HC Deb 19 December 1995 vol 268 cc1334-6
7. Mr. Purchase

To ask the Secretary of State for the Environment what plans he has to review the procedure for regulation of the water companies; and if he will make a statement. [4881]

Mr. Gummer

I have no plans to review the water industry's efficient regulatory system.

Mr. Purchase

Consumers will be thrilled by that scintillating answer. Is the Secretary of State aware that the second Cadbury review of corporate governance is considering seriously the question of supervisory boards? Would it not be sensible for the Secretary of State to consider how best we might proceed, given the abject failure of the present regulatory system, so that local people could once again sit on the supervisory boards and have a proper say about and input into the way in which the industry is regulated?

Mr. Gummer

The hon. Gentleman has forgotten the whole history of the water industry. We have problems there at the moment because of the lack of investment under the Labour Government. I know that that is true because I read carefully the words of the right hon. Member for Derby, South (Mrs. Beckett), who said that the Government had said that investment in the water industry had been cut under Labour. She said:

That is not true. The plans that we hoped to implement were not entirely fulfilled."—[0fficia Report, 30 November 1995; Vol. 267,c. 1385.] The fact is that they were cut, cut and cut again. Now, the investment is continuing and it is properly regulated.

Mr. Barry Field

May I recommend to Mrs. Gummer that Father Christmas places in the Christmas stocking of my right hon. Friend a little pamphlet from Conservative central office which I wrote on this very subject to give my right hon. Friend a little light reading over Christmas? Does he agree that it is remarkable that no matter how much the Almighty allows it not to rain, the Opposition cannot bring themselves to agree that water metering is the best way forward for charging for water?

Mr. Gummer

I shall look forward to the pamphlet, but it is interesting that the Labour party is in favour of all environmental things in general but none of them in particular. The truth is that unless resources are properly looked after, we cannot have sustainable development. That is why the Labour party has no environment policy whatsoever.

Mr. Matthew Taylor

Can the Minister confirm whether he has had reports that there are likely to be considerable water shortages next year, given the lack of rain last summer and the relatively dry weather this Christmas? If so, what is he doing in negotiation with the water regulator and others to tackle that?

Mr. Gummer

Those reports have one thing in common: they say that the shortage of water arises because of a shortage of rain. Unless the hon. Gentleman has a special way of delivering rain, discussions with the water regulator will make no difference. The water companies have an extensive programme of further investment and already spend extremely large sums. The retained profits and £3.5 billion of borrowing by the industry have financed that unprecedented investment. Much of it makes up for the lack of investment when the industry was nationalised, which is what the hon. Member for Wolverhampton, North-East (Mr. Purchase) wants to return to. I assure the hon. Member for Truro (Mr. Taylor) that I am looking at the position in the south-west, which is one of the areas most affected.

Mr. Nicholls

The fact that the Monopolies and Mergers Commission recently upheld Ofwat's decision to peg water charges in the south-west shows that regulation is working in terms of that aspect of the industry. Does my right hon. Friend agree that, given that the water company in the south-west cannot even deliver water to every house in my constituency and cryptosporidium affects water supplies, further regulation of the quality as opposed to the cost of the service should not be ruled out at this stage? Will he comment on that?

Mr. Gummer

The drinking water inspectorate and the environment agency deal in their respective ways with quality. I am happy to point out to them, as I have in the past, my hon. Friend's views on those matters. I am glad that my hon. Friend points the House to the fact that the mixture of the water regulator and the opportunity to appeal to the Monopolies and Mergers Commission show the toughness of the regulation, the affect on South West Water and the insistence that South West Water meets higher standards immediately.