HL Deb 10 April 2003 vol 647 cc67-114GC

(Fifth Day)

Thursday, 10th April 2003.

The Committee met at noon of the clock.

[The Deputy Chairman of Committees (Lord Carter) in the Chair.]

The Deputy Chairman of Committees (Lord Carter)

The usual announcement was made at the beginning of the Committee stage. I remind noble Lords that in the event of a Division, the Committee will adjourn immediately for 10 minutes.

Schedule 4 [Licensing of water suppliers]:

Baroness Byford moved Amendment No. 166D: Page 147, line 7 after "Assembly;" insert— (iii) each relevant licence holder;

The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 166E. 166F, 166G, 167A and 168ZA.

I seek clarification through Amendment No. 166D. When a reference to the Competition Commission concerns a single licence holder, the report goes to him immediately and at the same time to the Secretary of State and the Assembly. What is different about a referral of more than one licence holder is that they will all have to wait a further two weeks before receiving the report. We could not quite understand those provisions in the Bill, unless I have read them incorrectly. What will the Secretary of State and the Assembly do during those 14 days? There are those who, looking at past performance, will say that the amendment will not even be opened, let alone read, straight away. I do not quite understand why there is a 14-day delay when the decision has obviously been taken.

On Amendment No. 166F, subsections (6) and (7) give the Competition Commission the duty, "so far as practicable", to prevent disclosure of anything that is not in "the public interest", against "commercial interest" or harmful to an individual. This is only a small suggestion, but does that suggest that the Competition Commission is not to be trusted? Does the Secretary of State have a different yardstick? She can hardly be responding to an appeal because the report has yet to be published. On what grounds is it envisaged that the Secretary of State will exercise the power to ban the publication of aspects of the report?

Amendment No. 166G is a probing amendment. The Competition Commission has the duty, on page 146 at line 6, of specifying the modifications by which the anticipated adverse effects, could be remedied or presented".

The words that we wish to omit suggest that the authority can gainsay the Competition Commission. One is tempted to ask: why involve the commission at all if it can be overruled on disclosure by the Secretary of State on modifications by the authority? These are all slightly technical amendments.

Amendment No. 167A relates to line 18 on page 149. If the authority is limited to making modifications that are recommended by the Competition Commission, there will be no need for any of that to be stated. There is much to-ing and fro-ing, and all of that is to be done in a timescale that no one who has ever waited for a promised regulation, guidelines or White Paper from the Government might credit. We wonder why the words are in the Bill.

Amendment No. 168ZA is another probing amendment. It appears that licensed water suppliers are to be allowed to have their own treatment works. Will the Minister expand on that and the subject of ownership by the licensed water suppliers of buildings, pipes and lands? Will they, for example, he able to take over existing water undertakers' responsibilities in that way, sell off the water abstraction end but retain the treatment works and delivery system? if a water undertaker develops a delivery system for a licensed water supplier and charges for it, will the system belong to the licensed water supplier?

I apologise for the fact that these are fairly technical amendments. We are seeking clarification on them. I beg to move.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

The essential point about the amendments is that the provisions are virtually the same as those in the Utilities Act. Although there are points in the Bill at which water clearly needs to be treated slightly differently from gas and electricity because of the structure of the market or the regulations, unless there was a specific reason for departing from the wording of the Utilities Act—or the earlier gas and electricity Acts—so far as gas and electricity are concerned, we have not departed from it.

On the specific point relating to 14 days, the standard conditions would relate to many licences but when one is dealing with a number of licensees some matters could be involved that are confidential to some of the licensees and not to others. The view is that we should need more time in which to sort that out before sending them what is in effect a standard reply circulating everything to everyone.

Amendments Nos. 166D, 166E and 166F, if taken together, would remove the right of the Secretary of State to excise sensitive matters from commission reports. The provision of confidential information to the commission and its use of that information is essential to enable it to do its job. As I said, those are the same provisions as apply to gas and electricity and there is no particular reason why those providing confidential information under the Gas Act should have their interests protected whereas those under the equivalent water licensee provisions should not.

Amendment No. 166F relates to our reasons for involving the commission on modifications if the Secretary of State can veto. Again, that is consistent with the Utilities Act in relation to the implementation of government policies. The Secretary of State is unlikely to intervene frequently but the power is available in the Gas Act and the Electricity Act. The Secretary of State has wider interests than those of the Competition Commission, and that may lead to such a veto.

Amendments Nos. 166G, 167A and 168ZA would require the authority to be precise about any specifications that it had made for licences in the report and therefore there would not be any discretion left to the authority to make whatever modifications it believes are appropriate to give effect to the commission's conclusions. Again, that is similar to the position relating to gas and electricity. To remove that in the case of licensed water suppliers would be inconsistent and would add to the burden on the Competition Commission of getting it absolutely right. However, to give effect to its intentions, the authority's own expertise needs to be brought to bear in terms of the precise drafting of the licence. That discretion is sensible in relation to all of the utilities.

If the authority attempted to make modifications that were not in line with the conclusions of the report, the Competition Commission can exercise a veto under new Section 17P. That protection is also available.

On Amendment No. 168ZA, the noble Baroness asked whether licensees would still be able to acquire treatment works. The answer is that if they will not acquire, that may be because licensees have their own treatment works and input treated water to the undertaker's network. If the noble Baroness requires further clarification, I had better write to her because I am not entirely sure whether that directly answers her point.

The main point is that the provisions are the same as in the gas and electricity legislation and I do not see any overriding reason why things should be different in this respect.

Baroness Byford

I am very grateful to the Minister. In a way, I am sorry that this is the opening amendment because it is very technical. Had I realised that the provision was taken from the Utilities Act verbatim, I might not have tabled the amendment. I shall reflect on what the Minister said.

On the amendment relating to licences of their own, if, on reconsidering my explanation in greater detail, the Minister wants to come back to me, I should be happy. I am still not clear what rights I, as a new licensed supplier, have over where that would be coming in. I had not anticipated that all licensed water suppliers would have their own treatment works; that came to me as quite a surprise. It is possible that they might have that but I had not foreseen that they would have that. On those two amendments, I am certainly happy.

If I understood the Minister's response to Amendment No. 166G correctly, he said that the Competition Commission can overrule the authority: if the authority decides that work needs doing, the commission has the final say and the authority does not. I had not read the provision as having such clarity.

Lord Whitty

To clarify the position, the authority has the right to fulfil the intention of the commission's recommendations in a way that varies slightly from the wording of those recommendations. However, where it has to go outside the recommendations and make a modification contrary to or distinct from them, the commission would have a veto.

Baroness Byford

I am grateful for that clarification. I understand the point; but if the Secretary of State or the authority does not like what the commission intends to do, the body having the final say is presumably the Competition Commission. Based on the indications from officials sitting behind the Minister, I am assuming that to be correct.

I should like to read the other responses in greater detail. If the Minister wishes to come back to me on the particular issue that I mentioned, I should be happy, but at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 166E to 168ZA not moved.]

Baroness Byford moved Amendment No. 168ZB: Page 156, leave out lines 9 to 11

The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 168VA, which are grouped together. Both are probing amendments; they seek greater clarification.

As the Bill stands, it appears that licensed water suppliers will not be allowed to have treatment works—I raise this matter for the second time. Will the Minister expand on the subject of ownership by licensed water suppliers of buildings, pipes and land? Will they, for instance, be able to take over the existing water undertakers, sell off the water abstraction side of the business, but retain the treatment works and delivery system? If a water undertaker develops a delivery system for a licensed water supplier and charges for it, will the system then belong to the licensed water supplier?

As I said, Amendment No. 168VA is also a probing amendment. Section 158 of the WIA gives the undertaker powers to lay, maintain and alter any relevant pipe in a street. Paragraph 30 in Schedule 8 to the Bill denies that right for pipes that would be used for supplying non-domestic water under a water supply licence. Will the Minister confirm that that is the case and that I have not misunderstood the matter; and will he then explain what will happen if a licensed water supplier requests a supply in circumstances that would entail digging up a street? Will it become a matter for the planning authorities, or will it simply be impossible to go ahead? As I said, we merely seek clarification. I beg to move.

12.15 p.m.

Baroness Farrington of Ribbleton

I accept that clarification is very important in these matters.

The effect of Amendment No. 168ZB would be to remove the new duty on undertakers to lay pipes to connect licensees to the supply systems. We do not wish to see that happen.

The effect of Amendment No. 168VA would be to extend that duty to cover both potable and non-potable connections. The use of the undertakers' pipe-laying powers is important in order to allow licensees to introduce water into the supply system. Undertakers will have to use the pipe-laying powers for connections only in relation to the potable system—the drinking water system. That will ensure that pipes are laid to a suitable standard and are owned by the undertakers, so that the drinking water supply system remains integrated under the responsibility of the undertaker.

We do not believe that the amendment is necessary for non-potable water supplies. I sent the noble Baroness a detailed letter on these issues the other day. The brief answer to the point she raised then is that the pipes are separate. Therefore, the undertaker is not required to lay pipes for this purpose.

Two further questions were raised in relation to other amendments. The first was: can the licensees have treatment works? Yes, they can construct their own treatment works or purchase access from undertakers. Regarding taking over the assets of existing undertakers, the answer is no: the provisions give no rights to acquire undertakers' treatment works or piped network. I hope that I have answered the points raised.

Regarding the power to lay pipes supplying non-domestic water, the power is not available for non-potable water networks. Without pipe-laying powers, pipes can be laid by applying to the local highways authority. So there is no automatic right of access.

I hope that with those reassurances the noble Baroness will not feel it necessary to press the amendment.

Baroness Byford

I am grateful to the Minister for that response, and I thank her for the letter that she sent to me in the interim. I shall not use the expression "a dry Bill", but the Bill is slightly technical in parts. It is a matter of seeking clarification. On re-reading the Bill, one begins to wonder whether one has got it right. At this stage, I thank the Minister and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford moved Amendment No. 168ZC: Page 158, line 26, leave out "or second" and inset ", second or third

The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 168ZD, which seeks to insert a third condition regarding provision of the supply system entailing environmental damage to flora, fauna or geographical or physiological features.

I believe that the amendment speaks for itself. But the undertaker must be able to refuse to dig up an SSSI or blast a new pipeline through the Downs or in the Lake District. The lack of an environmental, sufficient cause is a serious oversight, unless the Minister can point to its inclusion elsewhere in the Bill. In our view, it will not be sufficient to have that stated only in the WIA or the WRA. It should on the face of the Bill. I beg to move.

Baroness Farrington of Ribbleton

We agree with the aim of ensuring that the requirement on undertakers to make water available to licensees and for transfer from one undertaker's supply system to another should not result in damage to the environment, including flora, fauna and geographical features.

I can reassure the noble Baroness that there is no need for the additional condition proposed in the amendment. In supplying the water to licensed water suppliers, undertakers will remain under their existing duty under Section 3 of the Water Industry Act to further environmental objectives. Therefore, it is not necessary to repeat that commitment in this legislation.

Baroness Byford

I thank the Minister for her response. Presumably, this would affect new water suppliers too—they would fall within this restriction.

Baroness Farrington of Ribbleton

Yes, I believe so.

Baroness Byford

I am grateful to the Minister for that clarification. In that case, I shall happily withdraw the amendment. We are obviously very anxious to make sure that flora, fauna and geographical and physiological features are considered when these decisions are made. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 168ZD not moved.]

Lord Dixon-Smith moved Amendment No. 168ZE: Page 160, leave out lines 39 to 41.

The noble Lord said: This is another probing amendment. It deals with the question of the costs that a water undertaker may charge a water supplier for the use of its facilities in order to bring water from the supplier's source to its customers.

We are uncertain as to the meaning and effect of the words that we seek to delete. The cost principle referred to in the clause is that, the charges payable … under the agreement or determination … shall enable the undertaker to recover from the supplier … any expenses reasonably incurred in performing any duty under sections 66A to 66C … in accordance with that agreement … and … the appropriate amount in respect of qualifying expenses and a reasonable return on that amount". I presume that the final words refer to capital costs and that sort of thing. The clause goes on: to the extent that those sums exceed any financial benefits which the undertaker receives as a result of the supplier supplying water to the premises of relevant customers". We are somewhat puzzled as to what precisely that means—if the water undertaker is no longer supplying the customer. It could conceivably be envisaged that if a customer is sufficiently big he might have some reduced costs. At the same time, he has presumably lost a great deal of income. We thought that the only thing to do was to table an amendment seeking to remove those last words, in an attempt to find out exactly what was intended. It looks as though the recovery of costs is not straightforward. If it is not straightforward, we are not sure what else this provision might mean.

Lord Whitty

In allowing access to their networks and providing supplies of wholesale water, undertakers incur additional costs. They will need to recover those costs from the licensed water suppliers. This clause sets out the principles on which the charges that licensed water suppliers pay to undertakers will be based. Those charges will enable undertakers to recover the costs that the undertakers incur as a result of the licensee introducing water, including an amount for expenses they have incurred in relation to customers who switch to licensed suppliers.

However, it is necessary to deduct from those costs any savings that they may be able to make and any financial benefits that may accrue as a result of the licensee's involvement. The amendment seeks to remove the offset of those financial benefits, so they are not deducted from the costs. Financial benefits may, for example, include financial savings resulting from being able to defer or cancel future capital plans as a result of not directly supplying the customer who has switched to licensed suppliers.

The effect of the amendment would be to ensure that any such financial benefits were retained by the undertaker. Effectively, the undertaker would be over-charging the suppliers to the disadvantage of the customers. Of course, in not all circumstances will any financial benefits arise. This simply provides for the situation in which such financial benefits or savings arise and need to be taken into account and offset against the charges which the undertaker is making.

Lord Dixon-Smith

I shall need to study that with some care. I understand direct financial benefits, if there are any, and perhaps they should be taken off the charges. But the idea that charges should be taken off, to the benefit of being able to defer or even avoid future capital expenditure, is stretching the point. This is expenditure which has not yet happened and therefore could not be charged anyway.

Baroness Byford

I thank my noble friend for giving way. We are doing a duet here. Perhaps I may raise one point. The Minister said that the proposal would be to the disadvantage of consumers or customers. Equally, it would be to the disadvantage of customers of water undertakers, so it depends on which customer will be losing out. Unless I misunderstood what the Minister said, there will be a loss to somebody.

Lord Whitty

The total cost will be met one way or the other. There will not be any additional cost to the consumers as a whole. If it is right that the undertaker should be able to recover the costs of setting up a licensed supplier and charge that, it will eventually be charged to the customer. But if the undertaker is left just to charge the gross costs but does not deduct any benefit from those gross costs, the final expenditure is shifted to the wrong customer.

For example, when the competitive activity allows the incumbent water undertaker to defer or avoid investment as a result of the additional capacity created by eligible customers switching to a new supplier, such investment would otherwise have to be financed through higher prices to his direct customers. If that is not so, there is no reason why allowance for that should continue to be built into the charge to the licensed supplier; that is, it is an attempt to ensure that the net costs are passed through the system to the ultimate customer in the right place.

Lord Borrie

Perhaps I might intervene and I hope that my comments will be helpful rather than unhelpful. Whereas I understood the example given by the Minister about the water undertaker being able, in certain circumstances, to defer capital expenditure that it might otherwise have had to incur—customers are now being supplied by the other company—I am unsure that that is covered by these words. I do not see that the undertaker receives financial benefit simply because he has been able to defer or permanently bring to an end his plans for future capital expenditure. Is that really a financial benefit received?

Lord Dixon-Smith

I am grateful to the noble Lord, Lord Borrie, for explaining rather more clearly than I what is causing us concern. I understand that it might be of benefit if one supposes that the capital expenditure programme was so advanced that it had been taken into account in the pricing structure for the authority's water to its customers in the most recent assessment by what is now Ofwat and what will be the new body.

Because the price structure is reviewed regularly, I cannot believe that that situation would ever arise. On a number of occasions, we have discussed the length of lead-in time for major capital expenditure of any sort by a water undertaker. The authorities responsible for the pricing structure would not allow any accrual of income to the water undertaker until the expenditure had commenced. Therefore, to a certain extent, we are talking about a situation that will never arise.

12.30 p.m.

Lord Whitty

I think that the noble Lord and my noble friend Lord Borrie have both accepted the principle that financial benefit should be offset against cost. My noble friend Lord Borrie asks whether the wording of the Act actually covers the saving as well as a financial benefit received. It is intended to cover savings gained as well as positive financial benefit gained. Our advice is that the wording does cover that, although we shall look at that matter again.

As to whether it can be identified or not, clearly that will be a matter that Ofwat will need to look at and its guidance will need to cover. Clearly, there will be some situations where there will be some argument about whether it can be identified or not. But, surely, the principle is right.

Lord Dixon-Smith

I am grateful for that reply. If we are dealing with a principle—we may well be able to accept a principle—I think that the examples which we have been discussing are a little fictitious, if I may put it that way. We shall study what has been said. It has been an interesting discussion on another of the technical points. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Duke of Montrose moved Amendment No. 168ZF: Page 161, line 16, leave out from beginning to end of line 29 on page 162.

The noble Duke said: On page 159, the Bill states that the authority may determine a case referred to it by a licensed water supplier. What is the point, two pages later, in making it mandatory for the authority to consult the Secretary of State before it makes that determination? Not only does this indicate considerable doubt about the ability of the authority to carry out its duty, but it also deprives the licensed water supplier of an appeal route. Furthermore, it lengthens the time necessary for a decision to be reached. In our view, it is unnecessary and bureaucratic. I beg to move.

Lord Whitty

This may be an issue about the way in which legislation is drafted. The reference to consulting the Secretary of State is required in order to obtain the opinion of the Drinking Water Inspectorate. The Secretary of State is directly responsible for the DWI and for drinking water quality. Therefore, in practice, this consultation would be with the DWI. That is an important safeguard in respect of the quality of water in the public supply system.

Where a dispute concerns a supply of wholesale water given by one undertaker for introduction into another undertaker's supply system, the authority is also required to consult the Environment Agency. That is to enable the agency to give its views on the advisability of transferring water between different systems. There is an existing requirement to consult the agency in case of a dispute.

The reference to the Secretary of State therefore is not pre-empting the appeals process but it provides a means whereby the Drinking Water Inspectorate could give a view.

The Duke of Montrose

I thank the Minister for his reply. I am not well enough up on the structure of legislation to know why that cannot be stated a little more clearly in the Bill. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 168A: Page 162, line 36, leave out first "supply" and insert introduction

The noble Lord said: This is a formidable-looking group of amendments. I have communicated to those on the Opposition Front Benches the need for the amendments, which I hope will be acceptable. They are related to the competition provisions and are technical and consequential. I would like to draw three points to the attention of Members of the Committee. If there are any other queries, no doubt they will be raised.

Amendment No. 168F and the associated Amendments Nos. 168G to 168J augment the provisions in proposed new Section 66G by making provision for the authority to designate two or more introductions of water from a single supplier as a strategic supply. That better caters for situations where, for example, licensees develop several sources. Amendment No. 168M allows customers to sue an undertaker for consequential loss or damage, should the undertaker not comply with its duty to maintain a supply. Amendment No. 168N and the associated consequential amendments substitute the undertaker for the licensed water supplier as the body which detects incidents of damage to water fittings, contamination of water and waste. That better reflects the present position, which will continue under the competition arrangements, where undertakers detect incidents through their routine audits.

The remaining amendments are technical or consequential. I beg to move.

Baroness Byford

I thank the Minister for proposing the amendments. As he said, the majority of them are technical, and he was kind enough to circulate some explanatory notes with them. At this stage, there is nothing specific that I want to raise, so I think that we on these Benches accept the amendments as they stand.

Baroness Miller of Chilthorne Domer

I rise simply to check something. I have the Minister's explanation on Amendment No. 168M. Is he saying that without that amendment, the proceedings could not be brought? In debate on when proceedings could be brought at an earlier sitting of the Committee, my understanding was that actions could be brought in situations of breach of duty in any case. Why is the amendment necessary?

Lord Whitty

I cannot even find the right page on Amendment No. 168M, so I will have to dig beyond my initial explanation and write to the noble Baroness.

Baroness Miller of Chilthorne Domer

I am sure that a letter would be helpful, as it will probably be easier to understand when I read it slowly in any case. If the noble Lord writes to me, will he ensure that his office addresses any letters to Baroness Miller of Chilthorne Domer? If they are not addressed that way, the noble Baroness, Lady Miller of Hendon, gets my post. That is obviously an inconvenience to her but, if she is away, any such post can take a week or more to reach me.

Lord Whitty

My apologies for that to both the noble Baroness and, probably even more so, the noble Baroness, Lady Miller of Hendon.

On Question, amendment agreed to.

Lord Whitty moved Amendments Nos. 168B to 168E: Page 163, line 14, leave out from "that" to end of line 16 and insert "an introduction designated under this section as a strategic supply no longer constitutes such a supply, it shall cancel its designation. Page 163, line 18, leave out "a supply" and insert "an introduction Page 163, line 24, leave out "a supply" and insert "an introduction Page 163, line 25, leave out second "supply" and insert "introduction

On Question, amendments agreed to.

Baroness Byford moved Amendment No. 168EA: Page 163, line 28, leave out "for domestic purposes

The noble Baroness said: In moving Amendment 168EA, I shall speak to Amendment No. 168FD. We have two more probing amendments. We understand—we have been told—that the 50 litre threshold will mean that the market opened for licensed water suppliers will be about 2,000 customers. Page 131 of the Bill lays down the requirements in relation to premises supplied by the licensed water supplier. The first of those is that the premises are not household premises. Will the Minister explain why such a tight definition does not apparently rule out the supply of water for domestic purposes? That deals with Amendment No. 168EA.

Amendment No. 168FD is another probing amendment. Will the list of companies to which the strategic supply may be transferred include water undertakers, or will that be a last resort to be used only when another licensed water supplier cannot be found to do that particular job? I beg to move.

Lord Whitty

Household premises would use water exclusively for domestic purposes, whereas non-household premises generally use water for both domestic and non-domestic purposes. That is why the Bill refers to household rather than domestic premises. All water supplied through potable water systems has to meet the statutory standards for quality, whether it is domestic or non-domestic.

Baroness Byford

What a simple response. Can I tempt the Minister to look at the Bill and explain it in those few words? It certainly does not read that way. Can I crave the indulgence of the Minister and his team to consider slightly rewording the Bill to make the provision so obvious? One sometimes feels foolish tabling amendments, but when one cannot find an answer to what is obvious to the Government but not to those of us who may have to come back to a Bill at some stage, such rewording would be enormously helpful. It would involve only a few words. I urge the Minister to consider it.

Lord Livsey of Talgarth

I wholeheartedly support what the noble Baroness said. The Minister has put over a crucial piece of information so far as households are concerned. Clarity in this respect is absolutely vital.

Lord Whitty

I will have a look to see whether anything can clarify the provision. The problem is that charging specifies domestic and non-domestic, whereas the type of use of water is as I have described. It is not going to be so easy to clarify the Bill.

Baroness Byford

I appreciate that it may not be easy, but the noble Lord has a great reputation for trying to put problems right. I hope that we can persuade him to tackle that one little job. When talking about households, it is quite obvious that they might use some water for a domestic purpose and that the rest will be for business, but the Bill is certainly not clear to that effect. I hope that he will think about the problem. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 168F: Page 163, line 28, at end insert—


(1) Subsection (2) below applies if at any time the Authority determines that two or more introductions of water—

  1. (a) which are made by a licensed water supplier; and
  2. (b) which a water undertaker is required to permit under section 66B or 66C above in accordance with agreements under section 66D above, constitute a collective strategic supply of water.

(2) The Authority shall designate the introductions as a collective strategic supply.

(3) Subsection (4) below applies if—

  1. (a) a water undertaker requests the Authority to make a determination that two or more introductions of water constitute a collective strategic supply for the purposes of subsection (1) above, or
  2. (b) the Authority otherwise proposes to make a determination that two or more introductions of water constitute a collective strategic supply for the purposes of that subsection.

(4) The Authority shall give notice of the request or proposed determination to—

  1. (a) the Secretary of State;
  2. (b) the Assembly;
  3. (c) the Environment Agency;
  4. (d) the other party or parties, or the parties, to the agreements under section 66D above; and
  5. (e) such other persons (if any) as the Authority thinks it appropriate to notify.

(5) Any such notice shall specify the time (not being less than twenty-eight days from the date on which the notice was given) within which representations or objections with respect to the request or proposed determination may be made.

(6) The Authority shall consider any representations or objections which are duly made and not withdrawn.

(7) If the Authority determines that introductions designated under this section as a collective strategic supply no longer constitute such a supply, it shall cancel their designation.

(8) If the Authority proposes to make a determination under subsection (7) above that introductions no longer constitute a collective strategic supply, it shall give notice of the proposed determination to the persons specified in paragraphs (a) to (d) of subsection (4) above.

(9) Subsection (5) above applies to a notice under subsection (8) above as it applies to a notice under subsection (4) above (and subsection (6) above applies accordingly).

(10) For the purposes of this section, introductions of water are a collective strategic supply if, without those introductions being made, there is a substantial risk that the water undertaker would be unable to maintain supplies to its own customers as well as supplying the customers of the licensed water supplier in question with water for domestic purposes."

On Question, amendment agreed to.

Baroness Byford moved Amendment No. 168FA: Page 164, line 8, at end insert ", or (c) the wronged water undertaker

The noble Baroness said: In moving Amendment No. 168FA, I shall speak also to Amendments Nos. 168FB and 168FC. The first two amendments are linked. Say a person or company that should not do so supplies waters to premises x. Surely a water undertaker above all should be entitled to take the offender to court. As the Bill stands, I do not think that he is able to. That is why we have asked for the addition of proposed new Section 66H(7)(c), which suggests that, the wronged water undertaker", should be in a position to take that person to court.

Amendment No. 168FC is again a probing amendment. Through it, we are asking about exemptions. What are they? What person or class of persons is supposed to be exempt? What reasons and evidence will the Secretary of State have for taking such action? Proposed new Sections 66H(1) and 66I(1) specify "water", so presumably the exemption could not be used for fluoride or other chemicals—or could it, provided that the chemical was diluted to x parts of a million?

The amendments are a little technical, but I beg to move.

12.45 p.m.

Lord Whitty

The amendments seek to allow undertakers to initiate prosecutions against unauthorised use of their network. New Section 66H prohibits supply from the public network except by the undertaker or a licensee. New Section 66I prohibits the introduction of water into the supply network by anyone other than the undertaker, a neighbouring undertaker in accordance with an agreement, or a combined licensed water supplier.

Persons offending against either of these prohibitions will be liable to prosecution by the Secretary of State. The noble Baroness seeks to give a right of prosecution to the undertakers. It would not be appropriate to give the undertakers the right to prosecute as the offence would be related to access to their networks and therefore they would be directly involved. It would not be appropriate to give them the right to pursue a criminal prosecution.

Amendment No. 168FC would remove the ability of the Secretary of State to create exemptions from the new prohibitions. The noble Baroness is suspicious of this provision and wishes to ascertain what exemptions there will be. It is not entirely clear that there will be any exemptions, but we would not wish inadvertently to close off the possibility of local activity, which we can designate either as not appropriate or which we can license. I cannot think of any specific examples where that would apply but, by virtue of the age of the water industry, we cannot be aware of every local arrangement. We want to give ourselves a little bit of elbow room in that regard.

The main point on the earlier amendments is that we would not wish to give the undertakers the right to prosecute because they would be party to the dispute.

Baroness Byford

I thank the Minister for that reply. I am slightly puzzled as to why an independent water company is not allowed to prosecute. In the normal world outside, companies can take other companies to court if they have a grievance. If a decision was left to the Secretary of State, for example, it may well be that he would decide that a certain case did not warrant being taken to court. I find it unusual that water companies should be denied this legal right.

If the Minister is again going to tell me that this is a utilities Bill and that the provision is already in other Bills and has been transcribed across, I shall have to sit down graciously. But it is unusual.

Baroness Miller of Chilthorne Domer

I am becoming increasingly uneasy listening to the debate. I am not a lawyer—which is unhelpful when we are faced with technical amendments about whether or not people have the right to take legal action—and I would welcome the Minister's assurance that he will put in writing where in the Bill the legal right to take action is removed from companies and individuals. The Bill concerns water and I am surprised that it seems to remove the legal rights of companies and individuals.

Lord Whitty

We are talking about criminal prosecutions. It is rare for a party to a dispute to be able to prosecute the other party under the criminal law. We are not denying people their civil rights. It would perhaps be better if I set out the position in writing, as the noble Baroness suggests.

Baroness Byford

I am grateful to the Minister. I presume that the option of pursuing a case through the civil courts will remain, but that is not quite the same thing. I thank the noble Baroness, Lady Miller of Chilthorne Domer, for her contribution. I cannot understand why that provision is in the Bill. Human rights issues, legal responsibilities and accessibility are key concerns of the Committee. I look forward to receiving the letter from the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 168FB and 168FC not moved.]

Schedule 4, as amended, agreed to.

Schedule 8 [Minor and consequential amendments: licensing of water supplies etc.]:

[Amendment No. 168FD not moved.]

Lord Whitty moved Amendments Nos. 168G to 168L: Page 183, line 21, after "introduction" insert "or introductions Page 183, line 30, after "introduction" insert "or introductions Page 183, line 42, after "below" insert "or the introductions of water by it which are so permitted are designated as a collective strategic supply under section 66GG below Page 184, line 42, at end insert— ( ) Section 27 (general duty of Authority to keep matters under review) is amended as follows. ( ) In subsection (1), for the words from "water" to the end there is substituted—

  1. "(a) water undertakers or sewerage undertakers carry out functions; and
  2. (b) licensed water suppliers carry on activities authorised by their licences."
( ) In subsection (2)—
  1. (a) after paragraph (a) there is inserted—
    • "(aa) the carrying on by companies holding licences under Chapter 1A of this Part of the activities authorised by their licences; or"; and.
  2. (b) in paragraph (b), for "such company" there is substituted "company mentioned in paragraph (a) or (aa) above".
( ) In subsection (4), at the end of paragraph (b) there is inserted "or
  1. (c) the activities authorised by retail licences or combined licences; or
  2. (d) the carrying on of any such activities by a company holding any such licence.""
Page 184, line 42, at end insert— ( ) Section 39A (information to be given to customers about overall performance) is amended as follows. ( ) In subsection (1), after "customers" there is inserted ", and, if the direction so specifies, licensed water suppliers using the undertaker's supply system for the purpose of supplying water to the premises of customers or those customers,". ( ) After subsection (2) there is inserted— ( ) In subsection (3), after "undertaker" there is inserted "or licensed water supplier".

On Question, amendments agreed to.

The Duke of Montrose moved Amendment No. 168LA: Page 185, line 43, leave out sub-paragraph (2).

The noble Duke said: The Bill amends Section 55 of the Water Industry Act, which basically states that if anyone in a water undertaker's area requests a non-domestic supply, the undertaker, with a few caveats, is obliged to comply.

The subsection to which the amendment refers would extend the obligation to requests that come from outside the water undertaker's area. It is a bald statement which does not encompass how the consequences will be handled. For example, will the Minister explain whether the undertaker in question will have to lay new pipes, or can be apply to the water undertaker whose area it is for an automatic right to use the latter's delivery system? How does the subsection impinge on the new rights of licensed water suppliers? I beg to move.

Baroness Farrington of Ribbleton

At present, undertakers have a duty to supply customers outside their areas for domestic purposes but not for non-domestic purposes. We have sought to simplify the situation and provide clarity by removing this distinction.

The Bill also restricts this duty to supply customers outside the undertaker's area to those who are not eligible for supply by a licensed water supplier. This ensures that undertakers will compete only outside their areas through their associated companies and not directly. If the noble Duke is seeking to ensure that non-domestic customers eligible for competition can be supplied out of area by the undertaker, the amendment would not achieve it.

In such circumstances, the undertaker will have to build new pipes but, as we discussed in an earlier amendment, he will be able to charge for this. There is an existing duty to supply water outside the area for domestic purposes; it is a new duty only in regard to non-domestic supply. The change will not have any direct effect on licensed water suppliers because it relates only to ineligible customers, not to those who are eligible elsewhere.

The Duke of Montrose

I thank the noble Baroness for her reply. She has a great grasp of the subject but I am afraid I am a little lost. It will be well worth our while to read what the noble Baroness said and attempt to follow the logic in that way. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Duke of Montrose moved Amendment No. I68LB: Page 186, line 11, after "premises" insert "which meet the threshold requirement laid down in section 17D

The noble Duke said: As it stands, the wording in the Bill implies that anyone may apply to a licensed water supplier for a domestic supply. Is this intended to be the case? Section 17A on the granting of licences lays down quite clearly that a retail authorisation does not allow a licensed water supplier to supply household premises. However, the section title refers to "Domestic Supply". Is this to be interpreted as the adjective "domestic" describing the noun "supply", or is it a shorthand for "the supply of domestic standard water"?

Are the words used deliberate? Does this piece of legislation tucked away in a schedule of minor and consequential amendments open the door to licensed water suppliers supplying domestic quality water to all classes of customer? I beg to move.

Lord Whitty

I do not know. The amendment would appear to add a requirement that only customers of eligible premises may notify undertakers that they no longer wish to receive a supply of water. Given our earlier discussion in this context, I shall have to seek clarification of the definition of "domestic" and write to the noble Duke.

Baroness Byford

I am grateful to the Minister. I smiled when my noble friend moved the amendment. I thought that it would be one on which the Minister would have to come back to us. It is an acceptable course of action.

The Duke of Montrose

I shall await clarification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 168LC: Page 187, line 3, leave out "not

The noble Lord said: This is a group of linked probing amendments. We are curious as to why the Bill is drafted this way round. It requires a water undertaker to be prescient if it is to fulfil its duties.

We are dealing with supply. The proposed new Section states: This section applies where … a licensed water supplier ceases to supply any premises with water; and … the owner or occupier of the premises has not notified the water undertaker… that he has made arrangements for the continuation of the supply of water to the premises"— and so on. That appears to imply that a big business customer—we are talking about 50 megalitres of water—which is eligible in the competition arena would not be sufficiently au fait and on top of its business to know that its water supplier was going to collapse and go bust.

Or are we talking about an unpredictable temporary breakdown? Are we talking about imposing on the major water undertaker an obligation to provide a stand-in supplier because the water supply system has broken down for 48 hours?

In normal circumstances, as this would concern a business with a very high water use, the business would be aware in advance that it had problems with its water supply and would notify the water undertaker of the situation. We believe that it should be the customer's duty to notify the water undertaker that it had difficulties with its water supply. That would enable the water undertaker to respond properly. To require the water undertaker to respond automatically at zero notice would place a heavy burden on it. That may not be what the Bill intends to happen but, from the way in which it is written, that certainly appears to be the case.

The water undertakers, water suppliers and customers will all be substantial businesses. I do not follow the logic of the Bill and the way in which it is written. The amendments seek to turn the logic around so that the obligation is on the customer to notify the water authority.

Lord Whitty

The intention of the section is to provide customers with an interim supply while arrangements are made for an alternative supply, or a reversion to a permanent supply, when the supply from a licensee ceases. It could happen at very short notice or with no warning to anyone. The minute that supply from the licensee ceases, the duty automatically applies to the undertaker, and continues for at least three months.

The amendments we are discussing would require customers to notify undertakers before the interim supply duty applies. That could lead to a hiatus. Until the customer notifies the undertaker, the undertaker will not be able to charge for the supply and might therefore cut off the supply as it is not supplying to a customer at that point. As drafted, the Bill offers the prospect of continuity for the customer and allows the undertaker to recover charges for making the supply. There could be a hiatus on both counts were the amendments to be accepted.

1 p.m.

Lord Dixon-Smith

I hear the noble Lord's explanation with a degree of fascination. It seems to me that what he says flies in the face of what was said about the charges that a water undertaker might levy for passing water through his pipes. If the water undertaker has to maintain the whole system so that, literally at the drop of a hat, he can start to supply water without notice, he will never gain any benefit as a result of having a water supplier pumping water through his pipes and out to the customer. The water undertaker must maintain the whole system on the basis that he can carry out the obligations of the water supplier instantaneously should the water supplier fail. That issue is slightly separate from that addressed by the amendments we are discussing. I hear what the Minister says and I shall study it but we shall need to consider further the consequences that arise from this section of the Bill. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 168LD and 168LE not moved.]

Lord Whitty moved Amendment No. 168M: Page 187, line 41, at end insert— ( ) Where a duty is imposed by this section in respect of any premises, any breach of the duty which causes the owner or occupier of the premises to sustain loss or damage shall be actionable at the suit of that owner or occupier; hut, in any proceedings brought against a water undertaker in pursuance of this subsection, it shall be a defence for the undertaker to show that it took all reasonable steps and exercised all due diligence to avoid the breach.

On Question, amendment agreed to.

Baroness Byford moved Amendment No. 168MA: Page 188, line 13, leave out sub-paragraph (3).

The noble Baroness said: In moving Amendment No. 168MA, I wish to speak also to Amendments Nos. 168MB and 168RA.

I turn first to Amendment No. 168MA. In the proposed new subsection (3A) in the Bill the licensed water supplier has a specific duty in relation to the supply of water for domestic or food production purposes.

In new Section 17A of Chapter 1A on page 131 of the Bill household premises are made off limits for licensed water suppliers. New Section 17B defines the water undertakers' supply system as the mains and other pipes used to convey water from a treatment works to customers' premises and any water mains and pipes used for conveying non-domestic water. Non-domestic water is defined on page 133 of the Bill as, water supplied other than for domestic or food production purposes".

My next point may relate to an earlier discussion but will the Minister clarify whether the wording in new Sections 17A and 17B is or is not intended to ensure that licensed water suppliers do not supply domestic quality water to domestic or food premises? In briefings from various interested parties before this process began, the message was quite clearly that the major customers interested in leaving water undertakers would do so precisely because they do not need domestic quality water.

I turn to Amendment No. 168MB. This is a probing amendment. The proposed alteration to Section 69 of the WIA would mean that a water undertaker forced to give a licensed water supplier access to his system to supply one of his ex-customers, perhaps with water from another undertaker, would have to test that imported water and publish the results. In the circumstances we believe that that might be an imposition too far. It is a bit like losing the front of one's garden to compulsory purchase for a footpath and then finding that one has the duty to sweep the said footpath. As the licensed water supplier appears also to have a duty to test and publish, will the Minister explain why the undertaker should be required to do so too?

I turn to Amendment. No. 168RA. Subsection (1) of Section 75 of the WIA gives the water undertaker powers to act in response to any of the four scenarios listed as paragraphs (a) to (d). It surely therefore makes more sense to extend the powers to licensed water suppliers. Will the Minister explain the thinking behind that subsection as it stands and clarify whether it is the Government's intention that the water undertaker should act on the suspicions of a licensed water supplier? I beg to move.

Lord Whitty

Amendment No. 168MA seeks to relieve licensed water suppliers of an obligation to supply wholesome water and to ensure that the quality of water they supply does not deteriorate. That is a central obligation. It may not be the intention of the amendment to do what I have outlined. The maintenance of the present standards of the quality of water in the public supply networks is of fundamental importance. Ensuring that licensed water suppliers are responsible for water quality is central to maintaining that quality.

Section 68(1A), which this amendment seeks to remove, makes those who supply water through the public supply system responsible for its quality. Together with amendments to Section 18, it requires the Drinking Water Inspectorate to take enforcement action against any licensed water supplier should they be responsible for a failure to meet the water quality standards.

Section 69 of the Water Industry Act contains provisions for the Secretary of State to make regulations to impose obligations on the use of processes, substances and products that are used in the treatment and supply of water. These regulations protect the quality from potential contamination from the use of unsuitable substances and products. Those safeguards are needed.

Amendment No. 168MB would restrict the requirement to water undertakers to conform to any standards prescribed for processes, substances and products. The Government consider it essential that there are safeguards to protect the quality of drinking water. Water undertakers and licensed suppliers should be subject to the same provisions to ensure that only appropriate processes, substances and products are used in water supply.

Section 75 of the Water Industry Act deals with powers to prevent damage, contamination and waste. Water undertakers have powers to disconnect water supplies or serve notices on consumers requiring steps to be taken to prevent damage and waste.

The last amendment in this group would give the responsibility of disconnection or the serving of notices to licensed water suppliers. Licensed water suppliers do not have the necessary powers to undertake these functions. The Government believe that water undertakers are best placed to ensure the integrity of the water supply system because through their monitoring and inspections they are likely to detect any waste or contamination. The responsibility to prevent damage, contamination and waste, and the powers to enforce that, should therefore remain with them.

As regards Amendment No. 168MA and the distinction between potable and other water, where licensees supply potable water for domestic purposes the water must meet drinking water quality standards. The import of the measure that the amendment seeks to remove is to place an obligation on licensees as well as on undertakers in that regard.

Baroness O'Cathain

Before the Minister sits down, I seek a point of clarification. The water undertakers have the duty to make sure that the water is not contaminated and is tested. Is the Minister saying that the water suppliers do not have that duty? Or I am wrong in that?

Lord Whitty

The first two amendments in the group we are discussing deal with giving water suppliers the same responsibilities for ensuring water quality as the water undertakers. The duty in the third amendment in the group, however, which relates to disconnection or the serving of notices—and, therefore, enforcement in the light of contamination or damage—must rest with the water undertakers. There is not an equivalent power to the water suppliers in that regard.

Baroness Byford

I thank my noble friend for her intervention which was helpful. The Minister said that the water suppliers are not responsible for a certain duty. I do not understand why that is so. After all, they supply water. We all agree that we want high standards as regards water quality. There is no difference between us on that. Let us establish that before we start. But the question is where the responsibility starts, middles and ends. If a water supplier is taking water from a water undertaker, at the moment the undertaker has to guarantee a certain standard for the water that goes to the water supplier. I shall need to consider the matter in greater detail as I am getting confused. It appears that the same responsibility is not expected as regards those who supply the incoming water.

Lord Whitty

The opposite is the case. Amendments Nos. 168MA and 168MB would remove the responsibility on the water suppliers. They are required to have equivalent responsibility for water quality. Amendment No. 168RA, which concerns disconnection and other enforcement powers, relates to the undertakers as they have the power of disconnection, not the water suppliers.

Baroness Thornton

I see.

Baroness Byford

I wish that I did. I thank the Minister for his comments, which I shall certainly read in Hansard tomorrow. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 168MB not moved.]

The Deputy Chairman of Committees (Lord Carter)

Amendment No. 168R is in the wrong order on the Marshalled List. It should come before Amendment No. 168RA. I now call Amendments Nos. 168N, 168P, 168Q and 168R.

Lord Whitty moved Amendments Nos. 168N to 168R: Page 192, line 13, leave out "licensed water supplier which provides" and insert "water undertaker whose supply system is used for the purpose of a licensed water supplier making Page 192, leave out lines 20 and 21. Page 192, line 22, leave out second "that" and insert "the Page 192, line 32, leave out "that" and insert "the

On Question, amendments agreed to

[Amendment No. 168RA not moved.]

Lord Whitty moved Amendments Nos. 168S to 168U: Page 192, line 45, leave out "(1A)(a)" and insert "(1A) Page 193, line 2, at end insert— ( ) Section 78 (local authority's functions in relation to undertaker's supplies) is amended as follows. ( ) In subsection (1)(a), after "undertaker" there is inserted ", or by a licensed water supplier using that undertaker's supply system,". ( ) After subsection (2), there is inserted— (3) In subsection (1)(a) above, the reference to the water undertaker's supply system shall be construed in accordance with section 1713(5) above." Page 193, line 2, at end insert— ( ) Section 86 (enforcement of water quality) is amended as follows. ( ) In subsection (1)(b), for "by a water undertaker" there is substituted "using a water undertaker's supply system". ( ) In subsection (2)(a)(i), for the words from "by" to "above" there is substituted "or a licensed water supplier by or under any of sections 68, 69 or 79 above or imposed on a relevant person (as defined in subsection (1A) of section 70 above) by or under that section". ( ) In subsection (3), after "undertaker" there is inserted ", licensed water supplier or other relevant person (as defined in section 70(1A) above)". ( ) In subsection (4), for paragraph (c) there is substituted— (c) at any reasonable time require—

  1. (i) any water undertaker or licensed water supplier to supply him with copies of, or extracts from, the contents of any records kept for the purpose of complying with any duty or other requirement imposed on that undertaker or supplier by or under any of sections 68, 69 or 79 above; or
  2. (ii) any relevant person (as defined in subsection (I A) of section 70 above) to supply him with copies of, or extracts from, the contents of any records kept for the purpose of complying with any duty or other requirement imposed on that person by or under that section."
( ) In subsection (6), after "undertaker" there is inserted ", licensed water supplier or other relevant person".

On Question, amendments agreed to.

1.15 p.m.

Baroness Byford moved Amendment No. 168 UA: Page 193, line 27, at end insert—


(1) It shall be the duty of every water undertaker to promote the efficient use of water by its customers.

(2) The duty of a water undertaker under this section shall be enforceable under section 10 above—

  1. (a) by the Secretary of State;
  2. (b) with the consent of, or in accordance with, a general authorisation given by the Secretary of State, by the Director.

(3) Nothing in this Part shall have effect to authorise or require a water undertaker to impose any requirement on any of its customers or potential customers.""

The noble Baroness said: In moving Amendment No. 168UA, I wish to speak also to Amendments Nos. 170 and 171B standing in the name of the noble Baroness, Lady Miller of Chilthorne Domer.

All through the Bill at various stages we have tried to promote the conservation of water. As we said at the beginning of our discussions, we are concerned that there is an insufficient duty to promote it. We have talked about efficiency and saving water. One can use water efficiently but that does not necessarily mean that one conserves water in the way that we should like to see.

Conservation measures could be taken at the level of the individual householder who decides to use water in a different manner. One could argue that that constitutes efficiency of use but it would also conserve water. We have talked—and will talk later—about the whole question of having more reservoirs so that in times of drought one can draw on water that has been conserved. But at the moment there is nothing in the Bill that we consider adequately covers the matter.

I could go on at length but that would be unfair to the Committee. The words literally speak for themselves. We are asking that after Section 93A of the WIA there should be inserted new Section 93AA, which concerns a duty to promote the efficient use of water. I beg to move.

Baroness Miller of Chilthorne Domer

I support Amendment No. 168UA in the name of the noble Baroness, Lady Byford, with a slight reservation that I shall mention in a moment. I shall also speak to our Amendments Nos. 170 and 171B. I believe that those amendments are necessary. I accept that my amendments are similar. Amendment No. 170 is a slightly narrower amendment because it lays the duty on Ministers, government departments and the National Assembly for Wales, but Amendment No. 171 B extends that duty to all public bodies.

In his reply I expect that the Minister will say that water undertakers already have a duty to promote the efficient use of water. The fact is that at the moment that duty is almost invisible. Although sometimes they send out helpful leaflets, there is no active promotion. Including such a provision on the face of the Bill requiring water undertakers to be more active would be helpful. Where water is metered, undertakers are in a dilemma as the use of greater volumes of water provides undertakers with more money. To require them to encourage their customers to be efficient adds to the dilemma.

My reservation on Amendment No. 168UA refers to subsection (3) which states that, Nothing … shall have effect to authorise or require a water undertaker to impose any requirement". On the whole I agree with the spirit, but I can see a point where technology, for example, could produce smart taps that would identify when leakages occur. At some time in the future a water undertaker could require its customers to fit such a device. I have a slight reservation about subsection (3) of the amendment.

On Amendments Nos. 170 and 171B, I have in mind the Office of the Deputy Prime Minister and planning authorities. I believe that in those areas we could see real efforts take place on the conservation of water. At the moment building regulations and planning requirements are totally feeble in relation to requiring water conservation. We still see industrial buildings constructed with enormous roof spans. For all the play that the Government made of the construction of the Dome being able to recycle water, we simply have not seen that translated into everyday use around Britain, except in a few exciting examples.

With regard to domestic house building, there is a vast area of potential for grey water recycling, for capturing water running off roofs, which would also release storm drains. None of that has been addressed. To address the issue in guidance is not sufficient; it needs to be addressed in a statutory way, otherwise the urgency required is lacking.

Lord Borrie

I understand why these amendments have been grouped together: they are all concerned with the conservation of water—a most important subject. However, I believe that there is a world of difference between imposing statutory duties on public bodies, as referred to in the Liberal Democrat amendments, and imposing a statutory duty on water undertakers as under Amendment No. 168UA. I agree with the Liberal Democrat amendments, but I do not like Amendment No. 168UA.

Although I agree with the Liberal Democrat amendments, I thought that the noble Baroness, Lady Miller of Chilthorne Domer, understated the water companies' attitude to conservation. Companies with which I have been concerned in recent years have done not just a little, but a great deal in terms of promotion and providing information to customers on numerous matters directly concerned with water conservation. Such information has included the efficient use of water, the conservation use of water sprinklers and the like on gardens in the hot summers that occasionally we have in this country and matters concerned with the huge amount of water that is wasted in a relatively short space of time from one dripping tap. I can think of numerous examples of promoting the efficient use of water by customers and encouraging conservation.

I do not like Amendment No. 168UA, partly because of the reason to which the noble Baroness, Lady Miller, alluded; namely, imposing a duty on water undertakers under subsection (1), and then saying in subsection (3), Nothing in this Part shall have effect to authorise"— let alone require— to impose any requirement on any of its customers or potential customers". A duty, enforceable by the Secretary of State or by the new authority is to be imposed on water undertakers and yet they cannot do more than they regularly do at the moment, as I have just described, in informing customers of how to save water. The amendment does not appear to me to be appropriate. Therefore, I am critical of Amendment No. 168UA.

Baroness O'Cathain

Before supporting Amendment No. I68UA, I would like to make a gentle suggestion to the noble Baroness, Lady Miller of Chilthorne Domer. Her view of water undertakers as regards metering was very cynical. She suggested that if meters are installed undertakers will encourage people to use more water in order to receive more money. That is precisely the reverse of what happens. The reality is that when meters are installed, people are very conscious of the amount of water that they use and the cost of it, so they try hard to conserve water.

On the point raised by the noble Lord, Lord Borrie, about Amendment No. I68UA, there is a duty to promote rather than to impose. If the water undertakers have to impose yet more regulations or requirements on their customers, that will be extremely difficult and it would put a huge cost on to the water undertakers.

I take his point that at the moment much is done by the water undertakers to promote the efficient use of water by customers. I believe that the purpose of the amendment is to encourage people to think about that even more. The undertakers do produce information notices about sprinklers and so on. But some water companies go further than that and tell people that in the area where they live there is a water short age and so it would be better when planning their gardens to produce tropical plant gardens or gardens with drought-loving plants. I have seen many leaflets to that effect.

There is a kernel of something here, if we can get the message across, although I do not know how. I suspect that the water companies would probably say that if they are to undertake a big promotion of the efficient use of water they will need that offset against the price that they charge, or they will want some recognition of it in their prices. As it is so important that there should be efficient use of water it is good to have such a provision on the face of the Bill.

Lord Dixon-Smith

I support this group of amendments. I do not believe that there is a great deal of difference between us. The noble Lord, Lord Borrie, of course, loves to argue about words. At this stage these amendments have been tabled to sort out where we stand. I do not believe that there is any disagreement that there should be something on the face of the Bill about the efficient use of water. I do not think that anyone would have a difficulty with that as a statement of principle. Whether one uses the word "efficient" or the word "conservation" is another matter.

Although I accept entirely that all public bodies should be involved with the efficient use of water, the Government and indeed all public bodies are not actually water suppliers. They do not have a relationship with customers. I am sure that the Government must be the customer of a great many water authorities. The water authorities are the bodies that have a direct relationship with customers across the country and that gives them a considerable influence over persuading their customers to use water efficiently.

One could make a slightly cynical observation that if Ofwat did not work quite so hard at keeping the price down, people would be slightly more interested in conserving water. As it is, they simply buy water in a bottle from the supermarket at a more expensive price per litre. There are some oddities when one considers the situation.

The primary responsibility for promoting the efficient use of water should go to the water authorities because they have the supplier/customer relationship with everyone, including, of course, the Government. However, they have to apply it to themselves. Members of the Committee will recall that I mentioned at Second Reading that we have one water authority that has too high a rate of leakage for anyone's comfort. Easily the biggest additional source of water in that area is the amount that leaks out of the authority's pipes. As water is neither created nor destroyed, that water goes somewhere. The fact is that it is treated but does not come out of the customers' taps. That also has to be considered.

I do not think that there is any disagreement anywhere in the Committee about this principle: that something on this subject ought to be on the face of the Bill. These amendments may not be perfect—amendments at this stage of a Bill rarely are—but I believe that we all have an obligation to work together to ensure that we can come up with an agreed amendment on this subject that can be put on the face of the Bill before it leaves this House.

Baroness Miller of Chilthorne Domer

I say to the noble Baroness, Lady O'Cathain, and to the noble Lord, Lord Borrie, that I speak mainly as a customer. I am a metered customer of Wessex and an unmetered customer of Thames. In neither place do I find that a great effort is made to encourage me to be efficient with my water. The efforts that I have made have been of my own doing.

My more substantive point is that I believe that we need two matters on the face of the Bill. The first concerns the efficient use of water. In his reply the Minister will probably say that to give the Environment Agency the power over efficiency matters is sufficient, so such a provision does not need to be inserted in the Bill and that it is a duty on the water undertakers. I believe that water conservation is a slightly separate matter. I see the Minister frown. I shall try to define the difference. One point is that people should try to use less water and the other is that such matters as recycling of water are a conservation matter. I may not use less water, but I use the water available to me in a different way. I realise that I have not defined the situation well. I am sure that we shall return to this subject at Report stage and I shall work on my definition. I hope that in reply the Minister will address those as two different issues.

Lord Whitty

I can assure the noble Baroness that I was not frowning at her remark. I think we have just come to that stage in the Committee! Nor was I suggesting that this matter is all down to the Environment Agency. Amendment No. 168UA proposes a duty on water companies to promote the efficient use of water by their customers. That already exists in Section 93A of the Water Industry Act. Clearly, both conservation and efficiency are subsumed under that. In this Bill, paragraph 24 of Schedule 8 contains an amendment to extend that duty to licensed water suppliers. In effect, I think that matter is covered by existing legislation and by a part of Schedule 8 that we have already dealt with. I therefore do not believe that Amendment No. 168UA is needed.

On Amendments Nos. 170 and 171B, which apply duties to central government more widely, I am not sure whether the correct form of words is used or whether it is inserted at the correct place in the Bill. However, there is something in the noble Baroness's argument that there could be value in extending the scope of some of the initiatives across all public bodies. I am prepared to take away the two amendments, to reflect on them and perhaps to come back if I see a better way of producing that result.

Baroness Miller of Chilthorne Domer

I particularly thank the Minister for that reply and assure him that that will also save government time when we come to the Planning and Compulsory Purchase Bill.

Baroness Byford

I thank noble Lords for their comments on this group of amendments. I accept—but do not perhaps always fully agree with—what the noble Lord, Lord Borrie, said. I realise that the amendment is not perfect in any way. The Minister said that the power is already there. We looked at the duty in the Act and felt that we needed to strengthen it. I shall take that away and consider it. On the Minister's response to the noble Baroness, Lady Miller, we should be delighted if he came back with something that would do what we are seeking to do in all of our amendments; that is, to conserve water. We seek to secure that at various places in the Bill—such a provision should be in it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 168V: Page 194, line 27, at end insert— In section 148 (restriction for charging for metering works), in subsection (2), after paragraph (c) there is inserted— (cc) any sums which it is entitled to recover under an agreement under section 66D above;".

On Question, amendment agreed to.

[Amendment No. 168VA not moved.]

Lord Whitty moved Amendments Nos. 168W to 168Z: Page 194, line 39, at end insert— In section 163 (power to fit stopcocks), in subsection (1), after "the undertaker" there is inserted "or a licensed water supplier." Page 195, line 22, at end insert "or 66GG Page 198, line 16, after "introduction" insert "or introductions Page 198, line 27, after "introduction" insert "or introductions

On Question, amendments agreed to.

Schedule 8, as amended, agreed to.

[The Sitting was suspended during pleasure from 1.32 to 2.5 p.m.]

Baroness Miller of Chilthorne Domer moved Amendment No. 169: Before Clause 55, insert the following new clause—


(1) The Secretary of State and the Water Services Regulation Authority shall consult the Health and Safety Executive about all safety issues which may be relevant to the carrying out of any of their respective functions under Part I of the WIA.

(2) The Secretary of State and the Water Services Regulation Authority shall, in carrying out their respective functions under Part I of the WIA, take into account any advice given by the Health and Safety Executive about any safety issue (whether or not in response to consultation under subsection (1)).

(3) For the purpose of this section a safety issue is anything concerning the abstraction, storage, treatment or conveyance through pipes of water, or the storage, treatment or conveyance through pipes of sewage or trade effluent, which may affect the health and safety of—

  1. (a) members of the public, or
  2. (b) persons employed in connection with the above-mentioned activities.

(4) Sections 2 and 2A of the WIA and subsections (1) to (3) above do not apply in relation to anything done by the Water Services Regulation Authority—

  1. (a) in the exercise of functions relating to the determination of disputes, or
  2. (b) in the exercise of functions under section 31(4A) of the WIA.

(5) The Water Services Regulation Authority may, nevertheless, when exercising any function under section 31(4A) of the WIA, have regard to any matter in respect of which a duty is imposed by section 2 or 2A of the WIA or subsections (1) to (3) above if it is a matter to which the Director General of Fair Trading could have regard when exercising that function.

(6) The duties imposed by sections 2 and 2A of the WIA and subsections (1) to (3) above do not affect the obligation of the Secretary of State or the Water Services Regulation Authority to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any Community obligation or otherwise)."

The noble Baroness said: The purpose of the amendment is to require the Secretary of State and the water services regulation authority to consult the Health and Safety Executive on all relevant issues. It is important because at the moment the Secretary of State has the discretion to consult the HSE. At an earlier stage of the Bill, we discussed people being judge and jury and so on.

The Secretary of State would be helped by having to consult the HSE. There are few more important issues than water, water and sewage, sewage and trade effluent; their effects on health are immense. I do not expect that I need elaborate for Members of the Committee all of the issues that arise when something in the system goes wrong.

I noticed that the Minister said in his response to the amendments grouped with Amendment No. 168MA that the Secretary of State had powers over the addition of substances to the water supply. I am sure that that is provided in previous legislation. That makes it even more important that the Secretary of State should at least have a duty to consult the HSE on any way in which he intends to exercise those powers.

The Minister may say that our amendment is not necessary because the Secretary of State would exercise his discretion responsibly. I am sure that he would. It is in the public interest to include the amendment in the Bill and not leave the critical issue of health and safety to political discretion. I beg to move.

Lord Dixon-Smith

I do not believe that anyone would quarrel with the principle of the amendment but I am slightly puzzled about how the water industry—I use those words with their widest meaning—could escape from the Health and Safety at Work etc. Act anyway. I simply do not see that. No doubt the Minister will put me right if I am wrong.

The issue of adding substances to the water supply is important. I recall that it became a matter of primary legislation in relation to adding fluoride as a preventive medicine for teeth. That would not be a question of the HSE being competent to deal with the matter; one would go to the relevant health people for that sort of information. The principle is absolutely right but I believe that in so far as the matter can be covered, that is done by existing legislation. The amendment is probably unnecessary but I stand to be corrected.

Lord Livsey of Talgarth

I rise to support my noble friend Lady Miller and to ask a fairly simple question. Subsection (3) of the amendment refers to the "treatment …of water". There was a serious case of pollution of a water supply in, I believe, north Cornwall about 10 years ago—

Baroness Miller of Chilthorne Domer


Lord Livsey of Talgarth

At Camelford; I thank my noble friend. A very serious incident occurred there. Is existing health and safety legislation adequate to deal with an incident of that kind or would the amendment strengthen the legislation and allow us to deal more effectively with such an incident?

Lord Whitty

The first part of the amendment deals with the position of the Health and Safety Executive. Of course we agree that with the enforcement of health and safety legislation and regulations, there must be a good relationship between the authority and the HSE. That is already covered by the memorandum of understanding between Ofwat and the HSE.

The first part of the amendment would put the HSE in a rather different position in terms of the requirement to be consulted. As the noble Lord, Lord Dixon-Smith, said, in that respect the water industry is not different from any other employer who must abide by the rules of, and be subject to inspection by, the HSE.

As I understand the amendment, it is probably lifted from the provisions applying to gas in particular and electricity. The position of the HSE in relation to gas is different in this respect compared with water. Historically, under the Gas Acts, the HSE and its predecessor bodies had substantially greater powers over the supply, connection and installation of gas than with regard to the water supply side. With regard to water, that is the responsibility of the Environment Agency or the Drinking Water Inspectorate—that involves the Secretary of State—or local authorities in relation to some reservoirs. The HSE does not have the same relationship with water as with gas; the read-across is not appropriate.

The second part of the amendment—subsections (4) to (6)—is about the disapplication of the authority's general duties where it is determining disputes or acting under its concurrent functions under competition legislation and the Secretary of State or the authority are performing duties under other legislation. Subsections (5) and (6) of the amendment are already covered by the Bill. That leaves the disapplication of the authority's general duties when it determines disputes between undertakers and consumers under subsection (4) of the amendment. That would reverse the current position. The authority's general duties include the consumer objective—protecting the interests of consumers—and ensuring that undertakers properly carry out their functions. In the absence of more strongly competitive markets, which exist for other utilities, the authority must itself continue to balance the demands of its various duties with regard to determining disputes. I therefore do not believe that subsection (4) is appropriate, and subsections (5) and (6) are already dealt with.

With my assurances on the health and safety side of my explanation and the differences with other utilities, I hope that the noble Baroness will not proceed with the amendment.

Baroness Miller of Chilthorne Domer

I thank the Minister for his reply. I accept his comments on subsections (5) and (6) of the amendment not being necessary and subsection (4) being inappropriate. I shall read his comments again. I ask him to respond to my noble friend's comments on the Camelford incident and the addition of substances to water. I believe that his response was that that would be covered by the Drinking Water Inspectorate. Does the HSE not consider procedures that are followed differently? Would the incident have been less likely to have happened if it had been involved?

Lord Whitty

On the supply of water to consumers, the contamination of water or the damage to consumers would be covered by existing legislation—I am not entirely familiar with the incident in Camelford. The enforcement agency would be involved at the point of delivery; the DWI, or, if a contamination occurred further upstream, the Environment Agency would be involved, not the HSE. The only role that the HSE would have in this respect would be the same as applies in relation to a factory and in terms of the danger to employees. It has a different role in relation to gas.

Baroness Miller of Chilthorne Domer

I thank the Minister for his reply. I shall read it carefully. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 170 not moved.]

2.15 p.m.

Clause 55 [The Chief Inspector of Drinking Water and the Drinking Water Inspectorate]

Lord Livsey of Talgarth moved Amendment No. 170ZA: Page 71, line 1, leave out "may" and insert "shall

The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 170ZB and 170ZC. The purpose of the first two amendments is to create an inspector of drinking water for Wales in the Drinking Water Inspectorate. The insertion of the word "shall" in Amendment No. 170ZA means that that must be created. The word "but" is removed in Amendment No. 170ZB, which proposes a drinking water inspector for Wales. I must apologise to Members of the Committee because on looking at this amendment I have discovered that I have made an error on the top of page 71 of the Bill. I should have excluded the first part of paragraph (a) which states, subject to paragraph (b) below". I apologise for that. The way that the Bill is currently drafted will not deliver the proposal that I am seeking. None the less, I should like to speak to this amendment about the desirability of having a drinking water inspector for Wales.

Most of the amendments that I have tabled are as a result of personal experiences as a Member of another place and the problems that I have encountered which need to be overcome. In one case, the drinking water in a community was of substantially low quality and totally unacceptable. It was very difficult to establish whether there was a drinking water inspector in being. I should have remembered that because it was after the original Act. In fact, what occurred was extremely unsatisfactory. I shall explain in more detail when I turn to Amendment No. 170ZC.

Eventually, the case was referred to Europe because we were unable to obtain any sense from the water company concerned. Ultimately, after 12 years of water problems in that community, the most effective person to deal with the matter was the drinking water inspector, who we tracked down to an office in London. Once the inspectorate was involved, it really got matters moving and I was very impressed with its ability to take action.

However, the residents of the community and I felt that the lines of communication were truncated and far away. If we had had our own drinking water inspector in Wales, we would have been able to refer to him or her immediately for action because we would have known of his existence. We were very concerned about that.

The problem related to old pipes, iron contamination, adults and children being ill, clothes being ruined and many other issues of that nature. The company said that it intended to deal with the problem, but it never did so satisfactorily. Ultimately, action by the drinking water inspector was required to overcome the problem.

Amendment No. 170ZC is also related to the same case. It states: The Drinking Water Inspector shall establish independent laboratory facilities for testing water quality for consumers in each region of England and Wales", In the case to which I referred, the water supplier was judge and jury. It did all the testing; it maintained that the quality of the water was okay; and it produced a lot of analysis to prove its case. The problem was that the timing of the sampling—the water supplier was at the end of a long supply route—was such that the quality of the water varied within hours. Therefore, the result depended entirely on when the sample was taken.

The only way to overcome the problem was to go to a public analyst 50 miles away. As we suspected, his analysis was totally different. It was with that ammunition that eventually we were able to approach the drinking water inspector, who sorted the matter out. The community had to pay for that analysis, which we felt was very unfair. In fact, a number of members of the community were extremely poor and could not afford it. However, the analysis was done.

The purpose of Amendment No. 170ZC is to establish independent laboratory facilities so that consumers can refer to an analyst in their region who would supply analysis for comparison with other samples. We think that most desirable. I beg to move.

Baroness Farrington of Ribbleton

The Drinking Water Inspectorate, headed by the chief inspector, currently acts on behalf of both the Secretary of State and the National Assembly for Wales to enforce standards of public drinking water in England and Wales. Clause 55 raises the profile of the inspectorate by providing statutory recognition to the existence of a chief inspector.

As the noble Lord, Lord Livsey, said, at present there is a single inspectorate for England and Wales headed by a chief inspector. The clause as proposed preserves that situation but leaves open the possibility to set up a separate inspectorate, headed by a chief inspector, for Wales, should the National Assembly wish to do so.

Amendment No. 170ZA would have the effect of imposing a mandatory obligation on the Assembly to designate a chief inspector of drinking water for Wales. Amendment No. 170ZB would omit the provision which envisages a single inspectorate with one chief inspector where the Assembly and Secretary of State are in agreement over the appointment. Such a person would be the chief inspector of drinking water, so it makes sense for him to be known as such.

I do not think that the noble Lord, Lord Livsey, will be surprised that the consequence of these amendments would be to oblige the Assembly to designate a chief inspector of drinking water for Wales. That would suggest a separate inspectorate for Wales, which is a route that the National Assembly has so far not chosen. It has chosen not to establish such an inspectorate because it believes—

The Deputy Chairman of Committees (Lord Grenfell)

I am afraid that we need to suspend the Sitting for 10 minutes for a Division in the House.

[The Sitting was suspended for a Division in the House from 2.25 to 2.35 p.m.]

Baroness Farrington of Ribbleton

As I was saying, there are currently 26 laboratories accredited to drinking water test specification that can provide independent facilities for water quality testing. The scheme ensures that analysis undertaken meets the appropriate regulatory requirements. I hope with that clarification that the noble Lord will understand why the Government are unable to accept the amendments.

Much work is being done by the Drinking Water Inspectorate in Wales, with much publicity and the launch of the chief inspector's report. A children's competition is running in Wales at the moment, with leaflets and reports—bilingual, of course—available. Media opportunities are also available to discuss quality issues. As a matter of fact, the inspector responsible for Wales is Welsh and liaises with the National Assembly regularly. Local authorities have lists of laboratories that can undertake testing, and there is a duty to keep informed about water quality. If they agree that there is a case to investigate, there is no charge.

I have no doubt that the noble Lord, Lord Livsey, will wish on reflection to allow the National Assembly to exercise its right to make the choice. I am equally sure that, between now and 1st May, he will have an opportunity to speak to candidates for the Welsh Assembly and press on them how he would like them to exercise that choice.

Lord Livsey of Talgarth

I thank the noble Baroness for responding to the amendment. I have no doubt that I will be able to speak to multiple numbers of candidates before 1st May, as I am sure will other Members of the Committee.

I shall first address Amendments Nos. 170ZA and 170ZB in relation to what the Minister said. I accept that the provisions give the Assembly a choice as to whether it has its own inspector. I also realise that the world has moved on since devolution, and that there is better communication between the Administration in Cardiff and consumers in Wales. None the less, I think that the Assembly should seriously consider doing as I suggest in the interest of consumers in Wales. We have plenty of water coming down from the heavens, but the infrastructure does not always deliver it in the condition or quantity that we require. The Government will no doubt draw the attention, as will I, of the Assembly to the matter.

Given the Minister's response on Amendment No. 170ZC, I should say that it was certainly not known until very recently that the laboratory facilities were accredited, available and could produce the results of samples for free. There needs to be wider distribution of that information. Local authorities may have it, but our local authority covers an area 132 miles long by 50 miles wide, so it is not always easy to access such information. It is important that community councils in particular in Wales get that information, so that they can plug into the facilities of that independent analysis, because water can be a problem in certain remote areas. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 170ZB and 170ZC not moved.]

Baroness Byford moved Amendment No. 170A: Page 71, line 12, leave out subsection (7).

The noble Baroness said: Under the Water Industry Act, the fine for water undertakers that fail to provide assistance or information—we are not talking about water itself—to one or more technical assessors, given the same responsibility planned for the Drinking Water Inspectorate, does not exceed level 5 on the standard scale. Along with all legislation recently proposed to do with DEFRA, the Bill seeks to increase the level of summary fines fourfold and to introduce an indictment process.

Will the Minister explain the decision to increase the fine so much? Have cases been brought in which the fines were felt to be inadequate? Why is it necessary? Obviously, none of us wants to give people the slightest opportunity not to provide assistance in the normally expected way. However, the Bill seems to contain an automatic and very acute rise, as did the Animal Health Act and other Bills. Is it simply because that is what normally happens when a new Bill comes in?

I am really seeking guidance because my understanding is that, if someone is indicted and the case goes against them, there is no upper limit on the fine which the High Court could impose if a conviction were made. I seek clarification on the issue. I beg to move.

Lord Whitty

The £20,000 maximum fine is in line with fines for a wide range of environmental offences, including some in recent legislation. It is important to ensure a sufficient deterrent to protect the quality of drinking water supplies adequately. That applies to a range of offences in this Bill as well. It is the deterrent effect of a £20,000 fine, as against the lower limit, that is important.

The fine also gives magistrates' courts sufficient powers to deal with serious water incidents where their local knowledge of circumstances will be valuable. Magistrates will be able to decide what appropriate penalties up to that limit can be imposed on a case-by-case basis. That remains the situation. Also relevant is the question of the Crown Court having unlimited fines.

The maximum fine and the ability to refer the case to the Crown Court are consistent with the proposed penalty in magistrates' courts for Section 70 offences of supplying water that is unfit for human consumption. Increasing the maximum level of fine will remove any incentive to commit the information-related offence as a means of avoiding prosecution for the serious offence of supplying water unfit for human consumption.

The investigation of serious water quality incidents is always a difficult task. Water undertakers hold key information. If the inspectors are frustrated by not being able to supply information or receiving the wrong information, it is important that there is a suitable penalty to prevent assistance or information being withheld. With that explanation, I hope that the Committee will accept that an increase in the maximum fine is appropriate.

Baroness Byford

I hear what the Minister has to say. Obviously we accept that one needs a sufficient deterrent, but we are not actually talking at this stage about water being of poor quality. We are talking about information or assistance. The Minister did not answer my questions. I asked whether cases had occurred and whether that was why there was a problem. Will this be an automatic fourfold increase in the level of the fine as compared with the amount in 1995, even though at this stage an offence as such has not been committed but a request for information has been made? I hesitate to ask the Minister again, but I should be grateful if he could give some examples or provide greater information.

The Minister says that magistrates will have local knowledge. Obviously they will. But at the moment we are not talking about local knowledge; we are talking about information. That is very different from a default having occurred in terms of water quality. Perhaps the Minister will explain the point further.

2.45 p.m.

Lord Whitty

I am not sure that I can explain any further than I already have. In terms of its enforcement functions, the inspectorate needs information. If it does not have accurate information, or receives false information, there is a problem in enforcing the standards that make the water fit to use. In a sense, that could have wider implications than a single incident.

It is therefore appropriate that the same level of fine is there as a deterrent. That is its prime purpose. It is true that, on the information side, there have been no prosecutions because the water companies have co-operated with the inspectorate in relation to this matter. However, one can conceive of a situation where a lack of information, or false information, could prevent the water companies from effectively prosecuting or effectively issuing an appropriately worded enforcement notice.

The Duke of Montrose

If there is concern about the quality of the water, is it not up to the Drinking Water Inspectorate to take a sample of the water? Surely it is not possible for anyone to prevent that happening. That is what will determine whether the water is up to the quality required by the inspectorate. I am not quite sure what other information it is likely to need in pursuing the question.

Lord Whitty

One can conceive of a number of different situations. The Drinking Water Inspectorate has, for example, issued some 3,000 enforcement notices where there has been a breach or suspected breach in terms of water quality and it is attempting to prevent a recurrence. Half of those enforcement notices will require the water company to take measures to ensure that such an instance does not recur. If it asks for information from the water company but is then given inaccurate information as to whether the company has carried out the terms of the enforcement notice, it is not then a question of water sampling but of whether the company is in breach of the enforcement notice. Therefore, it is important that the inspectorate is able to obtain accurate information.

Baroness Byford

I thank the Minister for that explanation. If I understand him correctly, last year some 3,000 notices were issued, but there have been no prosecutions to date.

Lord Whitty

No, there have been no prosecutions for not supplying information. There have been some 30 prosecutions in the past three years against water undertakers but not on the information issue.

Baroness Byford

I do not think I referred to prosecutions. I am slightly making my own point, although I accept that the initial thrust of the provision is that we want a sufficient deterrent. However, whatever the level of fine available, it has not been needed to date. I return to my original question.

We are going round in a circle. At this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 55 agreed to.

Clause 56 [Charges for services provided with the help of an undertaker]:

Baroness Byford moved Amendment No. 170B: Page 72, line 15, at end insert "only in the circumstances that the person has failed to comply with subsection (2A) above

The noble Baroness said: We are still dealing with the question of charges and I suspect that we shall be able to do so briefly. It may be for the convenience of the Committee if I take this amendment and the clause stand part debates on the following two clauses together, as they are linked.

I return to the issue of supplying information. The proposed new subsection (2B) makes it clear that the imposition of a maximum charge is subject to the service provider failing to supply information specified by an order under proposed new subsection (2A). As the Minister said, no such case has been reported. The revision to subsection (5) does not make it clear that that is the case. In fact, it seems to set up an inherent contradiction within the section.

The debate on whether Clauses 57 and 58 shall stand part also relates to the issue of fines. The uplift to fines associated to the activities that fall within DEFRA's remit has been increasingly noticeable for those who have taken Bills through the House. Again, I ask the Minister to provide evidence for the reason for such large increases. Having heard his response to my previous amendment, I do not think that that will be forthcoming.

For example, what has been the instance over the past five years of the imposition of the current maximum fines? I suspect none, because there have been none. What has been the record over the same period of other fines; and what has been the trend, say, over the past decade relating to abstraction and impounding of water and to supplying water unfit for human consumption? Will the Minister tell us in what circumstances water undertakers would be blamed for supplying unfit water—for example, were terrorists to attack and put unacceptable substances into the water?

These amendments are not meant to be flippant. I have been increasingly concerned about the upgrading of fines, particularly when the previous one related to information. That is the reason why we tabled Amendment No. 107B and why we gave notice of our intention to oppose the Questions that Clauses 57 and 58 stand part, I beg to move.

Lord Whitty

The noble Baroness has kindly linked the two Questions that the clauses stand part because they deal with the same issue—the £20,000 as against the £5,000 maximum fine. The amendment deals with issues on water resale; for example, if an owner of a caravan site paid his undertaker for a single water supply and charged the caravan owners for their water, the director has powers to fix maximum charges.

The improvements to the existing system are that the director's order can specify that interest is due on any excess paid. It can also require the person selling the water on to supply information and impose a different level of maximum charge if the information is not forthcoming.

I readily accept the principle that no one should be penalised under the clause except where he or she has failed to comply with the initial order. That principle is already applied in new subsection (2B). The power for the director to set a default basis of charges can be used only where the information prescribed in the order is not provided. The entitlement to repayment of past overpayments is a different matter. It already exists in the Water Industry Act 1991.

Those comments relate to the amendment itself. On the issue of the overall level of fines, it is true that in DEFRA legislation, as in some other legislation, the maximum level of fines has been raised principally for deterrent purposes. Where enforcement is dependent upon information, the level of fine has been raised for the failure to provide information as well as the substantive offence. That will give magistrates' courts adequate flexibility to deal with serious offences or repeat offences. Clearly the magistrates' courts will, as usual, use their discretion in relation to any particular case. To raise the status of environmental offences is important.

Clearly if a situation arose in which an offence of providing unfit water were caused by a terrorist incident or some other third party interfering with the water supply, it would not be appropriate that the water company should suffer anything like that level of fine and maybe no penalty at all, unless there was a compounding offence. In normal circumstances, it is important that the provision of unfit water is seen as a serious offence and that anything that undermines the ability of the enforcement authorities to ensure fit water is also seen as a serious offence. That is why we moved to the maximum of £20,000.

Lord Livsey of Talgarth

I support what the Minister has just said. There have been a number of cases in which it was obvious that the fines have not been adequate and the public have reacted with dismay because the regulations were not effective enough in this regard. His comments were very important indeed.

Baroness Byford

I have no difficulty responding to the noble Lord, Lord Livsey, with regard to the need for adequate fines when something has been done to make water unfit. I accept that and take his point.

The question behind this amendment and the preceding amendment involves information. We tried to clarify the differences during the passage of the then Animal Health Bill, when sweeping powers were brought in; that involved the ability to find someone guilty of a criminal offence by not providing information. The balance is about which provision is right. If water is not up to the right standard, I, like others, would want there to be an appropriate fine; I have no difficulty with that. We have been round these issues in relation to two or three amendments. I am grateful to the noble Lord for responding in the way in which he did. I still have slight concerns but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 56 agreed to.

Clauses 57 and 58 agreed to.

Clause 59 [Water resources management Plans]:

Baroness Miller of Chilthorne Domer moved Amendment No. 171: Page 73, line 10, after "measures;" insert— ( ) the recreational purposes to which areas of open water, within the undertaker's control, may be used to the benefit of the public;

The noble Baroness said: The amendment is designed to probe where the Government have got to with regard to their stated commitment to find ways in which to increase access to water for sport and informal recreation. That commitment was restated in Directing the Flow in November 2002. I am sure that the Minister and the noble Baroness, Lady Farrington, remember our debate during the passage of the Countryside and Rights of Way Act on that issue. That is why my noble friend Lord Mar and Kellie attached his name to the amendment. Along with us, he has continued to be concerned about what is happening in this context.

We propose to insert the provision at this point because we are not sure what "resources management plans" are intended to cover. Water resources management plans cover various points that are specified at the top of page 73 of the Bill. However, subsection (3)(d) states that they cover, such other matters as the Secretary of State may specify in directions". The Minister may say that recreational purposes, for example, to which the amendment refers, are covered by the phrase, "such other matters". If so, I should be very pleased.

I place on record the fact that the public appreciate the efforts made by various water companies to develop their reservoirs for recreational purposes. For example, I believe that South West Water established a trust for that purpose. Other water companies with which I am less familiar may do the same. However, some companies still do not allow access and some allow very restricted access—just for fishing, for example, but for no other purposes.

The amendment is intended to explore the Government's views about the fact that open water represents one of the most attractive facilities available to the public in the countryside, whether for more active sports such as sailing, canoeing or fishing, or for activities as quiet as having a picnic or simply sitting and enjoying the view, which includes the water. I hope that the Government have considered ways of moving on with regard to their worthy ambition in Directing the Flow. I beg to move.

3 p.m.

The Duke of Montrose

The amendment seeks to define more closely what is meant by "water resources", not "water resources management plans". The noble Baroness's definition seems to extend it to that. One might think that "water resources" simply means the quantity and quality of water, but the noble Baroness is viewing it in a wider sense. In general, water is good for recreation, but reservoirs are specialist areas of water. Are we here looking at reservoir management plans rather than water management plans?

I know that there are many fears and worries about reservoirs and about what will detract from the quality of drinking water. In a case local to me—this will not worry the Minister as it is in Scotland—a large reservoir supplying Glasgow has removed 5,000 sheep and sacked five shepherds because it is believed that small pollutant animals, called cryptosporidia—which are almost impossible to remove—are getting into the water. However, we have noticed that having got rid of the sheep the numbers of deer have increased. I am not sure whether that information will help in this case.

One has to be careful when dealing with the quality of water for drinking and for human consumption. Perhaps the Minister can tell the Committee whether the "water resources" element relates to traditional use.

Baroness O'Cathain

Are we dealing here with yet more costs imposed on water companies for protecting the environment surrounding reservoirs and other water resources? Is this a matter of ensuring that fences are kept in place and of allowing general access to the public? Would they be held responsible for children drowning in the water? As the noble Baroness, Lady Miller of Chilthorne Domer, said, some water companies make great recreational use of their water facilities in terms of allowing not only dinghies but windsurfers to skim along the surface.

The noble Baroness will be pleased to know, as will the noble Baroness, Lady Young of Old Scone, that a water company of which I have knowledge is putting in place wildlife areas, wild flowers, wetlands and so on as recreational add-ons to reservoirs. However, I worry about such a provision being on the face of the Bill. There are health and safety implications and rules and regulations involved. The next thing will be hot-dog stands. If such a provision is put on the face of the Bill, I wonder whether that will lead to more and more cost and more and more destruction of the countryside.

Baroness Young of Old Scone

The definition of "water resources" becomes more and more quaint as the Bill progresses. I never thought that water resources management plans would contain provisions for hot dog stalls, but anything is possible.

Recreation around open water bodies is extremely important but many open water bodies are important also for other purposes, particularly for the conservation of wildlife. Rutland Water—in Rutland, would you believe—is an internationally protected wildlife site of the highest importance to this country. It is also an area where a variety of recreations take place.

The amendment does not encapsulate the balance that needs to be achieved between recreation and conservation. It gives undue prominence to one use of an open water body without taking account of the many other uses that are needed to achieve balance. It would be preferable to leave these issues to the more general provision of "such other matters as the Secretary of State may specify".

Lord Howie of Troon

I draw attention to the important role played by the quarrying industry in this regard, especially through the extraction of sand and gravel. As my noble friend knows, the quarrying industry provides prizes and so on for projects which are particularly useful. It would be a pity if other parts of the Bill so debilitated the quarrying industry that it would be unable to carry out this useful work.

Baroness Young of Old Scone

I have had this argument with the quarrying industry on many occasions. I commend the industry for the after use to which it puts the large holes it creates, but that does not necessarily mean that it should create large holes simply for the purposes of after use.

Lord Howie of Troon

Does my noble friend wish me to reply to that?

Baroness Young of Old Scone


Baroness Farrington of Ribbleton

This is yet another example of the inventiveness of my noble friend Lord Howie of Troon in raising an issue which is dear to his heart on any item of business before your Lordships' House. I note his point about the quarrying industry's contribution to recreational facilities. I note also the comments of my noble friend Lady Young in regard to conflicts of interest between not only water authorities and the public but also between different interest groups and different sectors of the public.

We appreciate the motives behind the amendment. We are keen to encourage water undertakers to provide opportunities for water-based recreation but we believe that their existing recreational duties under Section 3 of the Water Industry Act 1991 are sufficient for this purpose. Most water undertakers provide access to land and water in their control. Statutory guidance issued by the Government three years ago gives an extremely clear steer on how they should approach their recreational and conservation duties under the Water Industry Act.

Section 3 of the Act places various conservation, access and recreation duties on water undertakers. These include a duty to exercise their statutory functions, so far as is reasonably practicable, in such a way as to make water or land associated with water within their control available to the public for recreational purposes.

A statutory code of practice issued by the Secretary of State under Section 5 of the Act requires undertakers to publish annual reports on how they have carried out their conservation, access and recreation duties and to make available to the public, on request, relevant land use and management plans.

The noble Baroness, Lady Miller, referred to water resource plans. These plans relate to how companies plan their water resources for public supply, not to the issue of access to water.

I hope that I have covered the points raised. We share the aims and objectives of the noble Baroness. My right honourable friend the Minister for Rural Affairs and Urban Quality of Life has asked the Countryside Agency to pilot projects for giving more access to canoeists. We have revised planning policy guidance on sport and recreation to emphasise the importance of water sports, and the DCMS game-plan strategy for sport and recreation will consider the issues of water sports and access to water.

I have tried to cover the points raised. I am not quite sure where the competencies lie in this field between here and the other side of Hadrian's Wall. If I discover that it is an area for which we are responsible south of Hadrian's Wall I shall write to the noble Duke. I fear that he will receive a similar answer to the one given to the noble Lord, Lord Livsey—that is, that he must direct his requests elsewhere.

Baroness Miller of Chilthorne Domer

I thank all noble Lords who have spoken. Their contributions have been very helpful. I particularly thank the Minister for her detailed reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Livsey of Talgarth moved Amendment No. 171A: Page 73, line 12, at end insert— (e) the environmental implications of the supply of the quantities of water required to meet those obligations.

The noble Lord said: I am concerned that there should be provision in the water plan for the flow of water into and out of areas in order to sustain the environment. There can often be too little or too much water available at times of drought or excessive rainfall and it would be sensible to cater for the environmental implications of the quantities of water needed to meet the obligations in the Bill. I beg to move.

Lord Whitty

The water resources management plans currently produced by the water undertakers include information on the environmental impacts of their obligations to meet their duties with respect to water supply. This includes the wider environmental impacts of any changes contained in the plan

When water resources plans are put onto a statutory basis the same information will be required. The direction-making power will be used to ensure that this is the case. Section 3 of the Water Industry Act already ensures that nature conservation obligations are taken into account by the undertakers in the discharge of their functions. Therefore the objective of the noble Lord's amendment is already covered.

Lord Livsey of Talgarth

I thank the Minister for that reply. I am satisfied that the existing legislation contains sufficient powers to meet my concerns. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 171AA: Page 73, line 41, at end insert "; and (e) any county council or metropolitan authority which has jurisdiction in all or part of the undertaker's area

The noble Lord said: The amendment is designed to probe which bodies, in addition to those listed in the Bill, the water undertakers should consult before they prepare their resources management plans.

I was delighted to see the Environment Agency at the top of the list because it clearly has a part to play. We learnt earlier that the Environment Agency has responsibility for preparing a national water management plan and I assume that it has produced such a plan. I look forward to the Minister telling me that it has been prepared under the environment Acts or whatever, otherwise there will be a lacuna.

The authority is of course included on the list but I am puzzled by the inclusion of the "Secretary of State". I assume that that refers to the Secretary of State in charge of the parent department—DEFRA. But the person who will have the most influence on future water demand in this country is not the Secretary of State but the Deputy Prime Minister. So I have to ask another silly question: is the Deputy Prime Minister a Secretary of State for the purposes of the Bill?

Lord Whitty


3.15 p.m.

Lord Dixon-Smith

That is reassuring. But once we are into that area we are concerned with housing demand and deep strategic planning. The local water resources management plans will have to take that deep strategic planning into account and we are concerned that the list contained in the Bill is not sufficiently wide. The Environment Agency will largely cover the subject but we believe that the county councils and metropolitan authorities should be added to the list. Given the Bill that is presently making its way through the building, perhaps we should add regional authorities to the list. We have tabled the amendment to probe whether the list of consultees goes wide enough. I beg to move.

Baroness Miller of Chilthorne Domer

I support the spirit of the amendment. It seeks to draw into the circle of organisations which should be consulted—particularly in regard to future housing requirements—the democratically accountable county councils, metropolitan authorities and regional assemblies, or whatever other organisation we may end up with.

Baroness Young of Old Scone

The sentiment behind the amendment is important. A major gap exists at the moment in terms of the statutory consultee status of the water companies and the Environment Agency, which is not a statutory consultee for the purposes of water resources.

The issue addressed by the amendment is important. In view of the large amount of development—particularly housing development—planned for water-stressed areas, both sides of the equation face a major issue. The planning authorities and the water companies need to engage with each other on this. Not only should the water companies consult with the local authorities but a positive duty should be placed on the local authorities to consult with the water companies.

Lord Whitty

I agree with all noble Lords. We need to write into the Bill a necessity to consult local authorities and the planning authorities. My only serious quibble is that it would be better if proposed new Section 37B(3) of the Water Industry Act was amended rather than proposed new Section 37A(8). I accept the principle of the amendment and I will come back to it at Report stage.

Lord Dixon-Smith

I am grateful to the Minister for that reply. He said that we will come back to the amendment at Report stage. Is he saying that he will do the work for us? There is a much greater chance of an amendment being tabled in the correct form if he does so.

Lord Whitty

I will consider the issue further and, if necessary, I will come back with an amendment at Report stage.

Lord Dixon-Smith

I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 59 agreed to.

[Amendment No. 171B not moved.]

Baroness O'Cathain moved Amendment No. 171 C: After Clause 59, insert the following new clause—


In section 144B of the WIA (restriction on undertakers' power to require fixing of charges by reference to volume), in subsection (1)(c), after "prescribed" insert "by the Secretary of State following an application by the Environment Agency"."

The noble Baroness said: The amendment looks short but it actually contains a lot of meat. By way of explanation I could say that it is a metering amendment although the word does not actually appear in it, but mainly it is a water conservation and, indeed, a water efficiency amendment.

Certain areas of this country are water scarce. At the moment one way of dealing with that situation is to have compulsory metering. I know all the arguments against compulsory metering but I say in its favour that the only way you can apply demand management in a scarce water area is through compulsory metering. Optional metering is extremely expensive as under that system meters may be situated only in every third or 10th house.

Some water companies have selective metering. They ask people if they have sprinklers. People who have sprinklers have to have a meter. There are other ways of having selective metering. For example, in the case of a new housing development an arrangement can be drawn up between the water company and the construction or development company involved to install new meters in every house. One has to bear in mind that the installation of meters does not necessarily mean that people have to use them. They can be removed.

The situation is a mishmash which is not conducive to having an overall plan to enable an area which has severe water shortages at certain times of the year or, indeed, in certain years within a decade, to manage its water resources correctly, which is the aim of the Bill. Although in some areas there has in effect been compulsory metering, or an onus has been put on certain bodies to install meters, particularly as regards new housing developments, that has not impacted on demand, as was previously assumed. Currently, free meters are offered but that is ineffective as a demand management tool. Further compulsory metering would be more economical than either optional or selective metering.

At the moment water companies can carry out compulsory metering only where the area concerned is designated an area of water scarcity under the water industry regulations of 1999. Only the Secretary of State can designate an area as an area of water scarcity following an application from a water company. This amendment in effect suggests that on the recommendation of the Environment Agency the Secretary of State would designate an area of water scarcity and thereby allow compulsory metering. I hope that I have explained the amendment sufficiently. I beg to move.

Baroness Miller of Chilthorne Domer

The amendment raises some very important issues concerning when compulsory metering should be introduced and the whole question of demand management. Research shows that demand is not so greatly affected by metering as by income. As income rises, so does demand for water. That is common sense as people with higher incomes tend to acquire washing machines and dishwashers and use them more often. They also tend to have power showers as opposed to normal showers and so on.

The principles raised in the amendment are important. The Government have a considerable amount of work to do in considering whether water charging is carried out in the right way in England and Wales at the moment. Levying water charges according to the value of a property is not satisfactory. I do not wish to repeat my remarks about vulnerable groups but the provision made for people who are unable to pay water charges, whether fixed charges or meter charges, is simply not satisfactory. That is indicated by the fact that only 1 per cent of those eligible for that help take it up. I shall be interested to hear the Minister's reply. The Government will need to address this whole issue.

Baroness Byford

Before the Minister responds, I say to my noble friend Lady O'Cathain that I am grateful to her for tabling this difficult amendment. The amendment itself is not difficult but the thrust behind it is. I think that all of us throughout the Committee stage have been aware of the need to try to conserve and use water efficiently. I have a tiny property with a meter as it is situated in a water scarce area and another property that is not in such an area. My noble friend rightly explained that in certain areas metering would be of enormous benefit.

If I understood my noble friend correctly, she said that part of the difficulty arose from the higher cost of installing meters in every 10th house in an area as opposed to installing them in every house in a new development.

I believe that I raised my next point at an earlier stage in our discussions but the days are beginning to run into each other and my brain is becoming more and more addled. I understand that the installation of meters in new housing is not compulsory but that it is encouraged. Perhaps it would be possible to include a measure in the Bill to encourage that encouragement even further if the Minister finds that he is unable to accept my noble friend's amendment as drafted. That might be a halfway house situation but perhaps my noble friend does not want to settle for a halfway house. However, there are problems of water scarcity in certain areas that need to be addressed.

People who have water meters may be pleased to discover the smaller sums they pay in water charges compared with those who pay fixed charges. I am very sympathetic to the amendment. I hope that if the Minister is not able to accept it as it stands, he will at least give a little more thought to it. This is a very important issue that needs to be addressed, particularly as regards parts of East Anglia, the South East and the London area where water shortages are becoming more acute as the years go by but where yet more houses are being constructed. I thank my noble friend for tabling the amendment and giving us an opportunity to debate this important issue. I believe that we all support the amendment in principle.

3.30 p.m.

Lord Whitty

I turn to the issue of metering. The amendment refers to Section 144B of the WIA and the ability of the Secretary of State to designate areas of water scarcity. That may determine whether certain homes are subjected to compulsory metering. Water metering involves considerably wider issues, some of which have been touched on and no doubt we shall return to them.

The noble Baroness asked about new build. All water companies are empowered to install meters in new build. As far as we know, they all do so and all new houses are metered. That may not apply in the case of some remote developments but virtually all new build is compulsorily metered. Therefore, I am not sure that the change proposed by the noble Baroness would improve the position in the real world.

At present the Secretary of States acts largely on the advice of the water companies. It is the water companies that have the knowledge about the scarcity of water, and therefore it is quite appropriate that they are the main source of advice to the Secretary of State. There is nothing in the present legislation to prevent the Environment Agency or indeed anyone else from proposing changes to the prescribed conditions for the Secretary of State to consider, with the final decision resting with the Secretary of State.

The amendment, however, suggests that the Secretary of State should be able to act only after an application to the Environment Agency. That seems the wrong way round. Although the Environment Agency obviously has responsibilities for the totality of supply and can suggest to the Secretary of State that a scarcity designation be introduced, it is not sensible to limit the initiation of that to only the Environment Agency. The water companies can go to the Secretary of State and seek that out themselves. In many circumstances they would be in a better position to do so, and could therefore introduce metering under such designation in areas where water was in least good supply.

I do not think that the amendment is appropriate. We shall no doubt return to the wider issues of metering at a later stage.

Baroness O'Cathain

I thank the Minister and want to ask a point of clarification. The Environment Agency has the right to designate an area as a water scarcity area. We wish the Environment Agency to make the application because, coming from it, the Secretary of State would realise the seriousness of the matter, given its responsibilities in terms of water demand management, conservation and efficiency, and its links to the water undertakers. Coming from it, we think that the request would have more thrust and power and a likelihood of being accepted by the Secretary of State. Is that right?

Lord Whitty

If the Secretary of State is considering imposing a scarcity designation, she would be bound to consult the Environment Agency anyway as it is a statutory consultee. Its view would be pretty substantial in determining her decision. If the amendment suggested that the Environment Agency should be put on the same footing as water companies, I would at least understand that. However, the difficulty is that the amendment suggests that the designation should be solely on the basis of an application by the Environment Agency. Other people may approach the Secretary of State, who would have to consult the Environment Agency among others, and make the decision in the light of that advice. The limitation to the initiation being from the Environment Agency seems unnecessary.

Baroness O'Cathain

I thank the Minister very much. Having heard what he has said, I shall read it very carefully and then look at changing the amendment in some way to come back with on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Farrington of Ribbleton

This may be a convenient moment for the Committee to stand adjourned until Tuesday 29th April at 3.30 p.m.

The Committee adjourned at twenty-six minutes before four o'clock.