about social inequity in Wales is compounded by a national sense of injustice. I use the word "national" advisedly. There is a sense that Welsh water resources have been exploited. Wales is a nation rich in water resources. It has been plundered at great cost to its communities and with a minimum of benefit to its economy. Water is an emotive subject in Wales.

The injustice continues today. In 1991, Welsh Water's consumers—the majority of consumers in Wales—paid an average of £90 for water supply, compared with £58 in the north-west of England. Welsh Water is selling water to the north-west for two thirds of the price that is paid by its own customers. That must be crazy, and it is profoundly unsatisfactory.

It is high time that Welsh Water was able to get a fair price for its water. That has been recognised by the chairman of Welsh Water, Mr. John Elfed Jones. If we got a fair price for that water, it would make a significant difference to the burden on Welsh customers.

If the ambitious plans of the National Rivers Authority to pipe water from Wales to the south-east of England were to come to fruition, and if there were a fair pricing system, it could bring an additional £20 million to Wales, which would make a significant difference to our water prices. I regard that scheme as environmentally highly suspect. It is clear to me that we need to reduce the profligate use of water. If such a scheme to transfer water went ahead, it would be intolerable if we were not able to capitalise on a natural asset by charging a proper price for it.

I finish on an overtly political point that has already been made by the hon. Member for Delyn (Mr. Hanson). If we had had a Parliament in Wales, we would not have privatised water. Social equity would have been fundamental to our system of pricing, and we would have ensured that water resources were developed to provide economic and environmental benefits for Wales and a service to our own people. I am quite confident that a Welsh Parliament will come, but it may take a few years. That is why Plaid Cymru will seek to move a draft Bill in this Session to introduce measures to mitigate the injustice of the existing system. We shall seek support for the Bill from all parties in the House.

8.46 pm

Ms. Jean Corston (Bristol, East)

I thank you, Madam Deputy Speaker, for calling me in this debate, and I intend to confine my remarks to the issue of drinking water quality. The concern that has been expressed about the quality of drinking water is evidenced by the volume of sales of water filters. Hon. Members should go and see how many water filters are on sale in any high street shop or Boots the chemist. If people were not buying them, they would not be for sale in such numbers or variety. The incresase in sales of mineral water is not just a question of style or the yuppie life but of mistrust of drinking water.

That was brought to my attention a year ago by somebody in the Bristol, East constituency when I was the Labour parliamentary candidate. A complaint was made about the taste of drinking water in one part of my constituency, Barton Hill. I suggested that the complainant, who was a member of a tenants group, should write to Bristol Water and ask for an analysis of drinking water at her residence, which she was entitled to under statute. She did so and received a long printout, none of which she could understand, but, fortunately, some of us could. It showed that her water was in clear breach of the drinking water directive.

That led to people in other parts of Bristol, East making similar requests to Wessex Water. Indeed, it was bombarded with requests for analysis, each of which showed that the water supply throughout Bristol, East was in breach of the drinking water directive. Let us remember that the directive was issued in 1976, yet the Minister referred to it as though it were quite new.

The water in Bristol, East was shown to be in breach for ammonium, lead, nitrites, nitrate and pesticide. I shall read the pesticide printout for a residence in Bristol, East. For a pesticide called CMPP, 40 per cent. of samples contravened the directive. For a pesticide called atrazine, 66 per cent. of samples contravened the directive. When I drew that figure to the attention of Bristol Water, the head of water quality management said that atrazine was "not very toxic". I do not consider "not very toxic" reassuring, and nor do my constituents. As for a pesticide called simazine, 16.6 per cent. of samples contravened the directive.

I then discovered that some of the analysis sheets showed that water in some parts of my constituency contained coliform or harmful bacteria. Under the Water Act 1989, there is a legal presumption against coliform of any shape or form. The analysis sheet from which I am reading shows that water contained 16 per cent. coliform and 4.5 per cent. faecal coliform. That means faecal material in the drinking water of my constituents.

I drew that to the attention of Bristol Water, which replied that it was probably due to people rinsing nappies under plastic taps. What decade are such people living in? Nowadays people use disposable nappies which they do not rinse under taps. It is nonsense to suggest that one can blame faecal material in drinking water on one or two people who happen to have babies and plastic taps on the basis that they still use terry towelling nappies. That seems a spurious reason.

People have also rung to say that, when they filled their fish tanks, the fish died. What in the water causes fish to die? This is happening 15 years after the directive was introduced. The Government have had years in which to invest in the water industry, and it does not lie in their mouths to blame Labour, which had only three years to do something, for their decade of neglect since the 1976 directive.

If that was the case and still is the case—water is still in a bad state in Bristol, East—and if that had been made clear to the public in 1989, who would have bought shares in the water industry? People would have been told to buy shares, but in an industry that was massively under-invested and in which the water was clearly in breach of the directive. They would have been told that the Government had had only 10 years in which to comply and that their time was up and the game was up, so what did they do? They introduced the Water Supply (Water Quality) Regulations 1989.

Under those regulations, the water companies were told that they would be immune from prosecution if they gave what were called undertakings. They were sometimes given what were called relaxations. I wrote to Wessex Water and, as I practise law, I found out what the regulations meant in my constituency. I have here a list from the Department of the Environment. It states that Bristol Water must install treatment for pesticides by 1997. The date by which steps are to be completed for nitrides was 31 December 1995. How long before ammonia is to be removed from the drinking water in my constituency? The deadline is 31 December 1995. As for aluminium, it had only to investigate the extent of failures to comply with the appropriate standards and identify remedial work, and it has until 31 December 1994 to do so. There is no date for iron—steps are on-going. As for lead, it must identify zones by 31 December 1994.

Is that a record of success? We are told that coliform must be removed by 31 March 1990, which is an amazing admission, because legislation dated the year before made a legal presumption against the presence of coliform in drinking water in any event. That is a weird deception, and also a dereliction of duty by the Government.

People in my constituency are now paying ever higher prices for a product which many of them will never drink because they are worried about what is in it. It is no good accusing politicians of being scaremongers merely because they read aloud figures provided by the company about which the Government boast. That is not good enough. My constituents are being asked to pay by a Marie Antoinette Government, who say, "Let them drink Perrier."

8.54 pm

Sir Anthony Durant (Reading, West)

I first apologise to the House for not being here for most of the debate. I was attending meetings, and I apologise for arriving at this late stage. I am delighted, Madam Deputy Speaker, that you called the hon. Member for Bristol, East (Ms. Corston), who had waited for so long.

When debating the water industry, we need to consider its history. We must realise that most of the capital investment in the industry—in sewerage and water purification—took place in the 1800s. Much of the current equipment, especially that for sewerage, dates from that time when the money was first spent. When the Government realised that there was a major problem in trying to put the matter right, they had a choice: they could have introduced enormous levels of taxation and used public money in an attempt to put right an industry which was in a bad state, but they chose the alternative of privatisation, which I support. I believe that it was the right way to proceed.

When the first Bill on water privatisation was introduced, I was not very happy, because one of my interests in life is inland waterways and rivers. It occurred to me that, with the first Bill, there was a danger that issues such as navigation and the conservation of rivers would be neglected. Therefore, I was delighted when the second Bill appeared, setting up the National Rivers Authority.

I believe that the NRA has done a remarkable job. Lord Crickhowell, who was the Secretary of State for Wales, has taken on the job with great enthusiasm. He has prosecuted every water authority. He set out to shake them up—some seriously and some not so seriously. He recently announced that he will tighten regulations on extraction from rivers. There is a particular problem in my constituency with the River Pang, from which Thames Water extracts water. It is now in a serious state. It is a beautiful fishing river, and its condition is a cause of great concern to my constituents, especially those in Pangbourne which is based on the River Pang.

My concern and my criticism of the Government involves the environmental protection agency. I do not wish the NRA to be gobbled up by the agency which the Government proposes to establish. It should keep its role in dealing with water. I do not want the excellent powers being exerted by the NRA to be lost to the agency. Let us keep the National Rivers Authority.

The Labour party talks about renationalisation of the water authorities. Labour admits that it will take 51 per cent. of the stock, which will cost about £8 billion on present prices. It will then have dumped on it £28 billion, which is the current investment programme. All of that will have to come out of the public sector borrowing requirement.

The Labour party does not have a very good record on the water industry. It cut investment by one third when it was in power. Lord Wilson, when he was Prime Minister, appointed Denis Howell as Minister for water. His only success was that, on the day he was appointed, it started to rain, so he felt that he was a successful Minister. It was the same when he was Minister for snow, and the snow stopped the day he was appointed. He had some magic qualities, and had successes in that regard.

I well remember when Denis Howell introduced a water rate equalisation scheme, which other hon. Members may not remember. Wales had bad investment in its water industry because it did not have investment coming in from consumers. The scheme was introduced, and we in the Thames Water area had to pay certain sums to Wales so that it could put its water system right. That did not work, either.

We have the lowest water prices in Europe, which is to the Government's credit, because they have kept prices down. Opposition Members ask why we cannot borrow. If one borrows money, it has to be repaid and one has to pay interest on the amount borrowed, which is another debt to the consumer. The Government are putting money into the water authorities; they put in £2 billion to support the EC directive on clean water, which the hon. Member for Bristol, East mentioned.

The water industry is a good story, and it is getting its house in order. Water is being serviced better, and we have better quality. The rivers are cleaner. Salmon, for example, are now appearing in the River Thames, where they have not been seen for many hundreds of years. The quality of the River Thames, on which I spend a lot of time, is becoming quite clean and is looking very healthy. The NRA is doing a wonderful job there.

It is not all doom and gloom, as the Opposition claim; it is a success story. Of course improvements are expensive; water is expensive, which is one of the problems. People have not realised that one has to pay for water. As the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) said, water is an essential commodity. However, it must be paid for.

All sorts of ideas for helping those on the lowest incomes may be considered, and I am not necessarily against a scheme to assist such people, but we must pay for the water we use. I am in favour of metering, and I want it to be introduced on a much bigger scale.

One of my constituents ran a campaign to get a meter. He refused to pay his water bills because he lived on his own, he used the wash basin only twice a day and he flushed the loo only twice a day. He held out until his water was cut off. When he came to see me in my surgery he said, "Don't get too near me, because I smell." He was determined to get a water meter, because he felt that metering was the right way in which to tackle the water system. In the end, the water authority gave in and provided him with his own water meter. The result was that his bills fell and he paid only for what he used; so his campaign was successful.

I am in favour of water metering. I know that experiments are going on at present, and I shall be interested to see how they work out. There are now technical ways in which to meter water which do not require great amounts of capital equipment, and I believe that that is the way in which we must go forward.

I am in favour of the Government's policy on water. I believe that it is the right way in which to more forward. I hope that we shall improve the service, as the water authorities intend to do, and that we shall improve the capital investment and especially the sewerage system, which is where most of the capital has to go.

When I became a local councillor, we put in a main sewer because the local council was then responsible for sewerage. Many people said, "Isn't this going to cost and awful lot of money?" A very experienced councillor said to me, "You never get any complaints about spending money underground, but if you flush the loo and the sewage does not go away, you have a riot on your hands." We must have investment in our water industry, and the water companies are investing £2 billion. I hope that that will provide both the quality of the water, which the hon. Member for Bristol, East mentioned, and an efficient sewerage system.

9.3 pm

Mr. Bill Etherington (Sunderland, North)

I was interested to hear the hon. Member for Reading, West (Sir A. Durant) refer to Denis Howell, who was appointed Minister of drought, as some called the post, in 1976. I bitterly regret that the Labour Government did not do anything then to introduce the proposal for a national water network. It is appropriate that this debate takes place during the week in which the chairman of the National Rivers Authority is threatening to prevent water companies from abstracting water from certain rivers. Last year I spoke to people in Sussex, Dorset and other parts of the south country who were worried about the drought in the south of England. Sixteen years have passed by, but nothing has been done.

What concerns me—I have said this before, but it needs stating again—is that there are never any benefits from privatising a monopoly. Let us make no mistake about it. Since denationalisation of the water industry there has been no commensurate reduction in prices, and no improvement in services or quality.

Many people will point out that vast investment is required to bring water standards up to the quality required by European Community regulations. When the industry was nationalised, there was always the possibility that a water network would be built. We are now in the ridiculous situation of facing the threat of standpipes in the south and south-east while there is a glut of water in the north. The Kielder reservoir was built in the north-east at a time when a tremendous increase in industrial use was expected, especially on Teesside. That reservoir provides water to the rivers Tyne, Wear and Tees, from which water can be abstracted, but that is as far as it goes. There has even been talk of exporting water from the north-east to increase revenue for the Northumbrian water authority.

When one thinks about what will be necessary to improve supply and prevent the threat of drought in the south, it is a worrying scenario. We all know that every private company is required by law to look after the interests of its shareholders first and customers next. Imagine the wrangling that will be involved if a pipeline is to be built to bring water from the north to the south of England—it almost defies imagination.

As the years go by, the problem will not be resolved because there seem to be irreversible changes in the water tables and in rainfall patterns, and there is a burgeoning population in the south. Eventually the private companies will return to the Government with a begging bowl. I do not think that any private company would be willing to invest money when a service is involved. They will invest money for a return on their capital there is no problem about that—but will not invest in such a large-scale project. That was why so many industries were nationalised. It was not because they had been marvellous successes and the Government wanted to take them over for the benefit of the people, but because they were inefficient and were not providing adequate and suitable services.

I forecast that the Government will have to take action if we have another two or three years of low rainfall and problems with drought and lowering water tables. I do not believe that the private water companies are capable of agreeing among themselves to provide a national water network, which is the only possible long-term solution to the problem.

I hope that in the years ahead I shall not have the dubious pleasure of looking back on these words and saying that I was right. I should love to be proved wrong, but I do not think that that will happen.

9.7 pm

Mr. Barry Jones (Alyn and Deeside)

I am glad to follow my hon. Friend the Member for Sunderland, North (Mr. Etherington) and that he caught your eye at this late hour, Madam Deputy Speaker.

The Minister of State made a rather cantankerous and nagging speech. He unwisely quoted an opinion poll, but he spoke well on sewerage. He gave way frequently, but not to my hon. Friend the Member for Halifax (Mrs. Mahon). He made an important statement regarding his intentions on water management. However, work on the London ring main was started before privatisation.

All of us in the Chamber at the time heard the Minister say that the framework of the water industry is working as intended, which was a strange and provocative statement for Opposition Members.

My hon. Friend the Member for Glasgow, Provan (Mr. Wray) denounced the sale of the century. He said bluntly, in his typical style, that the privatisation was a scandal. I shall not follow him and discuss Scottish matters. The hon. Member for Pudsey (Sir G. Shaw) conceded that prices had risen and that, in some respects, hardship had ensued. He at least, gave way to my hon. Friend the Member for Halifax. Clearly, he welcomed the debate, which contrasted greatly with the Minister of State's tardy response to it.

The hon. Member for North Cornwall (Mr. Tyler) made a sharp speech. He felt that Conservative Members should have worn sackcloth and ashes when they spoke today. He said that there was no competition in the industry. He referred to the Minister of State as an organ grinder and thought that Her Majesty's Government were selling off the family silver.

The Conservative Member for Dorset, West (Sir J. Spicer) said that we should not aim for perfection at whatever cost. He linked investment in the industry with the need for investment in the third world, which was a challenging concept.

My hon. Friend the Member for Carlisle (Mr. Martlew) argued that there was little support for water privatisation among the electorate, and he is surely right. He argued for a national strategy for the industry. The whole thrust of his speech was that there is no such strategy. He concluded by denouncing the water authorities' licence to print money, which was given to them by the Government.

We understand why the hon. Member for Teignbridge (Mr. Nicholls) made an animated speech, because he predicted that water charges in his region would increase by between 15 and 20 per cent. He described that as an outrage, which had caused a great deal of anger in his constituency. He said that his region at least needed some fine tuning, and he prayed in aid John Hampden and ship money.

Many of us enjoyed the speech of my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies). It is nice to welcome him back to the House and to hear his first speech as the hon. Member for that constituency. His predecessor was the much-liked James Lamond, who chaired some of the proceedings on the Water Bill. My hon. Friend has brought with him a handsome majority. Until recently, he was the distinguished secretary of the parliamentary Labour party and of the parliamentary committee. In the previous Labour Government, he undertook an important role most successfully and I enjoyed serving alongside him. Today was the first time he had spoken in the House for 13 years. With his typical humour, he said that he was a fit and active hon. Member who did not need a level playing field, a kick start or a retread. All of us who heard him know that he will serve his constituency honourably, conscientiously and successfully.

My hon. Friend the Member for Birmingham, Northfield (Mr. Burden) made a spirited speech. He was perhaps the only hon. Member who did not overlook the contribution of the employees in this important industry.

My hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) made a strong plea for a much-needed open space in her constituency which supports a wide variety of birds. She argued strongly against what she described as potential asset-stripping.

The hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) anticipated a staggering increase in the demand for more and more water. By implication, he was calling for a strategy from the Government.

My hon. Friend the Member for Delyn (Mr. Hanson) said that we had won the argument, even if his team had lost the soccer match today, by rather a large margin, against the lobby correspondents. My hon. Friend made a strong speech defending the interests of his constituents, who are already getting a good service from him. My hon. Friend, typically, spoke on behalf of poor people and said that price rises in the industry were going through the roof.

My hon. Friend the Member for Cannock and Burntwood (Dr. Wright) denounced what he rightly saw as the strategic decision of placing the burden on the poorer consumer. My hon. Friend seeks greater accountability in the industry, and I agree with him. He said that Ministers sheltered behind the water companies and the regulator.

The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) rightly denounced the poll tax.

My hon. Friend the Member for Bristol, East (Ms. Corston), like others in the debate, talked about the important subject of water quality. She pointed to the increasing sales of drinking water and said that such purchases were not just a question of style or the fads of yuppies. Her conclusion, with which I agreed, was that it showed the suspicion of many people in her area about the quality of drinking water.

On the issue of investment in the water industry, the chairman of Welsh Water, John Elfed Jones, is on record as saying that the only reason for his conversion to privatisation was the belief that it would free Welsh Water to invest in the water industry in Wales. In fact, a great deal of money has been used for other investment—for example, for the purchase of a 15 per cent. shareholding in South Wales Electricity and for buying five luxury country house hotels.

Without doubt, more money is being invested in the industry in Wales. That is welcome, although in some respects it is an indictment of the low level of investment by the Conservatives in the decade from 1979 onwards. The current investment is at massively increased cost to the water consumer. Before privatisation, it was said that investment would be financed partly by central Government and partly by local consumers. Now the whole burden is shouldered by the consumer. That represents another flat rate tax without regard to ability to pay, and it increases the burden on the ordinary family.

As my hon. Friend the Member for Bristol, East said, water privatisation focused public concern on the state of drinking water, the quality of which in the United Kingdom has rightly been condemned by the European Commission. In Wales, according to the latest report of the drinking water inspectorate, 27 per cent. of water supply zones do not meet the Government's standards for lead, 19 per cent. for coliforms and 15 per cent. for aluminium. The water industry has had to admit that in 1995, 10 years after the original deadline set by the Commission, water supplies to thousands of households throughout Wales will still breach European standards. It is also calculated that 295 km of Welsh rivers and canals are classified as poor or bad by the National Rivers Authority.

Ofwat's accountability has also been mentioned. In Wales, people are concerned at the water industry's lack of public accountability directly to the Welsh people. On matters relating to the water industry in Wales, Ofwat should be directly accountable to the Secretary of State for Wales. That is what Labour Members repeatedly called for in Committee. Instead, it is clear that the Welsh committee of Ofwat reports to the director general, who in turn reports to the Secretary of State for the Environment. So once again, accountability for matters of direct concern to the people of Wales has moved to London. Ownership and regulation of Welsh Water now rest in London, and no longer in Wales—as they should.

Ofwat's powers in respect of water disconnection have been called into question. Last year, the director general of Ofwat expressed concern about the large number of disconnections by Welsh Water. The latest figures, published only two years ago, show that Welsh Water disconnected more customers than any other water company. I am sorry to tell the House that last year alone 2,938 households were disconnected. The fact that Ofwat has—only now—decided to investigate the problem has rightly caused concern. Many people in Wales wonder what the director general has been doing for the past 12 months.

Will the Secretary of State for Wales launch an investigation into those disconnections? In so doing, he will ensure that Welsh water issues are in his hands, which is what we want. We do not want them in the hands of the Secretary of State for the Environment. It would also ensure that the social and economic problems faced by many households in Wales are taken fully into account.

At this stage in the debate, I should like to mention the National Association of Citizens Advice Bureaux. It is rightly concerned about the rate of water disconnections and says in its submission to Ofwat that there is a need for further safeguards against disconnection for certain groups of customers, particularly the elderly, the disabled and the many households with children.

Water disconnection is a punitive measure which will only increase hardship, and it should not be used where consumer non-payment is a result of poverty. People in Wales know all about poverty. The House may not know that the average household income in Wales is lower than anywhere else in Britain and earnings are among the lowest in the United Kingdom. Nearly 30 per cent. of men working full time earn less than £200 a week, and more than 30 per cent. of women working full time earn less than £150 a week. Those worrying statistics are apposite to the debate. So, too, are the unemployment statistics. In Gwent the unemployment rate is more than 11 per cent., in Gwynedd it is some 13.7 per cent., in Mid Glamorgan some 25,900 people are out of work, in the Rhondda 3,978 people are out of work, and in South Glamorgan more than 15,000 people are out of work in the great city of Cardiff.

People who are out of work find paying their water charges a major problem. The Government's set formula has been responsible for the huge increase in water prices. Since water privatisation, Welsh Water's charges have increased by 44 per cent. Last year they increased by 16.2 per cent. Welsh Water has made much of the fact that it will raise its prices by only 5 per cent. above the rate of inflation next year, but as the Financial Times asked the other day, will that self-imposed price cap keep the regulators off the company's back or is it just further proof of how generous the Government were when they set Welsh Water's K allowance?

Taxation is being privatised. Water privatisation is only part of a wider shift in the tax burden, which is affected by water, electricity, gas and telephone charging policies. They have all shifted the burden away from direct taxation towards direct charges which do not reflect ability to pay.

I have read, as other hon. Members probably have, about water from Wales going to other districts to alleviate water shortages. The chairman of Welsh Water has said that he would expect a good rate of return to Welsh Water from any such plans. I hope that Welsh Water customers, rather than the company, will benefit in reduced charges and better services. The people of Wales want assurances that any such scheme will not lead to further flooding to increase the capacity of reservoirs.

The Labour party believes that the Welsh Water authority must get its priorities right. We want it to concentrate on its core activities—to improve water quality and customer service, and keep bills down. Instead, the opposite has happened and Welsh Water has followed a policy of diversification into exclusive country house hotels and stock market bids for South Wales Electricity. In Committee, the Minister of State, the right hon. Member for Conwy (Sir W. Roberts) defended privatisation, as we always knew he would, on the grounds that Welsh Water would concentrate on its core activities, but that did not happen.

My hon. Friend the Member for Rhondda (Mr. Rogers) has a dossier on disconnections and increased charges. I have seen four such cases. As my hon. Friend told me: Yet another of my constituents has been put into court for one month's arrears in water charges… This particular case was dismissed but only after my old age pensioner constituent was terrified and upset over the prospect of court action.

It is appropriate to pose the question: what is the reality of a water supply cut-off for an ordinary family? In March this year, a young mother in great distress, living in the heart of my constituency, stood at her front door and asked me for help.

Mr. Ray Powell (Ogmore)

Labour Members are perturbed at old-age pensioners being taken to court due to delays in payment of water charges, while the chairman of the Welsh Water authority allows his salary to treble. We think that that is disgusting and deplorable, and it is a result of privatisation.

Mr. Jones

My hon. Friend's intervention truly reflects public opinion throughout Wales.

My constituent told me of her four young children, one of whom had a heart murmur, and of her husband who was on income support. As a family, they were in debt to the Welsh Water authority. She said that their water had been cut off and she was beside herself with worry, anxiety and alarm. She asked me what I could do for her children. At the time, I could not answer her. She was concerned for her children, especially the one with the heart murmur. Of course customers must pay their way, but it is wrong that super-rich water authorities should behave like all-powerful juggernauts. The punishment of an individual often entails penalising the elderly, the disabled and the young.

The consequences are severe. To help my constituent and the constituents of my hon. Friend the Member for Rhondda get over their distress, perhaps in preparation Welsh Water will let them stay free at one of its fine luxury hotels. I have the details for one such hotel. The tariff at the Cwrt Bleddyn hotel and country club in Usk displays charges which may seem reasonable to some but are certainly not for others. The hotel charges £160 for a full suite or £125 for a period room. The cheapest menu costs £22.50 per person, but the gourmet menu comes in at £32.50 and includes a warm salad of local wood pigeon as a starter. After that, guests can have saddle of venison with a piquant sauce of orange.

Mr. John Jones, the chairman of the Welsh Water, enjoys a salary of £143,000. It has increased by 211 per cent. since 1989. He has share options which totalled £290,000 by the end of May 1992. Since 1989, bills from Welsh Water have increased by 44 per cent. In the year 1991–92, there were 2,938 domestic disconnections.

Little wonder that, according to The Guardian, there has been a wave of criticism of Welsh Water. Its report states that the company has faced criticism from South West Electricity: David Jones, the managing director, said: 'Perhaps it would be better if Welsh Water concentrated on its own business. It already has plenty on its plate in dealing with pollution of our coast line and improving its standard of customer service.'

It is time for Welsh Water to consider the corporate image that it wants to convey. Can it really defend disconnecting such a necessity of life for the needy while proudly presenting its large and growing profits to the City? Its principle objectives should be a plentiful supply of wholesome water for every household at the lowest possible cost. Four years on, the conflicts between that objective and the interests of shareholders and the constant necessity to make a profit is still evident.

There is still a long way to go in environmental protection, sewage disposal and drinking water standards. So far the record is not good enough, which is why we ask the House to support our motion.

9.33 pm

The Secretary of State for Wales (Mr. David Hunt)

There have been 22 speakers in this debate, which has been characterised by some good humour, a wide range of points and, sad to say, a paucity of Members for most of its duration.

I congratulate the hon. Member for Oldham, Central and Royton (Mr. Davies) on his recycled speech. [Interruption.] Hon. Members who have just entered the Chamber will see what I mean when they refer to Hansard. The hon. Gentleman asked us to eradicate from the record three well-known phrases, but his request did not have much effect on his hon. Friend the Member for Alyn and Deeside (Mr. Jones), who repeated all three. I shall not do that. I compliment the hon. Member for Oldham, Central and Royton on a clean speech that was delivered virtually without notes. He paid a warm tribute to James Lamond, who was a distinguished member of the Speaker's Panel and much respected in the House. I was under his chairmanship many times. I am sure that the hon. Gentleman will make many speeches and I wish him success in the future.

I suspect that by calling the debate the Opposition were trying to promote some total fiction, pretending that they care about the water industry's customers and that the Government do not. Nothing could be further from the truth. They have tried to argue that, in privatising the industry, we disregarded the interests of customers. A major consideration in our decision to transfer the industry to the private sector was the conviction that customers would benefit from improved efficiency and standards and the provision of services at the lowest possible cost. That conviction is being borne out by events.

In privatising the water industry, we were conscious of the risk of creating private-sector monopolies with excessive power over the consumer. That topic has featured in many speeches, and I agree that such power would be totally unacceptable. Therefore, privatisation went hand in hand with the creation of powerful regulators. These were the Director General of Water Services, the National Rivers Authority and the drinking water inspectorate. As a result, we now have the most effectively and comprehensively regulated water industry in Europe, perhaps in the world.

The hon. Member for Glasgow, Provan (Mr. Wray) made a characteristically robust speech. I watched his prowess in the tug of war with great respect and considerable fear. He gave himself a great deal of rope when he clearly said that all the privatised industries should be taken into public ownership.

Mr. Bob Cryer (Bradford, South)

That sounds pretty good.

Mr. Hunt

There is a rustle among the leaves below the Gangway, but I did not hear much else.

The hon. Member for Dewsbury (Mrs. Taylor) spoke about records being broken, but she did not mention the record investment in the water industry. We heard much about the state of the industry. My hon. Friend the Member for Pudsey (Sir G. Shaw), who is not only a non-executive director of a water company but was a Minister in the Department of the Environment, made some salient points about the need for major investment and huge underground renovations. That is especially true in the context of the progress being made in reducing leakage. He stressed that it is vital to renew the nation's assets—and that is precisely what is being done by the record level of investment.

The hon. Member for North Cornwall (Mr. Tyler) said that we must learn lessons from other regulators, and I could not agree more. There is a great deal of contact between the different regulators, who have become an indispensable part of the regulation of key industries. We learn a great deal from the way that regulation operates in other industries, and we shall continue to do so.

The hon. Member for North Cornwall made an almost preposterous point when he described Liberal Democrat water industry policy, which was highlighted by my hon. Friend the Member for Teignbridge (Mr. Nicholls). The hon. Member for North Cornwall said that we ought to abolish standing charges. He was challenged to say whether the Liberal Democrats would abolish standing charges for millionaires. At that point, a smile came over the hon. Gentleman's face, and he said, "Of course." As my hon. Friend the Member for Teignbridge pointed out, there will be a surge of millionaires to north Cornwall, anxious to get their water charges on the backs of everyone else who pays.

Mr. Tyler

The Secretary of State and the hon. Member for Teignbridge (Mr. Nicholls) are arguing for means-tested pensions.

Mr. Hunt

Not at all. I do not want to delve too deeply into Liberal Democrat policy, because I would hit bottom very quickly.

My hon. Friend the Member for Dorset, West (Sir J. Spicer) made a distinctive contribution. He is proud of Wessex Water's excellent record—and if I may pay tribute to my hon. Friend, he gave a good example of why he is respected as an excellent constituency Member of Parliament.

My hon. Friend pointed out that, contrary to the rumours put about by Labour, 90 per cent. of our rivers conform to EC standards, whereas the figure for the Community as a whole is only 45 per cent.

The hon. Member for Carlisle (Mr. Martlew) also delved into the question of public ownership, and said that he would bring water back into public ownership. My hon. Friend the Minister for the Environment and Countryside pointed out in his excellent speech that we were hearing conflicting noises from the Opposition Benches. That may be understandable after the election, but it was not justified before the election. No one in the water industry knew what a Labour Government would have done to the industry. The voices of Provan and of Carlisle confuse us even more.

We then heard an excellent contribution from my hon. Friend the Member for Teignbridge, who represents his constituents vigorously. He has done so for some time, and I am sure that he will continue to do so. We realise the strength of feeling among his constituents on these key issues. My hon. Friend has made a number of points to my right hon. and learned Friend the Secretary of State for the Environment, who I am sure will bear them in mind.

My hon. Friend the Member for Hendon, South (Mr. Marshall) put the record straight. It is no use the Opposition saying that the necessary investment would be made under public ownership, when that never happened. The Labour Government cut investment in the water industry by 21 per cent.

Several Hon. Members

rose—

Mr. Hunt

I know that the guilty men will refuse to acknowledge that.

Mrs. Ann Taylor

Despite the number of times that we have repeated the figures, the Secretary of State has not grasped the basic fact that investment in the water industry under the last Labour Government averaged £1,254 million a year, compared with pre-privatisation investment under the Conservatives of £922 million a year. It was 1987 berfore spending by a Conservative Government reached even the worse year under the last Labour Government.

Mr. Hunt

Having made the longest speech—

Mr. Alun Michael (Cardiff, South and Penarth)

Withdraw.

Mr. Hunt

No, I shall not do that, because what I said was true. Having made the longest speech in the debate, the hon. Member for Dewsbury is now making the longest intervention, and getting nowhere. It is a fact that the Labour Government cut investment in the water industry by 21 per cent.

Let me now deal with the points that were made by the hon. Member of Alyn and Deeside about Wales. Will he please inform his hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) that, in the past year, investment in the Welsh water industry has amounted to £189 million. Next year, it will be £200 million. Let us compare that with the level of investment in 1978–79, the last year in which Labour held office. In real terms—[Interruption.] I know that the hon. Member for Dewsbury does not want to hear. In real terms, investment is now 80 per cent. higher.

Several Hon. Members

rose—

Mr. Hunt

No, I will not give way.

Let me tell the hon. Members for Alyn and Deeside, for Delyn (Mr. Hanson) and for Ceredigion and Pembroke, North (Mr. Dafis) that we have an extremely successful water company in Wales. It is the largest indigenous company that we have, and we all are very proud of it —except some Opposition Members.

Mr. Rhodri Morgan (Cardiff, West)

Will the Secretary of State give way?

Mr. Hunt

Will the hon. Gentleman allow me to answer points made by the hon. Member for Ceredigion and Pembroke, North during the debate, not all of which he attended?

For every £100 that Welsh consumers pay in water charges, Welsh Water spends £108 on improving services and upgrading water quality. In the coming year, it will spend £117 for every £100 spent by consumers.

Mr. Wray

What secret plans have the Government for the privatisation of Scottish Water?

Mr. Hunt

The hon. Gentleman cannot drag me into the Scottish debate. We are dealing with England and Wales; my right hon. and learned Friend the Secretary of State for the Environment has made the position relating to Scotland absolutely clear.

Yes, Welsh Water's profits have risen to £138 million, but only £30 million goes to shareholders in dividends. There are 65,000 shareholders, the majority of whom are Welsh Water customers and employees: 99 per cent. of employees own shares in the company.

Several Hon. Members

rose—

Mr. Hunt

I have still not responded to many of the points made in the debate.

The hon. Member for Birmingham, Northfield (Mr. Burden) asked about prepayment meters. I can tell him that the director general of Ofwat is considering that aspect carefully. As from April 1992, increases in water charges have now been restored to the index used to uprate income-related benefits.

My hon. Friend the Member for Stroud (Mr. Knapman), in a marvellously robust speech, said that, although the Opposition's motion talks of alarm, we could have been fooled, because at the time he spoke very few Opposition Members were present.

The hon. Member for Hackney, North and Stoke Newington (Ms. Abbott) referred to salaries for top executives in the water industry. The hon. Lady is not here at the moment, but, as the water industry faces the challenges of the future, it is vital that it has the best possible people in management positions.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) displayed an extensive knowledge of the water industry. He asked about the new methods of charging, which is another aspect being considered by the director general.

The hon. Member for Cannock and Burntwood (Dr. Wright) said that, like the House of Commons, the director general of Ofwat did not have much power. He is wrong, because the director general has extensive powers. If the hon. Gentleman considered them, he would realise their extent.

My hon. Friend the Member for Blackpool, South (Mr. Hawkins) put the record straight when he pointed out that, notwithstanding stories to the contrary, Blackpool's bathing water is improving all the time. I shall refer the points that he made on coastal protection to my right hon. Friend.

The hon. Member for Bristol, East (Ms. Corston) made many points which I can and will refute, but I do not have the time to do so now. I shall simply say that many of the points that she made justified increased investment in the water industry, the key to which is privatisation which will make that investment possible.

My hon. Friend the Member for Reading, West (Sir A. Durant) has extensive experience in the water industry and his points on metering will be borne in mind by the director general. My hon. Friend stressed once again the enormous investment of £28,000 million in the water industry which is mentioned in the Government's amendment.

The hon. Member for Sunderland, North (Mr. Etherington) took us down memory lane with references to Denis Howell and the drought, reminding us that the problems have not gone away. The important thing now is that we have a regulating body. Yesterday, the National Rivers Authority proved that it has powers to act.

What have we learnt from the Opposition today? I must tell the hon. Member for Alyn and Deeside that we have not learnt a lot. I am intrigued as to why a debate on water should have been chosen by the Opposition on such an important day in the parliamentary calendar. I went out of the Chamber for a few moments to the Members' Lobby, where I met a group of Members and some members of the press lobby. When I asked why we were debating water, I was told that it had something to do with the elections for the shadow Cabinet. The Government welcome the debate, because we are proud of our record on water.

What else have we learnt from the debate? We have learnt that the divisions on the Opposition Benches on public ownership have not disappeared. Those divisions have been evident during the debate. Those who want to see water returned to public ownership have failed the test for the new model Labour party. Their politics is still rooted in the past.

Mr. Barry Jones

Is it not true that the Minister for the Environment and Countryside said that he did not want this debate and that the Secretary of State was too afraid to come to the Dispatch Box?

Mr. Hunt

No, my hon. Friend did not say that he did not want this debate. We have been trying to discover why water is so high on the list of the Opposition's priorities. I may have the answer. Into my hands has come a document entitled, "The First Fifty Days". It was obviously produced just before the general election. It says: The new Labour government will not only face a ruined economy but also a deteriorating environment. We will act swiftly while taking the fullest possible expert advice. Our initial period in office will be crucial and will set the tone for the whole administration. In our first 50 days of environmental action we hope to stop the decline and reverse the trend by… Neil Kinnock's attendance at the UNCED conference in Rio. So the attendance of the right hon. Member for Islwyn (Mr. Kinnock) in Rio was obviously to be the answer.

There is only one reference to water in that document. It says that a Labour Government would set up a beach quality phone line.

Mr. Stuart Randall (Kingston upon Hull, West)

Will the Secretary of State let us into a little secret? Just between these four walls, will he tell the House what he thinks of a situation in which a few directors sit around a table and give themselves these massive pay increases?

Mr. Hunt

The hon. Gentleman has not been present during the debate. If he had been here, he would have heard my hon. Friends make point after point about the success of the water industry.

The problem is that the Opposition do not like success. I know that they are used to failure. What would they be saying now if the privatisation had not produced the success that it has with the highly successful privatised water companies? They would be deploring privatisation as a failure. In fact, privatisation has been a great success and we are proud of it.

Mr. Rhodri Morgan (Cardiff, West)

Will the Secretary of State comment on the fact that Welsh Water spent the £250 million of taxpayers' money which was injected into the company on privatisation, has invested in country house hotels which are losing money and is involved in street cleaning, together with a French company, from which it has had to withdraw? What will the Secretary of State say about the failure of the diversification movement?

Mr. Hunt

The hon. Gentleman must ask why every water consumer in Wales receives £108 worth of investment in the water industry—in this coming year it will be £117—for every £100 paid in charges. It is because Welsh Water is a successful company. Every time the hon. Member for Alyn and Deeside goes into a Welsh Water hotel and purchases a meal—he described it as venison with orange, an appalling prospect—he knows that the money will be used to improve investment in the water industry.

Mr. Barry Jones

rose—

Madam Speaker

Order. We cannot have two hon. Members on their feet at the same time.

Mr. Hunt

We have won the argument. I urge the House to throw out the motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 274, Noes 317.

Division No. 33]	[9.59 pm
AYES
Abbott, Ms Diane	Bruce, Malcolm (Gordon)
Adams, Mrs Irene	Burden, Richard
Ainger, Nicholas	Byers, Stephen
Ainsworth, Robert (Cov'try NE)	Callaghan, Jim
Allen, Graham	Campbell, Ms Anne (C'bridge)
Alton, David	Campbell, Menzies (Fife NE)
Anderson, Donald (Swansea E)	Campbell, Ronald (Blyth V)
Anderson, Ms Janet (Ros'dale)	Campbell-Savours, D. N.
Armstrong, Hilary	Canavan, Dennis
Ashdown, Rt Hon Paddy	Cann, James
Ashton, Joe	Carlile, Alexander (Montgomry)
Austin-Walker, John	Chisholm, Malcolm
Banks, Tony (Newham NW)	Clapham, Michael
Barnes, Harry	Clark, Dr David (South Shields)
Battle, John	Clarke, Eric (Midlothian)
Bayley, Hugh	Clarke, Tom (Monklands W)
Beckett, Margaret	Clelland, David
Beith, Rt Hon A. J.	Clwyd, Mrs Ann
Benn, Rt Hon Tony	Coffey, Ms Ann
Bennett, Andrew F.	Cohen, Harry
Benton, Joe	Connarty, Michael
Berry, Roger	Cook, Robin (Livingston)
Betts, Clive	Corbyn, Jeremy
Blair, Tony	Corston, Ms Jean
Blunkett, David	Cousins, Jim
Boateng, Paul	Cox, Tom
Boyce, Jimmy	Cryer, Bob
Boyes, Roland	Cunliffe, Lawrence
Bradley, Keith	Cunningham, Jim (Covy SE)
Bray, Dr Jeremy	Cunningham, Dr John (C'p'l'nd)
Brown, Gordon (Dunfermline E)	Dafis, Cynog
Brown, N. (N'c'tle upon Tyne E)	Dalyell, Tam

Darling, Alistair	Jowell, Ms Tessa
Davidson, Ian	Keen, Alan
Davies, Bryan (Oldham C'tral)	Kennedy, Charles (Ross, C & S)
Davies, Rt Hon Denzil (Llanelli)	Kennedy, Ms Jane (L'P'l Br'g'n)
Davies, Ron (Caerphilly)	Khabra, Piara
Davis, Terry (B'ham, H'dge H'l)	Kilfoyle, Peter
Denham, John	Kirkwood, Archy
Dewar, Donald	Leighton, Ron
Dixon, Don	Lestor, Joan (Eccles)
Dobson, Frank	Lewis, Terry
Donohoe, Brian	Litherland, Robert
Dowd, Jim	Livingstone, Ken
Dunnachie, Jimmy	Lloyd, Tony (Stretford)
Dunwoody, Mrs Gwyneth	Llwyd, Elfyn
Eagle, Ms Angela	Loyden, Eddie
Enright, Derek	Lynne, Ms Liz
Etherington, William	McAllion, John
Evans, John (St Helens N)	McCartney, Ian
Ewing, Mrs Margaret	MacDonald, Calum
Fatchett, Derek	McFall, John
Faulds, Andrew	McKelvey, William
Field, Frank (Birkenhead)	Mackinlay, Andrew
Fisher, Mark	McLeish, Henry
Flynn, Paul	Maclennan, Robert
Foster, Derek (B'p Auckland)	McMaster, Gordon
Foster, Donald (Bath)	McWilliam, John
Fraser, John	Madden, Max
Fyfe, Maria	Mahon, Alice
Galbraith, Sam	Mandelson, Peter
Galloway, George	Marek, Dr John
Gapes, Michael	Marshall, David (Shettleston)
George, Bruce	Marshall, Jim (Leicester, S)
Gerrard, Neil	Martin, Michael J. (Springburn)
Gilbert, Rt Hon Dr John	Martlew, Eric
Godman, Dr Norman A.	Maxton, John
Godsiff, Roger	Meale, Alan
Golding, Mrs Llin	Michael, Alun
Gordon, Mildred	Michie, Bill (Sheffield Heeley)
Graham, Thomas	Michie, Mrs Ray (Argyll Bute)
Grant, Bernie (Tottenham)	Milburn, Alan
Griffiths, Nigel (Edinburgh S)	Miller, Andrew
Griffiths, Win (Bridgend)	Mitchell, Austin (Gt Grimsby)
Grocott, Bruce	Molyneaux, Rt Hon James
Gunnell, John	Moonie, Dr Lewis
Hain, Peter	Morgan, Rhodri
Hall, Mike	Morley, Elliot
Hanson, David	Morris, Rt Hon A. (Wy'nshawe)
Hardy, Peter	Morris, Estelle (B'ham Yardley)
Harman, Ms Harriet	Morris, Rt Hon J. (Aberavon)
Harvey, Nick	Mudie, George
Henderson, Doug	Mullin, Chris
Heppell, John	Murphy, Paul
Hill, Keith (Streatham)	Oakes, Rt Hon Gordon
Hinchliffe, David	O'Brien, Michael (N W'kshire)
Hoey, Kate	O'Brien, William (Normanton)
Hogg, Norman (Cumbernauld)	O'Hara, Edward
Home Robertson, John	Olner, William
Hood, Jimmy	O'Neill, Martin
Hoon, Geoff	Orme, Rt Hon Stanley
Howarth, George (Knowsley N)	Parry, Robert
Howells, Dr. Kim (Pontypridd)	Patchett, Terry
Hoyle, Doug	Pendry, Tom
Hughes, Kevin (Doncaster N)	Pickthall, Colin
Hughes, Robert (Aberdeen N)	Pike, Peter L.
Hughes, Roy (Newport E)	Pope, Greg
Hughes, Simon (Southwark)	Powell, Ray (Ogmore)
Hutton, John	Prentice, Ms Bridget (Lew'm E)
Illsley, Eric	Prentice, Gordon (Pendle)
Ingram, Adam	Primarolo, Dawn
Jackson, Ms Glenda (H'stead)	Purchase, Ken
Jackson, Ms Helen (Shef'ld, H)	Quin, Ms Joyce
Jamieson, David	Radice, Giles
Janner, Greville	Randall, Stuart
Johnston, Sir Russell	Raynsford, Nick
Jones, Barry (Alyn and D'side)	Redmond, Martin
Jones, Ieuan (Ynys Môn)	Richardson, Jo
Jones, Jon Owen (Cardiff C)	Robertson, George (Hamilton)
Jones, Ms Lynne (B'ham S O)	Robinson, Geoffrey (Co'try NW)
Jones, Martyn (Clwyd, SW)	Roche, Ms Barbara
Jones, Nigel (Cheltenham)	Rogers, Allan

Rooker, Jeff	Taylor, Mrs Ann (Dewsbury)
Rooney, Terry	Taylor, Matthew (Truro)
Ross, Ernie (Dundee W)	Thompson, Jack (Wansbeck)
Ross, William (E Londonderry)	Tipping, Paddy
Rowlands, Ted	Turner, Dennis
Ruddock, Joan	Tyler, Paul
Sedgemore, Brian	Walker, Rt Hon Sir Harold
Sheldon, Rt Hon Robert	Wallace, James
Shore, Rt Hon Peter	Walley, Joan
Short, Clare	Wardell, Gareth (Gower)
Simpson, Alan	Wareing, Robert N
Skinner, Dennis	Watson, Mike
Smith, Andrew (Oxford E)	Wicks, Malcolm
Smith, C. (Isl'ton S & F'sbury)	Wigley, Dafydd
Smith, Rt Hon John (M'kl'ds E)	Williams, Rt Hon Alan (SW'n W)
Smith, Llew (Blaenau Gwent)	Williams, Alan W (Carmarthen)
Smyth, Rev Martin (Belfast S)	Wilson, Brian
Snape, Peter	Winnick, David
Soley, Clive	Wise, Audrey
Spearing, Nigel	Worthington, Tony
Spellar, John	Wray, Jimmy
Squire, Rachel (Dunfermline W)	Wright, Tony
Steinberg, Gerry	Young, David (Bolton SE)
Stevenson, George
Stott, Roger	Tellers for the Ayes:
Strang, Gavin	Mr. Thomas McAvoy and
Straw, Jack	Mr. Ken Eastham.

NOES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Ainsworth, Peter (East Surrey)	Carrington, Matthew
Aitken, Jonathan	Carttiss, Michael
Alexander, Richard	Cash, William
Alison, Rt Hon Michael (Selby)	Channon, Rt Hon Paul
Allason, Rupert (Torbay)	Chaplin, Mrs Judith
Amess, David	Clappison, James
Ancram, Michael	Clarke, Rt Hon Kenneth (Ruclif)
Arbuthnot, James	Clifton-Brown, Geoffrey
Arnold, Jacques (Gravesham)	Coe, Sebastian
Arnold, Sir Thomas (Hazel Grv)	Colvin, Michal
Ashby, David	Congdon, David
Aspinwall, Jack	Conway, Derek
Atkins, Robert	Coombs, Anthony (Wyre For'st)
Atkinson, David (Bour'mouth E)	Coombs, Simon (Swindon)
Atkinson, Peter (Hexham)	Cope, Rt Hon Sir John
Baker, Rt Hon K. (Mole Valley)	Cormack, Patrick
Baker, Nicholas (Dorset North)	Couchman, James
Baldry, Tony	Cran, James
Banks, Matthew (Southport)	Currie, Mrs Edwina (S D'by'ire)
Banks, Robert (Harrogate)	Davies, Quentin (Stamford)
Bates, Michael	Davis, David (Boothferry)
Batiste, Spencer	Day, Stephen
Bellingham, Henry	Deva, Nirj Joseph
Bendall, Vivian	Devlin, Tim
Beresford, Sir Paul	Dicks, Terry
Biffen, Rt Hon John	Dorrell, Stephen
Blackburn, Dr John G.	Douglas-Hamilton, Lord James
Body, Sir Richard	Dover, Den
Bonsor, Sir Nicholas	Duncan, Alan
Booth, Hartley	Duncan-Smith, Iain
Boswell, Tim	Dunn, Bob
Bottomley, Peter (Eltham)	Durant, Sir Anthony
Bottomley, Rt Hon Virginia	Dykes, Hugh
Bowden, Andrew	Eggar, Tim
Bowis, John	Elletson, Harold
Boyson, Rt Hon Sir Rhodes	Emery, Sir Peter
Brandreth, Gyles	Evans, David (Welwyn Hatfield)
Brazier, Julian	Evans, Jonathan (Brecon)
Bright, Graham	Evans, Nigel (Ribble Valley)
Brooke, Rt Hon Peter	Evans, Roger (Monmouth)
Brown, M. (Brigg & Cl'thorpes)	Evennett, David
Browning, Mrs. Angela	Faber, David
Bruce, Ian (S Dorset)	Fabricant, Michael
Budgen, Nicholas	Fairbairn, Sir Nicholas
Burns, Simon	Fenner, Dame Peggy
Burt, Alistair	Field, Barry (Isle of Wight)
Butcher, John	Fishburn, John Dudley
Butler, Peter	Forman, Nigel
Butterfill, John	Forsyth, Michael (Stirling)
Carlisle, John (Luton North)	Forth, Eric

Fowler, Rt Hon Sir Norman	Knight, Mrs Angela (Erewash)
Fox, Dr Liam (Woodspring)	Knight, Greg (Derby N)
Fox, Sir Marcus (Shipley)	Knight, Dame Jill (Bir'm E'st'n)
Freeman, Roger	Knox, David
French, Douglas	Kynoch, George (Kincardine)
Fry, Peter	Lait, Mrs Jacqui
Gale, Roger	Lamont, Rt Hon Norman
Gallie, Phil	Lang, Rt Hon Ian
Gardiner, Sir George	Lawrence, Sir Ivan
Garel-Jones, Rt Hon Tristan	Legg, Barry
Garnier, Edward	Leigh, Edward
Gill, Christopher	Lennox-Boyd, Hon Mark
Gillan, Ms Cheryl	Lester, Jim (Broxtowe)
Goodlad, Rt Hon Alastair	Lidington, David
Goodson-Wickes, Dr Charles	Lilley, Rt Hon Peter
Gorman, Mrs Teresa	Lloyd, Peter (Fareham)
Gorst, John	Lord, Michael
Grant, Sir Anthony (Cambs SW)	Luff, Peter
Greenway, Harry (Ealing N)	Lyell, Rt Hon Sir Nicholas
Greenway, John (Ryedale)	MacKay, Andrew
Griffiths, Peter (Portsmouth, N)	Maclean, David
Grylls, Sir Michael	McLoughlin, Patrick
Hague, William	McNair-Wilson, Sir Patrick
Hampson, Dr Keith	Madel, David
Hanley, Jeremy	Maitland, Lady Olga
Hannam, Sir John	Major, Rt Hon John
Hargreaves, Andrew	Malone, Gerald
Harris, David	Mans, Keith
Haselhurst, Alan	Marland, Paul
Hawkins, Nicholas	Marlow, Tony
Hawksley, Warren	Marshall, John (Hendon S)
Hayes, Jerry	Martin, David (Portsmouth S)
Heald, Oliver	Mates, Michael
Heath, Rt Hon Sir Edward	Mawhinney, Dr Brian
Heathcoat-Amory, David	Mayhew, Rt Hon Sir Patrick
Hendry, Charles	Mellor, Rt Hon David
Heseltine, Rt Hon Michael	Merchant, Piers
Hicks, Robert	Milligan, Stephen
Higgins, Rt Hon Terence L.	Mills, Iain
Hill, James (Southampton Test)	Mitchell, Andrew (Gedling)
Hogg, Rt Hon Douglas (G'tham)	Mitchell, Sir David (Hants NW)
Horam, John	Moate, Roger
Hordern, Sir Peter	Monro, Sir Hector
Howard, Rt Hon Michael	Montgomery, Sir Fergus
Howarth, Alan (Strat'rd-on-A)	Moss, Malcolm
Howell, Rt Hon David (G'dford)	Needham, Richard
Howell, Ralph (North Norfolk)	Nelson, Anthony
Hughes Robert G. (Harrow W)	Neubert, Sir Michael
Hunt, Rt Hon David (Wirral W)	Newton, Rt Hon Tony
Hunt, Sir John (Ravensbourne)	Nicholls, Patrick
Hunter, Andrew	Nicholson, David (Taunton)
Hurd, Rt Hon Douglas	Nicholson, Emma (Devon West)
Jack, Michael	Norris, Steve
Jackson, Robert (Wantage)	Onslow, Rt Hon Cranley
Jenkin, Bernard	Oppenheim, Phillip
Jessel, Toby	Ottaway, Richard
Johnson Smith, Sir Geoffrey	Page, Richard
Jones, Gwilym (Cardiff N)	Paice, James
Jones, Robert B. (W H'f'rdshire)	Patnick, Irvine
Kellett-Bowman, Dame Elaine	Patten, Rt Hon John
Key, Robert	Pawsey, James
Kilfedder, Sir James	Peacock, Mrs Elizabeth
King, Rt Hon Tom	Pickles, Eric
Kirkhope, Timothy	Porter, Barry (Wirral S)
Knapman, Roger	Porter, David (Waveney)

Portillo, Rt Hon Michael	Taylor, Rt Hon D. (Strangford)
Powell, William (Corby)	Taylor, John M. (Solihull)
Redwood, John	Taylor, Sir Teddy (Southend, E)
Renton, Rt Hon Tim	Temple-Morris, Peter
Richards, Rod	Thomason, Roy
Riddick, Graham	Thompson, Patrick (Norwich N)
Rifkind, Rt Hon. Malcolm	Thornton, Sir Malcolm
Robathan, Andrew	Thurnham, Peter
Roberts, Rt Hon Sir Wyn	Townend, John (Bridlington)
Robertson, Raymond (Ab'd'n S)	Townsend, Cyril D. (Bexl'yh'th)
Robinson, Mark (Somerton)	Tracey, Richard
Roe, Mrs Marion (Broxbourne)	Tredinnick, David
Rowe, Andrew (Mid Kent)	Trend, Michael
Rumbold, Rt Hon Dame Angela	Trotter, Neville
Ryder, Rt Hon Richard	Twinn, Dr Ian
Sackville, Tom	Vaughan, Sir Gerard
Scott, Rt Hon Nicholas	Viggers, Peter
Shaw, David (Dover)	Waldegrave, Rt Hon William
Shaw, Sir Giles (Pudsey)	Walden, George
Shephard, Rt Hon Gillian	Walker, Bill (N Tayside)
Shepherd, Cohn (Hereford)	Waller, Gary
Shepherd, Richard (Aldridge)	Ward, John
Shersby, Michael	Wardle, Charles (Bexhill)
Sims, Roger	Waterson, Nigel
Skeet, Sir Trevor	Watts, John
Smith, Tim (Beaconsfield)	Wells, Bowen
Soames, Nicholas	Wheeler, Sir John
Speed, Sir Keith	Whitney, Ray
Spencer, Sir Derek	Whittingdale, John
Spicer, Sir James (W Dorset)	Widdecombe, Ann
Spicer, Michael (S Worcs)	Wiggin, Jerry
Spink, Dr Robert	Wilkinson, John
Spring, Richard	Willetts, David
Sproat, Iain	Wilshire, David
Squire, Robin (Hornchurch)	Winterton, Mrs Ann (Congleton)
Stanley, Rt Hon Sir John	Winterton, Nicholas (Macc'f'ld)
Stephen, Michael	Wolfson, Mark
Stern, Michael	Wood, Timothy
Stewart, Allan	Yeo, Tim
Streeter, Gary	Young, Sir George (Acton)
Sumberg, David
Sweeney, Walter	Tellers for the Noes:
Sykes, John	Mr. David Lightbown and
Tapsell, Sir Peter	Mr. Sydney Chapman.
Taylor, Ian (Esher)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House congratulates the Government on its highly successful policy of privatising the water industry, which will lead to £28 thousand million investment on water and sewerage infrastructure, maintaining the quality of drinking water, improving rivers, and reducing discharges into the sea, thereby benefiting customers and the environment alike; and welcomes the action of the National Rivers Authority to safeguard the water environment and the role of the Director General of Water Services as the powerful independent regulator to provide effective protection for the interests of all the industry's customers.