Public Utility Transfers and Water Charges Bill

HL Deb 14 April 1988 vol 495 cc1147-77

3.38 p.m.

Report received.

Clause 1 [Power to act in relation to proposals for privatisation etc.]:

Lord Renton moved Amendment No. 1:

Page 1, line 6, at beginning insert— ("(1) The purpose of this section is to ensure that water authorities in England and Wales and electricity boards and the Electricity Council in England, Wales and Scotland have the necessary statutory powers to enable them to fulfil proposals made to any of them by the Secretary of State in order to prepare for privatisation and, in the case of water authorities, for the possible creation of a National Rivers Authority.").

The noble Lord said: My Lords, I hope that this amendment will commend itself to noble Lords in all parts of the House, especially my noble friend Lord Caithness. It is intended to help him overcome difficulties which arise in respect of Clause 1 and which were described by noble Lords at earlier stages of the Bill.

The difficulties are fourfold—and there may be others. Perhaps I may quickly describe the four main difficulties which I see in Clause 1. First, the Bill does not refer to the intention underlying it, expressed in ministerial speeches and in the first paragraph of the explanatory memorandum attached to the Bill as it originally came to us where it states that new powers are being granted to prepare for privatisation and for creation of a National Rivers Authority. Neither of those matters is mentioned in the text of the Bill, although privatisation is mentioned in the sidenotes to Clause 1. I should mention in passing that a sidenote is not part of the text of the Bill.

Lord Hailsham of Saint Marylebone

Hear, hear!

Lord Renton

My Lords, I am so glad to have the endorsement of my noble and learned friend. I shall have to come to the attitude that the higher judiciary may take to the Bill in a few moments.

The second difficulty that arises—and I referred to it, as did others in Committee—is that Clause 1(1) refers to the Secretary of State making proposals for the transfer of property or functions, but it does not state to whom the proposals may be made.

Thirdly, I must invite your Lordships' attention to Clause 1(4), which is, in my experience, one of the strangest provisions that I have seen in a Bill or statute and I must read it for the record. It states: The powers conferred by this section in relation to any proposal shall be exercisable whether or not Parliament has given any approval on which the implementation of the proposal depends and shall be without prejudice to any power conferred otherwise than by virtue of this section". That is extremely wide and somewhat vague.

Lastly, I refer to the use of the expression "a body corporate", which occurs first in Clause 1(2), which refers to: the transfer of anything from a relevant public utility to a body corporate". The nature of a body corporate in this context is unspecified. However, in subsection (5) we find another provision which purports to explain what is meant by a body corporate, but that other provision is, so far as I know, also unprecedented. I will read it. Subsection (6) states: References in this section to a body corporate shall include references to a body corporate which has not been established or formed but which may be established or formed in pursuance of a proposal of the Secretary of State". Therefore, that is not necessarily done by an Act of Parliament.

Our legislation should surely achieve three things: first, it should reveal the intention of Parliament—something which the higher judiciary are always pleading that legislation should do; secondly, it should be comprehensible to people who are bound by the legislation and indeed to all who have to use it, including the courts; and thirdly, legislation should be certain in its legal effect. Indeed, that is what parliamentary counsel claim that they are always striving to achieve.

However, I hope that I have already said enough to reveal to your Lordships that Clause 1 does not achieve those three objectives or any of them. One could go on describing the obscurities and difficulties created by Clause 1 but perhaps I may just add that it is likely to lead to proceedings in the High Court by people wishing to make sure that what is proposed by the Secretary of State to somebody or other, or done by a water authority or electricity board in a particular case, is lawful. When that happens—and, as I say, I believe it is very likely to happen—the court will then try to ascertain the intention of Parliament, but, under our rules of interpretation of statutes, the court will have to look at the text of the statute: the explanatory memorandum would not be admissible, nor would my noble friend's admirable speeches or those of his right honourable friend.

Therefore, I suggest that our intentions should be made clear, as I have attempted to do in Amendment No. 1. That has the advantage of not altering the powers already contained in Clause 1 but, by stating the purpose for which those powers are to be used, it largely removes the uncertainties and obscurities which I have mentioned.

Before I conclude, I must refer to Amendment No. 2, which is a worthy alternative attempt to achieve what my amendment achieves. Therefore, Amendment No. 2 also deserves consideration, because it has the same objective. I am not a professional parliamentary draftsman; I have done my poor best. I know that my noble friend, because he has been very helpful in discussing this matter, is anxious not to lose any flexibility which the clause now allows, and I can understand that. I should be glad to add some words which I believe may meet his main difficulty over this particular point. Perhaps noble Lords will look at the last line of my amendment, which refers to "the possible creation of a National Rivers Authority". If this amendment is otherwise found to be acceptable, I should be quite prepared at Third Reading perhaps, rather than by a manuscript amendment today, to add the words: or any other body corporate", just in case the Secretary of State, in his wisdom, decides to change his mind and not have a National Rivers Authority as part of privatisation but to have some other form of body corporate. If that is done, none of the flexibility in Clause 1 would be lost and meanwhile, the intention of Parliament would be made clear.

Lord McIntosh of Haringey

My Lords, before the noble Lord sits down, perhaps I may ask him whether he has any indication from the Government that, if that final phrase is added to the amendment, it would then be acceptable to the Government?

Lord Renton

My Lords, I have had certain private discussions with my noble friend and he has reserved his position. I beg to move.

Lord Campbell of Alloway

My Lords, perhaps I may support the spirit of this amendment in the hope that the Minister, while retaining total flexibility, which is crucial, will nonetheless take on board the experience of my noble friend Lord Renton in these matters of drafting for which everyone in your Lordships' House, on all sides, is always grateful so that Clause 1 can be made intelligible, or a little more intelligible than it is at present.

In essence, the problem—without repeating anything that has been said by my noble friend Lord Renton—appears to be that Clause 1 confers the power to act. One is then left to deduce the purpose of the power to act from complex means of implementation contained in the clause which are not readily intelligible. Certainly as regards subsection (4) they are open to the most serious objection.

Therefore, how do we get out of a situation which is pretty desperate, because, without overstating the position, Clause 1 as it stands (and no doubt will remain, perhaps subject to the inclusion of this amendment) is still there in turgid English without any precise legal effect and without any clear, positive intelligible intent? Indeed, as it stands, and probably as it will reach the statute book, it could qualify for first prize in any of the current Golden Bull competitions.

The merit of this amendment is that at least it does something, but it cannot cure the incurable. There it is, cast in its mould by the draftsmen, and we have to live with it, I assume. But cannot we try to do something to improve it? The merit of this amendment and why I support its spirit is that it tries, and it would succeed to a very large measure to do just that.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Lord, Lord Renton, for referring to my Amendment No. 2 and also for calling it a worthy attempt at drafting. There is nobody from whom I would rather have high praise than the noble Lord. I agree with him that both amendments attempt to achieve the same objective. I am content that both amendments should be considered together. Indeed, the noble Lord's amendment refers in the fourth line to, proposals made to any of them —that is, the water authorities and the electricity authorities. Therefore, I believe that if his amendment is agreed to it would also cover my Amendment No. 5. That would help to speed proceedings in your Lordships' House.

As I see it, the difference between the two amendments—the noble Lord, Lord Renton, will correct me if I am wrong—is that my amendment not only provides for the privatisation proposals but it also provides for related matters. The purposes that are related are a significant part of Clause 1(1). At Committee stage the Minister referred to the distinction between what he called the basic proposals—namely, the proposals for privatisation and the creation of the National Rivers Authority—as opposed to the related matters which are more concerned with the transfer of assets. This was said in the context of the Minister saying that modifications could be proposed by the authorities to the related proposals but not to the basic proposals.

In that sense, I marginally prefer my amendment simply because it covers all aspects of the proposals which the Government may make as regards Clause 1 and not just the proposals for privatisation. I believe it is a relatively sophisticated point. Since the noble Lord has already suggested an amendment to his own amendment, I do not think that we need detain ourselves too much with the detailed wording on the basis that I hope the Minister will see fit in his reply to agree to the amendment tabled by the noble Lord, Lord Renton, and to undertake to put forward a suitable amendment at Third Reading. I gladly give way.

Lord Renton

My Lords, I am grateful to the noble Lord for drawing attention to the difference in the wording between his amendment and mine, but I believe that in fact my amendment would cover related matters though not expressly saying so.

Lord McIntosh of Haringey

My Lords, I shall glady take that point on board. I believe that as a result of this debate we shall need an amendment at Third Reading. That amendment will have to be a conflation of the best of what the noble Lord is proposing and what we are proposing.

The matter is of considerable importance and it is one which is wider than those we have been discussing. The problem is that throughout Clause 1 there is an open-ended commitment forcing local authorities to co-operate in proposals which are not expressed clearly. They do not have to be in writing and they do not have to be addressed to any particular person. At one stage in Committee it was suggested that proposals had already been made in the series of White Papers that had been issued. As my noble friend Lord Williams said, in that case the deed is done and it could be continued after the end of this Parliament. It could be continued not only in the absence of approval by Parliament but in spite of the refusal of approval by Parliament. As the noble Lord, Lord Renton, correctly said, the clause is drawn extremely widely. It needs to be brought within the scope of proper legislation so that it does not become a question of dispute in the courts.

I very much hope that the Minister will see his way to indicate the form of an amendment that he would put forward at Third Reading. If not, I suggest that the noble Lord, Lord Renton, and myself will have to consider the form of an amendment that we would consider putting forward at Third Reading.

Lord Ezra

My Lords, I should like to support the spirit of the amendments of both the noble Lords, Lord Renton and Lord McIntosh. There is a degree of obscurity about Clause 1. The noble Lord, Lord Renton, has already referred to the fact that the marginal note is more illuminating than the clause itself. Furthermore, in the arrangement of clauses, Clause 1 is defined as, Power to act in relation to proposals for privatisation". When one examines the wording of Clause 1, it does not refer to that. I believe that there is very strong reason, merely for the purposes of definition and clarification—leaving aside the question of whether one agrees with the objectives of the Government —to make clear what Clause 1 means. That is why I hope that these proposals will be very seriously taken into consideration by the Minister.

Lord Nugent of Guildford

My Lords, I support my noble friend Lord Renton in this amendment. He made a point which particularly appeals to me as a practical one—that even the Explanatory Memorandum has no validity in court. The point that I picked up at Committee stage was that the Explanatory Memorandum forecasts the creation of a National Rivers Authority. The Government have already done that informally by the publication of a sizeable document about it. It seems to me that if my noble friend intends to go ahead and create this body, which will be a very important body indeed—and the whole of his future proposals about privatising the water industry turn upon it—it is only common sense to put it in the Bill.

My noble friend's purpose clause does this admirably. My noble friend Lord Caithness was good enough to inform me and to keep me in touch with his communications with my noble friend Lord Renton, and I understand that the Minister is anxious that he might lose some flexibility if he defines his purposes to this extent. As my noble friend Lord Renton said, he could add at the end of the amendment words such as, "or any other body corporate". That would leave him with complete flexibility and it would still give on the face of the Bill what the noble Lord is contemplating doing. After all that is what legislation is all about.

In nearly 40 years between the two Houses I have seen a good many Bills but never before have I seen a Bill as vague as this one. It is a matter of common decency in legislation. My noble friend the Minister must have some obligation to produce a Bill which is a respectable one. Clause 1 is a terrible piece of legislation. I hope that my noble friend will give in to the blandishments which have been poured upon him from every side of the House and agree to the amendment of my noble friend Lord Renton, or indeed to the amendment of the noble Lord, Lord McIntosh, which aims at very much the same thing. I hope he will agree to put down something similar at Third Reading.

4 p.m.

The Earl of Balfour

My Lords, the last words in the amendment of my noble friend Lord Renton are, "a National Rivers Authority". At the bottom of page 9 of the Bill Schedule 1 refers to, a drain or private sewer". Whichever authority is responsible for sewerage should be kept completely separate from anything to do with rivers and river purification. Because, unfortunately, sewage often creates pollution in rivers, the two bodies should be kept completely separate.

The Minister of State, Department of the Environment (The Earl of Caithness)

My Lords, I have listened carefully to the comments of my noble friend Lord Renton and of other noble Lords who have spoken, just as I paid close attention to what was said at the Committee stage of the Bill. I am happy to deal with Amendment No. 2 in the name of the noble Lord, Lord McIntosh. My comments on my noble friend's amendment also appertain to the noble Lord's amendment.

I should like to make one small correction to what the noble Lord, Lord McIntosh, said. He mentioned at one stage "local authorities" instead of water authorities.

Lord McIntosh of Haringey

My Lords, I am happy to be corrected. It was a slip of the tongue and I meant water authorities.

The Earl of Caithness

My Lords, I quite understand. I thought that it might be better for the record.

I know that there is a feeling that the Bill is insufficiently clear about the purpose of Clause 1. I know that my noble friend is vigilant in pursuing the objectives of clarity in the drafting of legislation. Let me say at the outset that I have a good deal of sympathy with the objective of my noble friend. I have therefore looked most carefully at whether there is any way in which we can meet the concerns that he has just expressed so clearly and which several of your Lordships have expressed in support of the amendment and at earlier stages. The fact is that, although the purposes of the clause are expressed in the Explanatory and Financial Memorandum which was attached to the Bill before the Report stage, and although the word "privatisation" is expressed in the side heading to Clause 1, I fully accept that neither the memorandum nor the side heading is part of the Bill. Neither therefore enables the courts to construe the meaning of a provision in an Act of Parliament.

I agree that I should like to be able to explain in a short concise provision such as the one drafted by my noble friend exactly what the purposes of the clause are to be. However, not for the first time—and nor probably for the last—I now enter an area which is difficult for me as a layman in debating with my noble friend, with his vast experience of legislation and his most distinguished chairmanship of the Renton Committee on the preparation of legislation.

I am advised that it would be possible, though in some ways undesirable, to express a purpose of this provision by reference to the word "privatisation". The main difficulty about this is that the word "privatisation" is of recent origin—indeed it has only just appeared in the latest supplement to the Oxford English Dictionary—and is not an exact expression. I do not, however, wish to dwell on that point. The main difficulty arises in relation to the body corporate, currently expected to be the National Rivers Authority. That is a body which does not exist, and cannot exist until the main legislation establishing it has received Royal Assent.

The NRA is an integral yet quite distinct part of our proposals for water restructuring and privatisation. However, in so far as it is a body which does not yet exist, it is by no means certain that a reference to it would produce the clarity which is the objective of my noble friend's amendment. If we were to take his amendment we would be committed to the title "National Rivers Authority" without any opportunity to reconsider that. We have no intention at present of changing the name, but we cannot be certain that it will necessarily be considered appropriate right up to Royal Assent of the main Bill. Indeed, your Lordships' House may decide to change the name, as the main Bill goes through.

Lord McIntosh of Haringey

My Lords, if the House is not satisfied with the name, would it not be possible to change the name by changing the provisions of this Bill when the main Bill goes through?

The Earl of Caithness

My Lords, that adds to the complications. If one changes the name and the name is in the Bill without the amendment suggested by my noble friend, there would be a gap when our proposals could not be considered.

To return to the point, the water authorities would lose their powers under the legislation to facilitate the establishment of the new body. I am advised—and the House will recognise that here I am heavily dependent on advice—that we could not be clear about what the National Rivers Authority is if we were to introduce a reference to it in this Bill, without a lengthy explanation of the various powers and functions which it is to have. That explanation is one of the purposes of the main legislation which we are seeking to bring forward at the earliest opportunity. Even if we were to attempt an explanation of the functions, if those functions changed—for example, as the Bill passed through Parliament—then again the authorities would lose their powers, a point I have just made to the noble Lord, Lord McIntosh. It is partly to help us do that that we need the co-operation from the water authorities which this Bill would allow them to give us.

I am sorry to labour this point. Both we and the water authorities take the view that the Bill as drafted gives them the powers they need, to the extent that they need additional powers. Clause 1 provides in legal terms for the process of privatisation and reorganisation of the water industry by the creation of a National Rivers Authority. The essence of that process in legal terms is the transfer of property and functions from the relevant public utilities to another body corporate. Subsection (2)(c) provides in legal terms for the detailed proposals about the establishment of the NRA and the formation and flotation of the successor companies. Subsection (6) deals with the fact that the corporate bodies in question—the successor companies and the NRA—have yet to be formed or established.

We have already provided considerable certainty about the proposals to which Clause 1 relates. We have made clear policy statements both on water and electricity. These have set the scene to a considerable extent for the changes we have in mind. The provisions in Clause 1 should not therefore be regarded as being completely open-ended. As we develop our proposals further, we shall, as Ministers, be answerable to Parliament and we shall have to bring proposals before Parliament. That will be a further limitation upon these provisions.

My noble friend suggested that in order to increase the flexibility which he and I discussed between Committee stage and today he could add the words "or other body corporate". I acknowledge the help which my noble friend is trying to give me on this matter.

Lord Campbell of Alloway

My Lords, perhaps I may intervene on a matter of some substance. My noble friend is saying that on his advice the incertitudes of Clause 1 are clarified by proposals that the Government have made that are within the public domain. That may sound all right to a layman but it will not wash in a court of law. It is a total error of presentation on his advice. With the greatest respect to him, it does not meet the point of my noble friend Lord Renton and the noble Lord, Lord McIntosh, or even the rather puny point that I was trying to make. It is plain wrong and his advice is wrong.

The Earl of Caithness

My Lords, perhaps I may come back later to the point that my noble friend has just made as I had intended to deal with it in due course. However, as I was saying, my noble friend Lord Renton kindly offered to help by suggesting an addition to the wording of the amendment, after the words "National Rivers Authority", of such words as "or other body corporate". I acknowledge the assistance that that would give me with regard to my concern for flexibility, but I believe that it defeats part of my noble friend's intention to help the higher judiciary—as he terms them—and does not remove the difficulty of identifying what the duties of the corporate body will be and what functions it will undertake. Those questions will be fully and precisely dealt with in the main legislation.

However, as I have said on many previous occasions, as soon as the proposals for both water and electricity have been implemented—that will be within the lifetime of this Parliament—those powers will become redundant. In conclusion, as regards this amendment and indeed Amendment No. 2, I am advised, and have accepted with some reluctance, that it would cast doubt on a fundamental part of our objectives—that of enabling the water authorities to prepare for the NRA. In addition, there are some difficulties with the concept of privatisation. However, notwithstanding that fact, I am also advised that the Bill as drafted provides the industries with all the powers they need and thus will enable the Government to advance two of our most important manifesto commitments.

I appreciate my noble friend's concern and desire to help. Indeed, I also appreciate the remarks made by my noble friend Lord Campbell of Alloway. I am not sure that "appreciate" is the right word. None the less, I take note of what he said when he pointed out that my advice was wrong. Therefore, should my noble friend see fit to withdraw the amendment, it will enable us to consider the matter further. I promise him that I shall seek further legal advice from the ablest source. In any case, I wish to discuss his concerns with him between now and the next stage of the Bill's proceedings.

Lord Renton

My Lords, I thank my noble friend for those last reasonably hopeful words. However, if I may say so with the deepest respect to those who have been advising him—some of whom I have met—I am quite convinced that he must obtain better advice. I am also grateful to my noble friend Lord Campbell of Alloway for stressing the point.

My noble friend Lord Caithness said that everyone knows that there have been ministerial Statements. However, that will not assist him in the courts. I am deeply grateful for the formidable support that I have received from noble Lords on both sides of the House.

I should like to amplify an important point made by my noble friend Lord Nugent of Guildford, who did not mince his words. He rightly said that the Explanatory Memorandum will have no validity in court. In case some noble Lords may wonder why that is so, the answer is a simple one. The Explanatory Memorandum is attached only to the first print of the Bill as it is sent to each House. Thereafter, during the course of its passage through either House, the Bill may be amended and therefore the Explanatory Memorandum may no longer hold good. That is one reason—not the only one—why the courts will not consider it.

I am grateful to my noble friend Lord Balfour for his help but I shall not be drawn by him into the thorny question—if that is the right adjective—of whether sewerage should be combined with other responsibilities. I shall duck that particular issue. Luckily, if I may say so, it does not arise on my amendment.

A noble Lord

Be careful what you duck in!

Lord Renton

My Lords, I return to the valiant effort of my noble friend Lord Caithness. I was glad that he was kind enough to say that he had much sympathy with the amendment of the noble Lord, Lord McIntosh of Haringey, and with the one I moved. He put forward the argument that it would be difficult for the word "privatisation" to be used, in this purpose subsection when it is not yet defined by statute.

I do not accept that. The word "privatisation" is, as my noble friend has pointed out, already in the Oxford Dictionary. It has a pretty wide meaning of which the courts would take judicial notice, without having to refer to ministerial Statements. Further, it covers various parts of the process of privatisation which can of course—as everyone knows—be carried out in different ways. So the mere use of the word "privatisation" in explaining Parliament's intention with regard to the Bill creates no such difficulty. I am surprised that he has received contrary legal advice.

I turn now to the use of the words "body corporate". I accept that we shall not have the National Rivers Authority finally set up until there is main legislation. I also accept the fact that there may not in fact be an organisation called the National Rivers Authority, but perhaps some other body corporate. I have already suggested that that point is met and flexibility retained by adding the words "or any other body corporate" to the end of the amendment. I also say, in answer to that point, that the amendment already refers to the fact that there may not be a national rivers authority after all by the use of the word "possibly". Therefore, that issue is already covered in the amendment; but let it be covered again by the addition of those words on Third Reading.

I do not accept that if this purpose subsection were included there would have to be a lengthy explanation added to the text. I think that the suggestion was put as a piece of makeweight advice and should be immediately discarded. I say to my noble friend that not only should he tell his advisers to reconsider the matter but that he should also obtain better legal advice. Furthermore, with the knowledge of what has been said this afternoon, together with the report which will appear in Hansard tomorrow, I hope that he will take seriously the possibility of a purpose subsection along these lines when he considers the matter further. We shall, in any event, return to the issue on Third Reading. However, in the meantime, I hope that by withdrawing the amendment a good purpose will have been achieved. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

4.15 p.m.

Lord McIntosh of Haringey moved Amendment No. 3: Page 1, line 6, at beginning insert— ("( ) Subsection (1) below shall cease to have effect in respect of either water authorities or the electricity boards and the Electricity Council on any date on which Parliament withholds approval to legislation proposing the privatisation of either the water authorities or electricity boards, provided that the subsection shall cease to have effect in respect of either industry on the next dissolution of Parliament after this Act receives the Royal Assent where no such proposals have been approved in respect of that industry.").

The noble Lord said: My Lords, I think it would be for the convenience of the House if we considered Amendment No. 4 at the same time. The amendments deal with another of the deficiencies in Clause 1 to which noble Lords have already referred when discussing Amendment No. 1.

The debate which took place in Committee on Clause 1 not only advanced no distance towards elucidating its meaning in respect of the time period in which it is intended to operate but actually made matters worse. As the noble Lord, Lord Diamond, said, it is bad enough that the clause should say: The powers conferred by this section … shall be exercisable whether or not Parliament has given any approval on which the implementation of the proposal depends". That phrase ought to ring alarm bells in the ears of every noble Lord who is concerned with the sovereignty of Parliament and with the clarity of legislation.

The point is that the clause as drafted gives unlimited powers to the Bill, which would persist after the end of a single parliament in the event of a failure of the Government's political will or, indeed, the Government's inability, for any reason, to achieve their privatisation objectives, in such a way that there would have to be a further Act of Parliament by another government, perhaps of a different persuasion, to remove the effects of what is intended to be paving legislation. That cannot be satisfactory.

A government who have something in their manifesto must have the intention of completing the task within the period of one parliament. They cannot introduce paving legislation, which is designed for the achievement of a government's manifesto commitments and objectives, and allow for the possibility of that paving legislation persisting after an election if the government have not achieved their main manifesto objectives. In effect, a government are cluttering up the legislative programme of a future government to no good effect. It is not an acceptable use of parliamentary powers to have powers which persist in that way.

In response to the amendments moved in Committee by my noble friend Lord Williams, the Government said that the amendment would have caused delay in the first implementation of the powers which it is intended to confer. That may or may not have been the case. However, I think that I can claim, without fear of contradiction, that my amendments do not have that effect, and that the powers can come into effect straightaway, or as soon as proposals are put forward, without the delay that the Minister then feared.

The issue with which we are concerned in both amendments is that Parliament should work within the constitutional confines of a single parliament, and that in the end Parliament itself should be able to say, "We want to pursue this matter or not, and if we do not want to pursue this matter, then the paving powers immediately fall". I do not believe that I need to pursue the matter which was debated in Committee any further. Free-standing paving provisions in a Bill of this kind, to my limited knowledge, have no precedent in this form in legislation. It is thoroughly undesirable that the powers should be introduced in this way.

The problem would have been less serious if the Government had responded more warmly and constructively to the amendment moved by the noble Lord, Lord Renton. Since they failed to do so, and since it is still a matter for further discussion only and not for greater commitment, it is necessary that the time span of these paving powers should be brought under control. I beg to move.

Lord Renton

My Lords, although I have a great deal of sympathy for the amendment moved by the noble Lord, I feel bound to make several comments about it which he may perhaps find rather less helpful. The first is that, as he has said, it would be much better to have something along the lines of his Amendment No. 2 or my Amendment No. 1. Amendment No. 3 is a fall-back to a weak position compared with the one that we should have had with either of our first two amendments. I believe that the noble Lord accepts that.

I have another difficulty which is somewhat technical. I only hope that I can accurately describe it to your Lordships. It is that we must envisage that between the Bill receiving Royal Assent and the dissolution of this Parliament a great deal of activity will have taken place in the use of the powers granted by Clause 1. That is the assumption that we must make.

We must assume one of two things—that at the dissolution of this Parliament the Government change their mind and, not having had any main legislation, decide not to have the main legislation on this matter in the following Parliament. I believe that that is unlikely. The other possibility is one which, of course, the noble Lord, Lord McIntosh, would not expect me to relish, and that would be a change of government after a general election following dissolution. If the amendment moved by the noble Lord became part of the Bill, anything that was being done in pursuance of the Bill would have to come to an immediate stop even though some of it was only half done and even though half doing a particular thing might cause great confusion. So although it is tempting to say, "Let us in any event have a time limit", we must consider the consequences of suddenly having, so to speak, a guillotine on the exercise of the powers granted by Clause 1.

I could see that even another government coming into power and finding that position would find a state of great confusion which they might wish had been avoided. For that reason, I have a serious doubt as to the technical practicality of the result of the amendment.

Lord Ezra

My Lords, while I am of course impressed with the argument put forward by the noble Lord, Lord Renton, I must say that right from the start the clause has caused most of us a great deal of concern. I entirely agree that if the amendments put forward by the noble Lords, Lord Renton and Lord McIntosh, earlier had been accepted, there would be less reason to press for some time limit; but without a clearer definition of the objectives, and with a totally unlimited time scale, I feel that we shall be passing legislation which will have been far too broadly drawn to be appropriate for its purpose.

I am convinced by the argument advanced by the noble Lord, Lord McIntosh, that the paving legislation, which is what this purports to be, should be drafted to demonstrate that it is paving the way for other legislation which will no doubt be quickly brought forward by the Government in pursuance of their objectives. Unless we can look forward to some acceptance of the principle behind the previous amendments, we should press now, or at a later stage, for some limitation on the time scale.

The Earl of Caithness

My Lords, I have to confess to the House that I fear I was a little over-hasty at an earlier stage. If your Lordships would look at col. 1262 of 17th March you will see that I commended the Opposition for the early time at which they had put down their amendments. Alas, that has not been continued at this stage.

The noble Lord, Lord McIntosh, chided me for not being more helpful on the previous amendment. I thought that I was as helpful to the House as I could have been in view of the persuasive arguments that I heard from all sides.

I shall now speak to Amendments Nos. 3 and 4. Noble Lords will recall that at the Committee stage we debated a number of amendments and various noble Lords expressed concern about the breadth of the powers conferred on the water and electricity industries by this Bill. Related to those concerns were anxieties that the Bill did not spell out the purpose for which the powers were being conferred. That is the subject of other amendments on the Marshalled List.

At the Committee stage, the noble Lord, Lord Diamond, moved an amendment which would have imposed a time limit of 1st January 1990 on the exercise of the powers in the Bill. Indeed, he took that amendment to a Division and was defeated by 114 votes to 70. That timetable was impracticably short, as I believe the noble Lord himself recognised. I made clear in my reply to him the importance to the Government of getting on with the business of privatising these major industries. We have never envisaged that these powers would be needed for long, and once the main privatisation proposals are through the powers will of course be redundant.

The two amendments moved by the noble Lord, Lord McIntosh of Haringey, Nos. 3 and 4 on the Marshalled List, also set a time limit on the exercise of the powers in Clause 1. Amendment No. 3 provides that this limit would arise if Parliament rejected our proposals for the privatisation of either the water authorities or the electricity supply industry or at the next dissolution of Parliament, whichever of these events occurred first.

There are technical difficulties about this amendment which relate to the definition of privatisation and the relationship between privatisation and the establishment of the NRA. These are difficulties which we have already encountered in considering the first amendment and which I shall be looking at most carefully between now and another stage.

Putting these technical considerations to one side, however, the amendment would provide that if the main legislation on our proposals for either of these industries failed to receive the approval of Parliament and this occurred sooner than the next dissolution of Parliament, then the powers given to those industries by Clause 1 would be withdrawn. I can assure your Lordships that we are confident that our main legislative proposals when introduced will commend themselves to both Houses and that they will be carried through to approval.

It cannot, however, be entirely beyond the realms of possibility that the main legislation will not complete its passage through to approval, for example, because we ourselves chose to withdraw it in order to put right some unforeseen defect. But we would not want such an event to deprive the utilities concerned of the powers to prepare for the proposals which we nonetheless wish to carry forward.

The other element of Amendment No. 3, and the effect of Amendment No. 4, is to provide that the powers in Clause 1 should lapse at the next dissolution of Parliament. I feel that I should underline once again our firm expectation that the process of legislation will have been completed well before the end of this Parliament and that there will by that time be little still to be done to complete the implementation of our proposals. I have to say, however, that even so we should not be prepared to see the flexibility of the provision in Clause 1 cut back by the introduction of the time limit which these amendments propose.

As your Lordships know, this is a Government who have a full and challenging programme which they intend to put into effect during the term given them by the election last year. We all know, however, that Parliaments may have variable life times. The experience of the last 25 years has demonstrated that fact beyond peradventure.

We are committed to making the best possible progress with legislating and carrying out our proposals for the future of the water and electricity industries. We shall best achieve this object if through the Bill we give those industries the powers that they require and the flexibility in their application that we consider appropriate. These two amendments would reduce that flexibility, and my noble friend Lord Renton highlighted this. He showed that far from making difficulties for a future government, which the noble Lord, Lord McIntosh, indicated might happen, having no time scale would be a benefit to a future government. I must therefore hope that the noble Lord will withdraw these amendments.

Lord McIntosh of Haringey

My Lords, I have seldom heard such a stumbling argument put forward with such confidence. The noble Earl seems to think that Parliament is the poodle of the Government and that, the electorate having expressed a wish by electing a government who include in their manifesto the commitment to privatisation of water and electricity, somehow that ensures that that will be achieved. The Minister has not even convinced expert opinion on his own Back Benches that he or his Government can draft Clause 1 of a paving Bill to provide for water and electricity privatisation. If they cannot do that, what confidence can we have that the Government will be able to draft the main legislation for the privatisation of water and electricity?

My noble friend Lord Williams of Elvel, both at Second Reading and in Committee, pointed to the horrendous accounting difficulties that there will be in valuing the assets over a sufficient period to provide an adequate prospectus for the water and the electricity industries. This is particularly true for the water industry, part of whose assets are to be transferred to a National Rivers Authority. There was no satisfactory answer from the Government Front Bench to either of those points. There has not been one up till now, and there is no indication that the Government have even thought through, let alone found an adequate solution to, the problems which have been raised by noble Lords on this side of the House and the problems of drafting and clarity which have been raised by the noble Earl's own expert colleagues.

Under those circumstances, I am not in the least convinced by the argument put forward by the Minister. I do not think that he has in any way countered the point which I made, which is that there is a danger which must not be discounted that at the end of this Parliament there will be no completed main privatisation legislation; that there will be a government following a general election who will have different priorities and different ideas of what is proper but that the paving legislation which is now proposed will still be in existence and will have to be repealed. That is not a satisfactory situation and I do not believe that this House ought to allow it to continue in legislation.

However, the noble Earl has made certain criticisms of the wording of the amendment which I shall have to read very carefully before considering what to do at a later stage. In view of those criticisms, it is appropriate that I should beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Lord McIntosh of Haringey moved Amendment No. 5: Page 1, line 6, after ("proposing") insert ("to any utility referred to in this subsection").

The noble Lord said: My Lords, I think I can move this amendment very quickly. I hope that, since it was included in the amendment of the noble Lord, Lord Renton, Amendment No. 1, and he did not criticise that aspect of Amendment No. 1, the noble Earl will accept the justice of this amendment. I am sure that the noble Lord, Lord Renton, himself, having included a similar phrase in Amendment No. 1, will have no difficulty in supporting this amendment.

The argument here is that a proposal is not identifiable in any meaningful way to the courts, to the utilities themselves or to the general public unless it is actually made to somebody. I do not want to go over the arguments again about Ministers making proposals in their bath, but there is a valid point here. If a proposal is to mean something it must be expecting something of somebody or must be showing an intention to do something to or in conjunction with somebody. The obvious recipient of a proposal must be the utility referred to in this subsection. I hope therefore that since this aspect of Amendment No. 1 was not subject to any criticism, the Minister will have no difficulty in accepting Amendment No. 5. I beg to move.

The Earl of Caithness

My Lords, I recognise the spirit behind this amendment, which in seeking to define more closely what are the proposals in Clause 1 provides that they should be proposals made by the Secretary of State to the utilities concerned. A recurrent theme of the response which I have made to points raised by your Lordships both today and at the Committee stage of this Bill has been our wish to remove uncertainty about the ability of the water and electricity industries to act in relation to our proposals, so that they can get ahead with their preparations.

Of course they must know what they need to prepare for. I can assure your Lordships that we have established a very close dialogue with both industries to explain our intentions to them, and indeed to receive their advice and comment on those intentions. That dialogue will continue as we move towards the main legislation and, if it is approved by Parliament, towards its timely implementation.

It is a dialogue of fundamental importance. Nonetheless, it would in my view be neither necessary nor appropriate to restrict the proposals referred to in Clause 1 to the confines of this dialogue. The White Papers of February 1986 on water, and February 1988 on electricity, and the policy papers on the National Rivers Authority, have been major expositions of our proposals—but they were not statements narrowly addressed to the industries concerned. They went to a far wider audience.

I would ask your Lordships as well to look ahead to the expression of our proposals in the legislation which we expect to introduce as soon as possible. That legislation will be presented to Parliament. It will not be addressed to the water and electricity industries. It may be that the legislation is amended during its passage through Parliament, with the result that it incorporates different proposals by the Secretary of State. The water and electricity industries will need to be able to act quickly in relation to such amended or new proposals, and to require that the proposals should be reported to the industries in a distinct procedure would be unnecessary and could well delay their response.

Nonetheless, the noble Lord, Lord McIntosh of Haringey, did make a valid point about the connection with the amendment of my noble friend—Amendment No. 1. For that reason I should like to look at this amendment in connection with the first amendment. I hope that on that basis the noble Lord will withdraw this amendment.

Lord McIntosh of Haringey

My Lords, I am not convinced by the early part of the Minister's argument. But in view of the commitment that he made in his last sentence to consider the amendment in conjunction with his reconsideration of Amendment No. 1, I think it is appropriate that I should beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 6: Page 1, line 6, after ("proposing") insert ("in a published form laid before both Houses of Parliament").

The noble Lord said: My Lords, with Amendment No. 6 I wish to speak to Amendment No. 7. We are ending up with a less and less satisfactory means of trying to get the Government to say what they plan to do and to protect the public in relation to what we understand to be the Government's own intentions.

But there is an important point of principle here as regards Parliament which was not dealt with when we discussed previous amendments. I do not conceal my view that Amendment No. 6 which states that the proposals should be: in a published form laid before both Houses of Parliament is preferable to Amendment No. 7 which states that they should be placed in the Libraries of both Houses. But if the Minister were sympathetic to Amendment No. 7 but not to Amendment No. 6 I should be very prepared to moderate my demands for parliamentary responsibility to that extent.

The issue here is of very great public importance. It is the issue of the right to know. It is not a purely theoretical issue. We have seen within the past two months a very regrettable example of negotiations and proposals which have not been made public and which have resulted in a conclusion which is in the view of many of us totally unsatisfactory. I refer of course to the takeover of Rover by British Aerospace.

The House will recall that when that happened the Secretary of State for Trade and Industry simply made an announcement that he was permitting discussions to take place and that he was preventing discussions from taking place with any other bidder for the Rover Group. Those discussions took place entirely in private and when the conclusion was reached without any other bidder having had an opportunity to put formal proposals the result was that the British Aerospace bid was accepted by the Government on behalf of Rover. The City and many of your Lordships felt that the deal was absurdly generous to British Aerospace.

That is the kind of result which one can obtain if one has secrecy in negotiations and if one maintains the inability of other interested parties to know what the negotiations are and to submit counter proposals to them. There is a serious danger that we might reach the same unsatisfactory result if negotiations are kept private in this way for the disposal of the electricity and the water industries.

The Bill is not concerned in itself with the detail of the final deals which will be struck for privatisation. That is a matter for the main legislation. However, we are concerned with the powers for the utilities which must inevitably involve expenditure on their part and which as the noble Lord, Lord Diamond, said in Committee involves in effect expenditure without any form of parliamentary control.

The purpose of the amendments is to impose some kind of parliamentary control and some kind of right for the public to know what is actually being negotiated so that things are not carried on entirely behind closed doors. I hope that the amendments will commend themselves to all of your Lordships who have a concern not only for public accountability but also for good business practice in negotiation. I beg to move.

4.45 p.m.

Lord Renton

My Lords, there is a little bit of a dilemma here. I agree with the noble Lord, Lord McIntosh, that it is important when public property—because that is what many of these bodies are—is going to be the subject of proposals by the Secretary of State as regards the change of its status, powers and functions that the public should know what is happening. A bit of glasnost—I hope I pronounce it correctly—would not be a bad thing in matters of this kind.

On the other hand, it is a question of at what stage the public should be told. That is the dilemma. Under either of these amendments the information would have to be presented in a published form. I presume that means that it would be available on public bookstalls or at the Stationery Office or that some press notices would be issued. That is the most usual way of doing it.

Under this provision any proposal, however tentative it may be, would have to be revealed. I can imagine preliminary negotiations taking place on a preliminary proposal. I really cannot see why the Minister or any water authority should be obliged at that stage to have the matter laid before Parliament or put in the Libraries.

But when things have reached the stage at which there is virtual agreement in principle, then I think that the public should have a right to know what is happening. Although I do not think that my noble friend could accept either of these amendments, I should like to make a helpful proposal. My suggestion can best be attached to Amendment No. 7.

Frequently the Government give undertakings to provide information for Members of each House of Parliament by laying copies of something or other in the Library. The Library is full of such information which has accumulated over the years. Very often it is much less important information than would come out of this Bill and out of any proposals made. So if my noble friend were to say that he would consider having some form of information made available to the public at some stage when agreement has been virtually reached as to what is to be done, that would be commendable and I would support it; but it does not have to be written into the Bill. We do not normally write that sort of thing into Bills.

As to Amendment No. 6, there the noble Lord, Lord McIntosh, has hit on something which is sometimes written into Bills. But for matters to be laid before Parliament which are of a merely tentative kind and still subject to some confidential negotiation does not seem to me to be a desirable process at all. Therefore, although I believe it is good and important that the noble Lord has moved these amendments in order that we can get some information from time to time as to what is happening, I do not think that either of his amendments is necessary to achieve that purpose.

Lord Ezra

My Lords, while I agree with the noble Lord, Lord Renton, that the definition of the word "proposal" is a difficult one and that if one took it too far it might just be a broad idea which the Minister wanted to discuss with the chairmen of the relevant bodies, nevertheless we are talking here of two vital issues which are of grave concern to the nation and certainly of grave concern to both Houses of Parliament as the legislation goes through. So I would support the concept of some commitment to openness at the earliest possible opportunity. I would personally be satisfied with some such commitment from the noble Earl if he were prepared to give it.

The Earl of Caithness

My Lords, I understand that the intention behind Amendments Nos. 6 and 7 on the Marshalled List is to secure some greater certainty about what are the proposals in relation to which Clause 1 of the Bill confers powers upon the water and electricity industries, and in particular to ensure that those proposals must be contained in a published document or documents made available to Parliament.

Your Lordships will know, without the need for my rehearsing at length the history of our intentions for these industries, that we have made a number of policy statements to which I referred on a previous amendment for electricity and water. There has been considerable discussion of our intentions in both Houses of Parliament on the basis of these policy statements. While these statements have indeed documented the fundamental stages in the formulation of our proposals for these industries, your Lordships will be aware that we are now engaged in the work of preparing the necessary legislation and that we are in dialogue with the industries in that process.

We do not claim to have had perfect wisdom from day one in forming our intentions for these industries and we may well see the need to make further proposals, not least because of insights that emerge from this process of dialogue. We shall make any such further proposals publicly known in due course, and no later than when the substantive legislation is passing through Parliament. However, we shall want the water and electricity industries to be in a position to act in relation to any such further proposals without the delay that might be involved if those proposals had first to be set down in a published document and made available to Parliament. Their preparations for our proposals must flow smoothly and expeditiously. I believe that these amendments would seriously threaten disruption of our programme and would introduce uncertainty.

I was therefore pleased by what my noble friend Lord Renton said when he suggested that the Library could be the place to put documents and that indeed it was full of such information. I can tell the House that three major letters written following preliminary proposals and discussions on further proposals to the water undertakers have already been put in the Library. Indeed, it is our policy that when we write following negotiations to the water authorities and when we have reached an agreed stage, or when we have agreed as far as possible, we then put information in the Library. But if we were to put all our proposals in the Library or to bring them before the House I do not see how one could possibly continue any sort of negotiation. I just wonder how the noble Lord, Lord Ezra, would have conducted the job he had if every single negotiation he had with his own board or with the unions had first to be laid before Parliament.

We realise the need to be open and we realise there must be some confidentiality while the proposals are being worked out, but I can assure the House that when we have got to that stage and we write formally to the water authorities and to the electricity industry, we will put copies in the Library.

Lord McIntosh of Haringey

My Lords, I have two basic points to make in response to that. The first is that any difficulty about the definition of proposals is not of our making but has been caused by the Government in putting forward this legislation. The fact is, as became clear at earlier stages of the Bill, that there is no adequate definition of what the Government mean when they use the word "proposing" in the first line of the Bill and therefore there is no adequate definition of the proposals.

If there had been a definition it would have been possible for us to put down more precise amendments, which would have indicated at what stage it was appropriate for the public to have the right to know, to which I referred. Clearly something which is a matter of discussion around a table does not have to be put in a fully fledged published form at that stage. Nobody is suggesting that. If the Government had adequately defined the proposals in the first place we would not be in the difficulty in which we now find ourselves in drafting these amendments.

Secondly, the analogy with the negotiations of the noble Lord, Lord Ezra, when he was at the National Coal Board is not a very sound one. What we are talking about here is taking assets which are at present the property of all our people—the water and electricity industries—and disposing of them to bodies corporate, privatising them, even though the Minister will not accede to the word being used in legislation. It is when the family silver is being sold off in order to pay for the groceries, as the noble Lord, Lord Diamond, said at Committee stage, that the public has a particular right to know the proposals at as early a stage as possible, because the public, which is being deprived of its family silver, must have the opportunity to say, "Come on, this approach to disposal is not satisfactory to us", even at a stage where no firm conclusion has been reached.

We must be grateful for the small concessions which the Minister made in replying to the debate. He said that as soon as possible papers, not necessarily in a published form, would be made available in the Libraries. I accept those assurances, and they are certainly enough to make me say that I do not wish to divide the House on these amendments. However, I must stress that when it is our assets and the disposal of them that we are concerned with, as soon as the Government take a position in principle about how the assets are to be disposed of, that is the stage at which the public has the right to know—not at the stage where a commercial agreement has been reached with the water or the electricity authorities. I hope that will be borne in mind when the Government make their detailed policy available for disclosure.

I am grateful to the noble Lord, Lord Renton, for his suggestion of a more limited and less threatening form of words for our amendments. If we think, on considering his words and those of the Minister, that it is appropriate to redraft the amendments, we shall certainly do so for Third Reading. In the meantime, I beg—

Lord Renton

My Lords, before the noble Lord sits down, in view of the undertaking that this information will be placed in the Library, which is the point that the noble Lord was really after in his Amendment No. 7, is it necessary to trouble all of us further on that point? I should think he has got what he is really after.

Lord McIntosh of Haringey

My Lords, unfortunately the undertaking was heavily qualified with comments concerning the stage at which the papers would be placed in the Library. I said that I would read what the Minister had said and what the noble Lord, Lord Renton, had said and see whether or not I am as reassured as he is. If I am, nothing will happen; if I am not, we shall introduce suitable amendments at Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

The Deputy Speaker (Lord Aylestone)

My Lords, in calling Amendment No. 8 I should point out that the word in the first line should be "transferred".

5 p.m.

Lord McIntosh of Haringey moved Amendment No. 8: Page 1, line 7, after ("transferred") insert ("on an equitable basis, having regard to accepted accounting procedure").

The noble Lord said: My Lords, I apologise for the error in the amendment. The amendment follows a lengthy discussion at Second Reading and at Committee stage between the noble Lord, Lord Belstead, in the first instance, and my noble friend Lord Williams of Elvel, about matters of accounting procedure which I am no more qualified to discuss than I am to discuss matters of law.

I notice, in reading Hansard of the Committee stage, that the Minister referred on 17th March at col. 1280 to the considerable difficulties which he anticipated if local water authorities and electricity authorities were forced to maintain an accurate balance sheet and profit and loss accounts according to established accounting procedures. I was particularly interested to hear the Minister yesterday make great play of the deficiencies of the West Yorkshire County Council in failing to keep an asset register of its properties. Surely, what is sauce for the goose is sauce for the gander. If there are difficulties in maintaining asset registers for a county council and if that is deplorable, then surely it is deplorable that the same criterion should not apply to the water and electricity authorities.

At Committee stage my noble friend Lord Williams sought to establish that the transfers should be at a fair value. I appreciate that there could be difficulties about the meaning of "fair value". We are attempting to overcome some of the arguments put forward by the Government in resisting the idea of a fair value. We are now restricting that to a matter of accountancy practice.

I cannot see that there is anything unbusinesslike or counter to the spirit of the Bill in inserting that sort of provision. On the other hand, it is a necessary protection of the public that in such disposals of assets there should be not only proper accountancy procedures—whether that is done on an historic cost or a current cost basis is immaterial; it should be done in the same way for all such deals—but also that they should be on an equitable basis which protects the public interest. I hope that the amendment will not be thought controversial and will commend itself to the House.

The Earl of Caithness

My Lords, the amendment requires the transfer of the property and functions of a utility to have regard to accepted accounting procedure. At Committee stage on 17th March I said that the starting point for the accounting procedure for any transfer would be that already existing in the water authorities. As the noble Lord, Lord Williams of Elvel, then suggested, that is historic cost accounting with an addition of current cost accounting.

Water authority accounts have been prepared for a number of years now using normal conventions under the Companies Act and following all relevant statements of standard accounting practice. That required the auditors of each authority to certify that the historic cost accounts give a true and fair view. The auditors have also been required to certify that the current cost accounts have been prepared in accordance with recognised accounting principles. The auditors have provided their certifications and have not sought to qualify them in any way.

Questions of details of the transfer are matters which are most appropriately addressed in discussions on the subsequent Bill which will make provision for the actual transfer. As your Lordships will remember from the privatisation of British Telecom, British Gas and others, no detailed proposals for the terms of transfer will be made until much nearer the time of transfer. There is no way that a utility can know now whether the proposals, when they eventually emerge, will satisfy the criterion set out by the noble Lord, Lord McIntosh. It puts the utilities in an impossible position of having to make a judgment which cannot be made. Potentially it puts the courts in a position of having to confirm or overturn the utility's judgment, having no principles in the Bill on which to determine what an equitable basis would be in that context.

Therefore, I must say to the noble Lord that it is premature to write such a provision into the Bill. Of course it is a consideration which must be taken into account later. That will be accomplished in the main Bill which will follow the present Bill as soon as possible. It is then that we should be looking at such matters.

Lord McIntosh of Haringey

My Lords, I cannot accept that. It is true that the details of deals will be properly considered in the main Bill and will probably be properly concluded when the main Bill achieves parliamentary approval, if it does. However, the legislation provides specifically for the division of the functions of both water and electricity authorities. In the case of water authorities there is the division of functions between the successor bodies corporate and the National Rivers Authority. In the case of the electricity authorities, there is the division of responsibilities, functions and assets of the Central Electricity Generating Board and the Electricity Council, as well as the regional electricity boards.

In both cases, the division of responsibilities has enormous environmental implications which cannot be dealt with in the course of day-to-day negotiations of particular deals. The environmental consequences of any sort of energy production or indeed of the supply and distribution of water are thrown into the air, in the latter case by the provision for a national rivers authority.

The Government cannot leave it until the main legislation to give detailed thought to how that division will be made. There must be some assessment of the environmental impact of the division of responsibilities between the new bodies corporate who are responsible for water and the National Rivers Authority. Because the issue has already been raised and because the Government have made a decision in principle about that matter, they must come clean about what it means now. In order to tell the public and Parliament what it means now, the Government must find some way of putting a figure on the impact of the division of powers. That means that there must be some equitable solution on accepted accounting procedures.

I do not believe that the Minister's reply has in any way obviated the need for the amendment. I accept that there may be difficulties about the precise technical definition of "accepted accounting procedures". However, I hope that the House will not feel that all those matters can be left to the main Bill. At this stage of the Bill I can only invite the Minister to think again about what has been said in the hope that he will come back with a suggestion which is more effective at Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 9: Page 1, line 13, at end insert ("or proposing any alteration to it for the purpose of the orderly and effective implementation of its functions").

The noble Lord said: My Lords, this amendment has been produced after very careful reading of what took place at Committee stage and in recognition of the fact that the Government had some valid objections to the amendments moved at that time. It is certainly true that if there were complete freedom for the authorities concerned to propose any alterations they liked to any of the proposals which the Government put forward, one could envisage a state of anarchy in which negotiations could continue for ever without reaching a conclusion.

At Committee stage the noble Earl made a distinction between what he described as "the basic proposals"—although of course the word "basic" does not occur in the Bill—which are the creation of the public limited companies and the National Rivers Authority, and "the related proposals", which are the more detailed proposals concerned with the transfer of undertakings. He said that so far as concerned the related proposals it was possible for the authorities to put forward alterations to them but not to the basic proposals. In other words, they could not object in principle to the object of the Government in putting forward this legislation in the first instance.

I accept that it would be wrong for the authorities to object in principle to the Government's intentions and therefore to hold up negotiations. However, I put to your Lordships that the distinction made between basic and related proposals is impossible to sustain in practice. Looking at the attempts at main legislation, it is clear that the proposals are inextricably interlinked and it will not be possible for us to say that this one is a subsidiary matter which is subject to negotiation as distinct from a basic matter.

I am convinced that when we come to look at the main legislation and any amendments to it, every amendment that we put forward to seek to improve the detail will be described as a wrecking amendment which seeks to overturn the general principle of the Government's legislation. That has always been my experience in the past and I am quite sure that it will happen again.

Our proposal, which we believe is constructive, is an alternative way of approaching the matter. We are saying that rather than being in relation to the principle, the restriction on the power for the utility to propose alterations shall be that the alterations should be: for the purpose of the orderly and effective implementation of its functions". I suggest to the House that in fact this is a drafting amendment which improves the ability of the Government to achieve their objectives in a way that the distinction made between basic and related proposals does not. I beg to move.

Lord Renton

My Lords, in moving this amendment the noble Lord has made his intention perfectly clear but I wish that the amendment itself were as clear. The difficulty arises in relation to the word "it" which could refer to "facilitating the implementation". Weight is lent to that interpretation because the amendment itself refers to effective implementation. So perhaps the word "it" could refer to implementation, or to the proposal for the transfer. The amendment moved by the noble Lord does not make clear which of those two possibilities is intended and I do not think that we ought to add ambiguous detail of this kind to the Bill.

The Earl of Caithness

My Lords, as the noble Lord, Lord McIntosh of Haringey, has just said, we debated a similar amendment at Committee stage, when the noble Lord, Lord Williams of Elvel, sought to give the water authorities and the electricity supply industry powers to seek modification of our proposals for privatisation and restructuring. The House will recall the distinctions that I drew then between the two kinds of proposals on Clause 1. I am grateful to the noble Lord, Lord McIntosh, for realising the strength of the Government's argument.

First, there are proposals for transfer as referred to in subsection (1)(a) which for the sake of clarity I shall refer to here as "basic proposals". These are our fundamental proposals, for example, to set up the NRA and a series of water and electricity utility companies. Then there is the second category of proposals, the "related proposals" referred to in subsection (1)(b) and subsection (2), which are essentially more detailed proposals and which relate to the various matters referred to in subsection (2).

A number of basic proposals have already been made by the Government and more will no doubt follow, but the essence of the basic proposals is that by the time they are made they constitute firm statements of the Government's intention to transfer property or functions to some other body. In the Government's view these are not matters on which it is appropriate for the industries to be given powers to seek to change the nature of our objectives. Of course in this Bill there are many areas where we contemplate that the industries may wish to change our mind. In the more detailed area of related proposals it is right that the industries should have the power to do so.

I recognise that in moving his amendment the noble Lord is trying to be helpful to the water industry. He says that the power to seek an alteration to government proposals—such as his amendment would secure—would ensure the orderly and effective implementation of the industry's functions. In our view, on the structure of the clause as it stands and in particular considering the definition of "related proposals" as in subsection (2)(b), the relevance of the kind of representations that the industries might make to attempt to persuade us to change our minds would be to our related proposals rather than to our basic proposals. For example, if the industries want to propose that the function should be discharged in a particular way in advance of transfer so as to facilitate transfer, that would certainly be open to them under the clause as drafted. That was the very point on which my noble friend Lord Renton put his finger.

However, I repeat that the basic proposals are something to which the industries and the Government must devote all their energies in the coming months and years, and the industries should not be diverted by attempting to persuade the Government to change their mind. On the related proposals of course the industries should and indeed are making suggestions and proposals to the Government which at the moment we are discussing. I believe that that is right and equitable.

Lord McIntosh of Haringey

My Lords, I am not wildly impressed by appeals to the basic structure of Clause 1, which has already come under very serious attack from all parts of the House. However, I appreciate the point that has been made by the noble Lord, Lord Renton, that there is a possibility of ambiguity in my amendment, and under the circumstances I think it better to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 10 and 11 not moved.]

5.15 p.m.

Clause 3 [Provisions regulating the charges of all water undertakers]:

Lord McIntosh of Haringey moved Amendment No. 12: Page 4, line 7, after ("liable") insert ("where the premises have been occupied, or water consumed, by persons with no right to occupy those premises, in circumstances where he could not reasonably have been expected to give notice of the termination of liability or").

The noble Lord said: My Lords, this has now become a probing amendment because, since I tabled the amendment—and perhaps it should have been put down later rather than earlier—I have seen the letter written to my noble friend Lord Williams of Elvel by the noble Earl concerning the issue of squatters and their responsibility for paying water charges. It seems to me that in his letter the noble Earl was making a very valid point that, if there is a risk of squatters breaking into the house, so far as possible advance notice should be given to the water authorities that one is going away in order that the supply can be discontinued. In that way the supply is not made available to squatters and the charges will not fall on the householder.

The discussion on this point that took place in Committee concentrated on the occasions when occupiers (those liable to pay water charges) cannot anticipate that they will be away for a signficant period of time and therefore cannot provide the necessary notification to the water authorities. Examples which were given related to an occupier who had been taken unexpectedly to hospital.

The point that the noble Earl makes in his letter to my noble friend is that the relevant clause of the other Bill is concerned not with temporary breaks in occupation but with the permanent cessation of occupation. He argues that in the case of permanent cessation of occupation there ought not to be any difficulty in the occupier giving due notice to the water authority. If that is the case, and if that is all to which this clause refers, I shall be happy to withdraw the amendment. However, I think that it would be helpful if the noble Earl set this matter out for the benefit of all Members of this House. I beg to move.

The Earl of Caithness

My Lords, the noble Lord, Lord McIntosh, could not have put his amendments down much later. However, I am grateful to him for the thought of the help that that might have given—even greater help than receiving them late last night.

Lord McIntosh of Haringey

My Lords, perhaps I may say that they were put down on Tuesday night. They could have been available to the noble Earl first thing yesterday morning.

The Earl of Caithness

My Lords, as the noble Lord knows, we were deep in discussion on local government yesterday.

The question of an absent occupier's liability for measured charges when his property is taken over by squatters was raised by the noble Lord, Lord Williams of Elvel, and the noble Lord, Lord Airedale, during the Committee stage of the Bill. As the noble Lord, Lord McIntosh of Haringey, has reminded the House, I subsequently wrote to his noble friend on 11th April setting out the position in more detail. I am happy to confirm to him that a copy of the letter is in the Library. However, as he so rightly says, it might be for the convenience of the House if I set the position out for the record.

This is not a problem unique to householders who pay for water services by meter. Nor is it limited to water services. The same point arises with the other utilities. However, with regard to water, the best advice that I can give to any owner or occupier going away for a long period—besides making sure that the property is properly secured—is to ask their water undertaker temporarily to disconnect the water supply during their absence.

Under Section 79 of the Third Schedule to the Water Act 1945, customers must give undertakers not less than 24 hours' notice in writing if they wish their supply to be disconnected. Provided that this is done the customer is then no longer liable for water supply and drainage charges until reconnection is made, but he could still be liable for the standing and environmental services charges. A small charge would be made for disconnecting a supply, but it could be well worth an occupier's while to take this precaution. If squatters subsequently move into the property and reconnect the supply themselves the water undertaker has to take steps to recover the charges from the squatters. The undertaker may also decide to disconnect the supply again.

If on the other hand the occupier decides not to ask the undertaker to disconnect the supply before he goes away and subsequently discovers that squatters have moved into the property, apart from taking steps to evict them, it is still possible to ask for the supply to be disconnected. As before, the occupier would not be liable for any charges incurred after the date of disconnection but would still be liable for any charges up to that date. The recovery of those charges would be a matter of civil law between the occupier and the squatters.

If in any case the undertaker, having been asked to disconnect a supply, fails to do so, or does so in such a way that the squatters can reconnect the supply, the undertaker may be liable to the absent occupier for any damage arising out of the failure or omission. And, as I say, in such cases the undertaker could not seek to recover from the absent occupier charges for water supplied after the date by which the disconnection should have been made.

As I mentioned during the Committee stage debate, these issues go much wider than the scope of Clause 3(6) of this Bill, which is about liability for charges after a consumer with a meter ceases to occupy a property without giving the required two working days' notice to the water undertaker. In other words, this provision is not about temporary breaks in occupation. In a case where cessation of occupation is to be permanent we do not consider it is too much to ask the occupier to give two working days' notice, if further charges are to be avoided. Having given that full explanation, I hope that it helps the noble Lord.

Lord McIntosh of Haringey

My Lords, I believe that it was worth putting the amendment down in order to achieve that statement, for which I thank the noble Earl. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Provisions relating to meters etc.]:

Lord McIntosh of Haringey moved Amendment No. 13: Page 6, line 35, after ("meters") insert ("including provision for the installation of meters which are easy to test").

The noble Lord said: My Lords, in moving Amendment No. 13 I should like to speak also to Amendment No. 14.

I apologise to the House for having omitted the word "water" in my draft of Amendment No. 14. I did not wish to demand the regular testing of electricity meters where the technology, although far from perfect, is rather better established than for water meters. I am not suggesting for a moment that we should be proposing the testing of water meters every week, every two weeks or even every year. The design life of a piece of equipment such as a water meter can readily be calculated, usually by the manufacturer. It is almost always the life of the most vulnerable part. There should be no difficulty in establishing the reasonable interval at which regular testing should be carried on.

However, the Bill is concerned with the introduction of something which is in most cases new to this country: the preparation in effect for the compulsory metering of water supply as an alternative to water rates or the possibility of the compulsory metering of water supply. It will affect a very large number of people. Some will be happy to see it. Some will be happy to participate in trials. But some will be resentful and will resist the imposition of water meters. Under these circumstances it seems only reasonable that all efforts should be made by the water authorities which will introduce these meters, first, to provide meters that are easy to test, and, secondly to provide for the testing of them.

At Committee stage the noble Earl made a very helpful comment when he said that the water authorities were prepared to undertake—I think that the phrase was—a confidence check. I believe that that is a step in the right direction which should be welcomed. It is to his credit that the Government have succeeded in getting the water authorities to agree to that step, which will go some way to alleviating the fears of customers who are having water meters thrust upon them.

However, it would be helpful if we were able to go further and to agree that water authorities should do their best to make the meters easy to test and to provide for regular testing at an interval dictated by the design life of the equipment. I beg to move.

The Earl of Caithness

My Lords, as I explained during the Committee stage of this Bill, in normal conditions modern water meters are reliable and accurate. When they fail it is usually because the piston inside the meter is jammed with particles of matter. This causes the register to stop moving but allows water to pass, though a reduced flow. This of course favours the customer. The flow may be reduced, but nothing is added to the meter reading.

Most tests of suspect meters reveal that there are problems with the plumbing; for example, dripping taps and leaking supply pipes. This can usually be proved simply by turning off all of the taps and checking whether the register on the meter is still moving.

Regular testing of meters in service will serve only to increase costs, which would need to be, one way or the other, passed on to the consumers as a whole. This would be particularly noticeable in the case of testing water meters because water services as a commodity are relatively cheap. So the cost of an annual test would be a significant addition to the current average annual water services charge of, say, around £100. I should add that government in consultation with the Water Research Centre and the Local Authority Co-ordinating Body on Training Standards are looking at ways of keeping the cost of testing meters to a minimum by simplifying the procedures to be used. This may reduce the cost to about £15 to £30. But, even so, we do not think that additional costs are justified in relation to the possibility of finding a faulty meter.

Nevertheless, as I shall explain when we reach Amendment No. 16 which is also to be moved by the noble Lord, the Government agree that customers should have full confidence in the accuracy and reliability of water meters and that there should be proper procedures for having them tested in use when the customer suspects that they are faulty and for adjusting bills where a meter is proven to be inaccurate. The Government intend to make regulations under Clause 5 and also under the weights and measures legislation covering these issues.

5.30 p.m.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Earl for that answer which I find very helpful. In the last year, and indeed during the last weeks, I have had experience of meters both freezing up and exploding due to intense cold and also jamming in the way the noble Earl described. This is a serious matter. Where meters are extensively used, the experience of trading standards officers from local authorities—this time I do mean local authorities—is that there is still a substantial level of complaint about water meters. I do not think the situation is as satisfactory as I am sure the Minister would like it to be, let alone the rest of us.

In view of what he said about the regulations and what is to be done under Clause 5, it is appropriate that I should thank him and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

Lord McIntosh of Haringey moved Amendment No. 15: Page 7, line 13, at end insert— ("( ) require for the purpose of investigating consumer complaints about metering the creation of an independent water complaints body to be composed of such members as the Secretary of State may determine;").

The noble Lord said: My Lords, this amendment was put down at Committee stage, but perhaps through some misunderstanding about the grouping of amendments it was not moved. It deserves the consideration of the House which it did not receive in Committee. There are a number of ways in which we could achieve consumer protection in advance of the final form of the privatisation of water. I appreciate that it will be necessary for the Government, when they are producing their main legislation, to make proposals for consumer protection. I am sure that that is the reply the noble Earl will give in response to this amendment.

But changes are being proposed now which will affect the water consumer. I refer especially to the changes which relate to the trials of metering of water supply. I do not think it is premature to suggest that there could be an independent complaints authority. It need not be elaborate. It need not have all the paraphernalia that sometimes accompanies these organisations. It could be on a national basis in the first instance without a regional component. It could have representatives on it from local authorities, with the collaboration of experienced trading standards officers from the local authorities and with water authorities also represented or giving evidence to it.

This is not a dramatic amendment. Nor does it make any significant change to the Government's ability to achieve their objectives in legislation. I hope it will commend itself to the Government and to the House. I beg to move.

The Earl of Caithness

My Lords, the handling of complaints about water services generally is obviously a very important issue, which we intend to develop further in the context of the main water privatisation Bill. At present, by virtue of Section 24A of the Water Act 1973, there are formal arrangements for the representation of consumers' interests. Each regional water authority's consumer consultative committee provides a forum in which customers' representatives discuss with the appropriate authority its policies and actions and their effects on consumers. For example, I understand that all of those water undertakers who have expressed a willingness to carry out a metering trial have already discussed the issue with the relevant consumer consultative committee.

I understand that many, if not all, water undertakers have established formal procedures for informing their consumer consultative committees of details of complaints and discussing what needs to be done. This procedure can deal with metering just as with any other issue. If customers receive no satisfaction from their local consumer consultative committee, they have the opportunity to take the matter up with the local government ombudsman.

As regards specific complaints about meter accuracy, regulations will be made under weights and measures legislation governing the metrological control of meters, which will give trading standards officers an important role in dealing with complaints about the accuracy of meters. In addition, in the case of metering trials, under Clause 4(4)(e) of this Bill, one of the matters to which the Secretary of State is required to have regard when considering a proposed scheme for approval is the provision made by the scheme for the handling of representations about the implementation, effect or operation of the metering trial scheme. This takes into account the special nature of the trials. Complaints about the proposed trials can be considered at this stage.

As regards the future, I should not normally have thought it right to anticipate future legislation in a debate on this Bill. But since we have a clear intention to act in the matter raised by this amendment I hope your Lordships will bear with me while I do so very briefly. Our intention is to establish a formal system of consumer consultation based upon independent regional consumer service committees, appointed by the Director General of Water Services to be set up to regulate the water industry after its privatisation. The new committees will be able to take a firm, independent stance and speak with a single, strong voice. They will have powers to investigate complaints, recommend action to correct problems and to refer matters to the director general for enforcement if necessary. However, this is all a matter for the future which your Lordships will have the opportunity to debate in full once we bring proposals before your Lordship's House in due course.

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister for that reply. It was the kind of response I hoped he would make. We shall await with interest and without commitment the details of the consumer protection proposals which will come forward in the main legislation. It is helpful that he has been able to do this now, and it is appropriate that I should beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey had given notice of his intention to move Amendment No. 16:

Page 7, line 13, at end insert— ("( ) provide for the powers of enforcement and regulation of metering equipment to be vested with the relevant trading standards authority.").

The noble Lord said: My Lords, I hope I heard the Minister correctly in his response to a previous amendment. If so, I think it may not be necessary to move this amendment.

[Amendment No. 16 not moved.]