Local Government etc. (Scotland) Bill (Hansard, 1 November 1994)

§ Mr. Brian H. Donohoe (Cunninghame, South)
With your permission, Mr. Deputy Speaker, I shall discuss Lords amendment No. 16, especially as it affects the House.
I have been asking the Minister about the appointment of the chairmen and chief executives of the new water boards. About three weeks ago, I received a telephone call from a person who asked me to lobby on his behalf, because he had been selected for the short list for one of the posts of chief executive. He told me that a company known as Andrew Rait Ltd., which is engineering the appointments of chairmen and the chief executives, had suggested that the posts would not be advertised.
I have checked that fact since then with some of the regions. They tell me that they are of the opinion that those posts should be advertised, but I am reliably informed by that person that they have now reached the stage at which the appointments will be made this week. How is it possible for a Government at this stage in any procedure to go down that road, and as far down that road as is, fairly obviously, the case in that instance?
I also understand that that occasion merited the presence of a person from the Scottish Office, which demonstrates how far the Scottish Office is going as far as the appointment of those chief executives is concerned. It is a major anxiety to myself and, I should imagine, to all Opposition Members, that the Tories are now doing as they are doing in terms of the appointments to those quangos.

§ Mr. Welsh
The Minister owes the House an explanation, and I hope that we shall hear one from him, because it is obvious that the Government's policy will force greater price increases in Scotland than would otherwise take place, purely because of the unwanted policy that he is forcing on the Scottish people.
The Minister knows the figures. In the "Scottish Lobby" programme, he said: Yes, of course we've done research. We have a very committed team which is researching all the figures. But you can't expect me to give a specific forecast". I think that we can expect the Minister to give a specific forecast, and we can expect him to do so tonight in the House of Commons, because we deserve an explanation of the basis of his assertion that the private finance initiative will not be more expensive. I have seen figures that show clearly that it will be, and that those costs will be borne by water consumers in Scotland.
The Government are entirely wrong in their water and sewerage proposals, and on the issue of disposal of assets and costs. Those are simply not wanted by the Scottish people. They are bad economics, and will produce a complete lack of accountability to the general public, for whom those services are meant to exist.
Those transitional arrangements, to my mind, are only nails in the coffin of an unwanted and unwarranted Tory proposal—and there is no doubt that it is a Tory proposal in its conception, its implementation and its philosophy. It is purely a Tory party political manoeuvre, and is opposed by every other political party in Scotland, and by the majority of the Scottish people. Yet it is being imposed on us.
1470 For that reason, the proposals will not last. If the Government are intent on forcing them through against the wishes of the people, and against common sense, we have a right to expect an explanation from them about the costings—now, before those price increases hit the Scottish people.
The Minister should have nothing to hide. If he has researched those figures, he has nothing to lose by making them clear and plain to everyone, so that we can all know the truth.
On the issue of disposal of assets and costs, will the Minister make clear the basis of his assertion that private investment in public water will be cheaper than the traditional method of financing water service projects? It will not be, but the Minister must have figures to back his assertion. Why not make them public, so that we can test the truth of his statement?
The Minister tried to rubbish the Strathclyde report, but he cannot ignore the fact that other local authorities have commissioned independent reports on financing. Their figures will be available to compare with information that the Government have produced and will act on. The independent studies that I have seen clearly show that the existing finance methods are a far better bargain for Scottish water consumers.
Leaving aside the obvious point that private finance expects to make a profit from its investment, independent figures show that traditional funding is cheaper, and that the Government's proposals will mean higher prices for consumers for an essential and unavoidable daily service. Those higher prices will be imposed on the Scottish people purely because of the Government's party political dogma, and that imposition will be against the wishes of all the other political parties and the people of Scotland.
I am told that a comparison between private and traditional local government financing methods shows that local government is simply better value for money. Independent figures show that price rises over 15 years under the public sector amounted to 83 per cent. But the price rises under private financing ranged from 112 to 153 per cent. That shows substantially higher borrowing costs, and that means higher price increases for consumers.
Over a 15-year period, the public sector options that I have seen produced lower water and sewerage price increases than the private sector, even assuming efficiency savings and debt write-off. The Government are keen to write off debt when it suits private pockets, but not at all keen to write off debt if that would be in the public interest—at least not in Scotland. They are happy to write off debt in London and for English purposes.
Over a 30-year period, the public sector becomes more favourable on every comparison. The Government should make their figures public, so that we can get to the truth of the matter. The studies that I have mentioned are independent, although the Strathclyde one is not. I agree with the Strathclyde report, but we cannot ignore independent surveys that have been produced by other Scottish councils.
The Minister says that he has done his homework and knows the costs involved. Will he produce his figures for public consumption so that we can get to the truth of the matter? We are supposed to live in a democracy, and the Minister is supposed to believe in open government. He can prove that. Instead of hiding behind a veil of secrecy, let him be open and honest with the public, and print the 1471 assumptions on which he made his claim that his proposal will produce lower bills for the consumer. If he believes that, he should put it to the test. Will he publish the Government's figures for public scrutiny? The Minister can answer that now. All he has to do is say yes.
Higher price increases are the result of Government policy, but the Minister is not prepared to admit that. If he can prove otherwise, he should do so. Consumers have a right to know, because their water service assets are being stolen from them and they will be forced to pay higher prices for the privilege, simply because of the Government's totally mistaken policy. It is not good enough. The Minister has the answer, and I hope that he will produce the figures for which I have asked.

§ Mr. Stewart
I shall start by speaking to the amendments that hon. Members have questioned. I have placed a memorandum on the Strathclyde study in the Library. The hon. Member for Banff and Buchan (Mr. Salmond) asked about amendment No. 16. The term "sewerage services" was replaced by a fuller and more precise term in a number of places in the Bill on Report. One occurrence of the term was overlooked, and that omission has been rectified.
The hon. Member for Banff and Buchan raised various conspiracy theories about the purpose of amendments Nos. 17 to 23. I hope that I can reassure him—hope springs eternal. He asked about the purpose of the provision. It could be of use, for example, where someone has moved house to a new water and sewerage area, but wishes to pursue an outstanding difference with the authority for his old area. That is the only purpose of the amendments.

§ Mr. Salmond
As I noted in my remarks, there might be an entirely innocent explanation for the amendment, but the two alternative sinister explanations which I gave are equally an interpretation of that amendment.

§ Mr. Stewart
I can absolutely assure the hon. Gentleman that both his conspiracy theories are precisely that: they are both completely wrong. I give him that assurance.

§ Mr. Salmond
Is the Minister giving the House an assurance that the Government will never privatise Scottish water?

§ Mr. Stewart
My right hon. Friend the Secretary of State has made it clear on innumerable occasions that the Government have no intention of privatising water and sewerage in this or any other Parliament.

§ Mr. Salmond
rose—

§ Mr. Stewart
That could not be clearer.
The hon. Member for Dundee, East (Mr. McAllion) raised a number of general points about water. He did not say how his party in government would finance what is widely agreed to be the extra investment necessary in water and sewerage in Scotland, but we look forward to hearing from him on a future occasion.
1472 I should like to make it clear, however, that hon. Members have perhaps misinterpreted amendment No. 29. The hon. Member for Cunninghame, South (Mr. Donohoe) has been misinformed on the appointment of chief executives, as will become clear in due course.
Amendment No. 29 has a simple purpose—to allow existing councils to pursue the private finance initiative.

§ Mr. Donohoe
Will the Minister confirm whether the posts of chief executive of the three boards in Scotland will be advertised?

§ Mr. Stewart
Yes.

§ Mr. Donohoe
When?

§ Mr. Stewart
Of course they will not be advertised until the Bill has received Royal Assent.
As I was saying, the purpose of amendment No. 29 is simply to allow existing regional councils to pursue the private sector initiatives under the private finance initiative BOO schemes. A number of regional councils are known to be pursuing discussions with the private sector. I have no reason to believe that that facilitating mechanism is in any way controversial, and I therefore commend the amendments to the House.

§ Mr. Salmond
What about amendment No. 24?

§ Mr. Stewart
I apologise to the hon. Gentleman.
Amendment No. 24 and the related amendments are technical amendments, to ensure that the ownership of the sewers laid across land will be with the owner of the sewer, not the owner of the land.

§ Mr. Welsh
Will the Minister address the specific questions that I raised? Is he saying that BOO schemes will be cheaper than traditional financing methods? If so, I do not believe him. Will he make the figures public to show on what he bases the view that BOO schemes and private finance schemes will be cheaper than traditional methods? I should like to see the figures and get to the truth of the matter. He has not addressed the fundamental question about value for money for water consumers. Under the Government's scheme, they will be paying more.

§ Mr. Stewart
No, that is not correct. As I have told the House, I have placed a memorandum in the Library. 'The hon. Gentleman referred to the Strathclyde document that is available to hon. Members today. We shall, of course, be studying that and, if appropriate, we will respond to it.