HC Deb 18 November 1992 vol 214 cc276-9
2. Mr. Wilson

To ask the Secretary of State for Scotland if he will make a statement on the progress of his consultations about the future of the water industry in Scotland.

3. Mr. Wray

To ask the Secretary of State for Scotland what plans he has for privatising Scotland's water.

6. Mrs. Ray Michie

To ask the Secretary of State for Scotland if he is now in a position to announce his plans for the future of the water industry in Scotland.

15. Mr. Kirkwood

To ask the Secretary of State for Scotland when he expects to publish his consultation document on the future of the water industry in Scotland

The Secretary of State for Scotland (Mr. Ian Lang)

I made a statement yesterday on the future of the water industry and have published a consultation paper.

Mr. Wilson

Does the Secretary of State recognise that the water industry has operated for more than 100 years in the public sector in Scotland without the need for recourse to domestic disconnections? Does he accept that we are a healthier and more socially just nation as a result of the absence of those powers? Will he give an undertaking today that, whatever the other considerations about whether water is privatised, he will not change the law as a result of that consultation to make it possible for poor people to have their water disconnected, with all the consequences that flow from that, which we are already seeing in England and Wales?

Mr. Lang

I answered the hon. Gentleman's question yesterday. Disconnections do not affect the viability of the options laid out in the White Paper. The hon. Gentleman talked about the history of the water industry. Significantly, at the end of the second world war, there were more than 200 separate water authorities. It is only since 1946 that the Water (Scotland) Act has given general powers to local authorities in that matter. Gradually, the number of water authorities has been changed and the structure of the industry in Scotland has been reformed and modernised. We now face the need to make further changes and I hope that the hon. Gentleman will make a submission in response to the consultation paper.

Mr. Wray

Will the Secretary of State tell the House that the Government put no money into Strathclyde Water? Under section 94 of the Local Government (Scotland) Act 1973, it is given a borrowing limit of £83 million and the revenue comes from meter and water charges of £94 million. The total running cost of sewerage services in Strathclyde is £86 million, the water debt is £170 million and the total debt of sewerage and water is £417 million; that means that Scottish and British taxpayers pay £66 million a year. Has not the Secretary of State for Scotland the guts to ask the Government to do exactly the same as they have done in England and Wales, by wiping off £500 million? We want a tartan dowry in Scotland, like the green dowry in England and Wales.

Mr. Lang

The water and sewerage industries need capital for investment every year. The only time they were denied it was during the 1976–79 period of the last Labour Government, when water investment was cut by one third and sewerage capital investment was cut by half. Such vulnerability exposes the difficulty of relying on private sector funding when massive new capital investment of some £5 billion will be needed in the next 10 to 15 years. Does the hon. Gentleman think that that £5 billion should be taken from health, housing, roads, education or some other source, or will he look at the consultation paper and try to find a more positive approach to the problem?

Mrs. Michie

I do not think that the Secretary of State has answered that question. He is threatening the people of Scotland by implying that the capital debt will be written off only if water is privatised. Does that not amount to plain blackmail?

Mr. Lang

I do not know how the hon. Lady thinks that existing debt can be written off—it must be repaid. Although the industry needs some £600 million a year, roughly £400 million of that comes from revenues, and the remainder comes from capital. The capital expectations, which have doubled in the past four or five years, are anticipated to go on increasing in the next 10 to 15 years. That money must be found and I await the hon. Lady's submission in response to the consultation paper and her suggestions about where it can be found.

Mr. Kirkwood

On the issue of accountability, does not the Secretary of State accept that one of the unique qualities of the existing system is that local people have the ability and the opportunity to influence the priorities of their local water and sewerage services? Some of us are concerned about the priority given to legislative standards enforced from on high. It is important that customers have a chance to influence what the water organisations do in their name. Will the Secretary of State give an assurance that whatever system is introduced, it will enshrine and retain that essential accountability?

Mr. Lang

The setting of standards to which the hon. Gentleman refers is something which should be done above local level—at national and European level. It is in order to meet those standards that we are inviting public consultation on the various options for the best way forward. The degree of accountability that can be derived from the options laid out in the consultation paper varies. I hope that the hon. Gentleman will send in a submission underlining that point.

Mr. Jenkin

I am an English Member of Parliament and my right hon. Friend will decide whether to privatise the industry in Scotland according to his consultation process—it is not so much a matter for me. However, should my right hon. Friend choose to privatise the industry, will he reassure the Scottish people that in England and Wales privatisation has led to a huge investment programme, a great improvement in water quality and improved conditions of employment for employees of the water industry?

Mr. Lang

I am grateful to my hon. Friend for telling us of his experience of the industry in England and Wales. During the 20 years to 1989, investment was below £6 billion and it is expected to be more than £28 billion over the next 10 years. That shows how the resources can be found in an imaginative way.

Mr. Adley

Without wishing to influence my right hon. Friend one way or the other—and I also declare an interest in the hotel business—may I ask him to look at that section of the legislation in England that affects infrastructure charges? Is he aware that an hotel in Leeds with which I have been associated for the past five to six years started off under the good offices of the Yorkshire water authority, which produced a quotation of £3,000 to attach the hotel to the mains? Now, the Yorkshire water company proposes to charge £208,000 for the same service. That fact does not need to influence my right hon. Friend's overall decision, but he should look carefully at the small print of anything that he introduces.

Mr. Lang

I am grateful to my hon. Friend for telling us of his personal experiences with the Leeds water authority. However, I must disappoint him, as I have no responsibilities for water in England or Wales.

Mr. John Marshall

When considering the possibility of privatising Scottish water services, as most Conservative Members wish my right hon. Friend to do, will he consider the experience of Thames Water, where there has been a 50 per cent. increase in investment and where water costs 45p per house per day—a reasonable charge? Does my right hon. Friend agree that the abolition of the drinking water directive would help the water industry throughout the United Kingdom?

Mr. Lang

I am grateful to my hon. Friend for telling us of the experiences of Thames Water. The drinking water directive and other European Community directives set standards to which we want to aspire. The investment programme on which we in Scotland have embarked means that we intend to aspire to those standards.

Mr. Tom Clarke

In view of the Secretary of State's self-imposed confidentiality about the Quayle Munro report, will he tell us whether Quayle Munro is free to give advice to potential buyers and precisely what Quayle Munro said to him about disconnections?

Mr. Lang

The Quayle Munro report did not address issues such as disconnections, but dealt with matters such as the viability of a range of options, which are now laid out in the consultation paper. Whether Quayle Munro later becomes involved in giving advice to individual companies is a matter for Quayle Munro.