Water and Sewerage (Hansard, 3 February 1993)

§ 9. Mr. Kirkwood
To ask the Secretary of State for Scotland what consultations were conducted prior to the announcement that he was ring-fencing section 94 capital consents for water and sewerage; and if he will make a statement.

§ Mr. Lang
The decision to vary the terms of the consent that I give for local authority water and sewerage capital programmes was taken to ensure that resources continue to be targeted in the most effective way in the run-up to local government reorganisation and restructuring of water and sewerage services. It is consistent with the existing separate accounting arrangements for those services.

§ Mr. Kirkwood
Does the Secretary of State accept that Borders regional council, using consent scheme finance, has been able to direct £1.5 million from water and sewerage to other budgets in a way that was in no way detrimental to the water and sewerage scheme? That was permissible under the original rules of the scheme. Bringing in ring fencing nine months into the financial year has left the council in a difficult position by making that transfer of £1.5 million of capital consent illegal under the new rules. That will require the money to be clawed back in the fiscal year 1993–94 in a way which will occasion cuts 316 in capital consents of up to 19 per cent. in some of the budgets in the Borders. Will the Secretary of State look again at the summary introduction of those rules, find some way of easing the difficulties of Borders regional council, and try to make sure that it has some way of managing the problem occasioned by a summary change in the middle of the financial year?

§ Mr. Lang
Yes, I am happy to reassure the hon. Gentleman. We made it clear when we introduced the arrangements that we would deal sympathetically with any genuine difficulties, having in mind precisely the kind of situation that the hon. Gentleman has described. My officials have been in touch with officials in Borders regional council. They have provisionally agreed a method of operation in relation to the enhancement or abatement of underspend and overspend which will enable Borders regional council to continue its other programmes without being unnecessarily restricted as a result of this.

§ Mr. McAllion
The capital consents for water and sewerage in the current year amount to just over £221 million. Is the Secretary of State aware that if that level of spending were maintained for the next 10 years it would amount to less than half the sum that he himself has identified as necessary to meet European Community targets? Is it not, therefore, obvious that his mind is already made up to find the missing £2.5 billion by privatising Scottish water in one form or another? Will he therefore now give an unambiguous assurance that he will not seek to change the law of Scotland to allow disconnections of domestic consumers from the water and sewerage services? He should understand that if he does not give that commitment it will be he and not those who resist him who will be acting illegally in the eyes of the people of Scotland.

§ Mr. Lang
The hon. Gentleman overlooks the fact that capital expenditure on water and sewerage in Scotland has doubled over the past four years. He mentioned a figure for the current year; next year it will be £237 million, rising to £248 million a couple of years after. There is a continuing and developing need to increase capital spending on water and sewerage in Scotland to an estimated £5 billion in the next 10 to 15 years. Part of the consultation exercise that we have just concluded is to find the best way of raising those resources at minimum cost to the consumer.

§ Mr. Ian Bruce
My right hon. Friend must believe that it is intolerable that hon. Ladies and Gentlemen in all parts of the House are not getting water and sewerage matters sorted out because of problems of public sector financing. Is not the sensible idea to move quickly towards a privatised water industry so that the investment can be made in water and sewerage services, as is happening in England and Wales?

§ Mr. Lang
It is precisely to find the best way forward for water and sewerage in Scotland that I issued a consultation paper, and the consultation period has just ended. The purpose of the section 94 capital consent arrangements that we have announced is to ensure that capital continues to be expended on water and sewerage. There has been an average underspend of £3 million per year in the past few years, and it is plain that the heavy burden imposed by our 317 needs in the water and sewerage industry in the next few years must be met by resources being directed towards them.

§ Mr. Welsh
Is the consultation a sham or is it for real? If the majority are opposed, will the minority Government in Scotland start listening to the Scottish people and abandon water privatisation in any shape or form? Or is the Conservative party also making democracy redundant under its current policies?

§ Mr. Lang
Is the Scottish National party for real? We have consulted extensively and widely on a range of options for the future of water and sewerage in Scotland. We have received some 3,000 replies. We shall examine them with great care, analysing the recommendations made and the way in which they address the eight specific questions that we asked in the consultation paper, and then agree on a way forward.

§ Mr. Tom Clarke
In the light of the Secretary of State's enthusiasm, expressed the other day, for local authorities raising private capital for a new bridge over the Forth, why does he exclude that principle for water and sewerage provision? Above all, will he for once answer the question about disconnections? Will he introduce legislation, or will he accept the overwhelming view of the Scottish people that privatisation of water and sewerage is totally unacceptable to us and ought to be withdrawn?

§ Mr. Lang
I have answered the hon. Gentleman's last question many times. As to the question of the relationship between public and private sector expenditure, if the hon. Gentleman had taken the trouble to read our consultation paper, he would have found a range of options of that sort laid out on which advice was requested. It is a great pity that the party that the hon. Gentleman leads in Scotland has behaved so irresponsibly as to ignore the important underlying issues which affect the future of water and sewerage. It has failed to submit positive and sensible forward-looking suggestions and, instead, has indulged in nothing but mindless rhetoric.