HL Deb 17 March 1988 vol 494 cc1256-73

3.29 p.m.

The Earl of Caithness

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Caithness.)

On Question, Motion agreed to.

House in Committee accordingly,

[The LORD ABERDARE in the Chair.]

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

Lord Diamond moved amendment No. 1: Page 1, line 6, after ("time") insert ("prior to 1st January 1990").

The noble Lord said: The Committee will recollect that this Bill gives the necessary powers to certain utility companies to prepare for privatisation in relation to proposals made by the Secretary of State. The purpose of the amendment is to draw attention to the unnecessarily wide powers taken by the Secretary of State in Clause 1, which provides: Where the Secretary of State is at any time proposing". The powers are not limited even to this Parliament. The provision is totally unlimited and, I suggest, quite unnecessarily so. The Government have made it absolutely clear that they intend to bring in the relevant privatisation legislation at the earliest possible opportunity. We have been told that the Secretary of State has made a proposal and there is every intention on the part of the Government to get on with it, if I may put it in that way.

Why is it necessary for the Government to take powers for the Secretary of State to make a proposal at any time? I suggest that it would be reasonable to give the Secretary of State whatever time he reasonably requires, and I should have thought that the deadline should be 1st January 1990 so that the clause would then read: Where the Secretary of State is at any time prior to 1st January 1990 proposing". I should have thought that that period of time would be more than adequate, and there is no good reason for having the totally unlimited powers which the clause at present provides.

The Bill is about certain privatisation schemes of which we are all well aware. It is not there to provide the Secretary of State with unlimited powers for ever and ever. I beg to move.

Lord Ezra

In supporting this amendment proposed by my noble friend, perhaps I may say that I believe this raises a matter of principle. I do not believe that legislation which comes through this Chamber should give any government unlimited power. If the Government propose to undertake certain measures, they should not only identify the measures but identify the time-span within which they want to take those measures.

This question of being able to introduce the measures indicated at any time does not seem to me to be in line with the normal legislative approach that we should take, and therefore I strongly support the amendment.

Lord Williams of Elvel

This amendment moved by the noble Lord, Lord Diamond, and supported by the noble Lord, Lord Ezra, brings us to the first of a series of amendments designed to modify or in some cases to achieve explanation of the provisions of Clause 1, which I believe is probably the most difficult clause in the Bill.

The noble Lord, Lord Diamond, was quite right to concentrate on this particular point of the time period, because at a later stage, when dealing with other amendments, we shall come to the nature and status of the proposals. We also believe that Clause 1 gives very wide powers and we believe that in some cases those powers need to be curtailed but certainly clarified. We support the two noble Lords who have put their names to this amendment. We believe that there should be a time-limit to the powers in the Bill, because if there is no time-limit on the face of the Bill there is no mechanism in the Bill—unless the noble Earl can explain where there is one—for putting a stop to the powers if, for one reason or another, the privatisation measures do not go ahead. That seems to be a good reason for having a timetable in the Bill.

The Earl of Caithness

As the noble Lord, Lord Diamond, said, this amendment seeks to impose a deadline of the end of the calendar year 1989 beyond which the powers to prepare for our proposals, which Clause 1 confers upon the electricity supply industries, would no longer be available. I appreciate the spirit of the amendment, which in effect is telling us, as the noble Lord put it, to get on with the job quickly. That is exactly what we want to do.

We are committed to the restructuring and privatisation of both industries. We intend to introduce the necessary legislation in both cases at the earliest opportunity. If that is during the next Session of Parliament—and we can of course have no certainty of that in advance of the Queen's Speech—then we expect to see the implementation of our proposals under way before the end of 1989. Nevertheless, while we are fully committed to making the best possible progress towards the restructuring and privatisation of these industries, we do not want to reduce the flexibility of this provision by including what would amount to an expiry date which is proposed by this amendment.

Lord Williams of Elvel

The noble Earl referred to a timetable which the Government have in mind. Perhaps he would like to suggest some date other than that mentioned by the noble Lord, Lord Diamond.

The Earl of Caithness

We seek to bring in at the earliest opportunity the Bills which will result from this one. As the noble Lord, Lord Diamond, will know from his experience, I cannot predict whether or not it will be in the Queen's Speech. We hope it will be at an early stage, but we believe that the Bill as drafted gives the Secretary of State the necessary flexibility. However, I assure the Committee that it is something that we wish to get on with quickly.

Baroness Seear

The Minister has not really answered the point. Are the powers to be unlimited in time or does the Minister accept that there must be a limit even if the limit quoted here is not the right one?

The Earl of Caithness

In view of what I said, I do not believe it necessary that there should be a time-limit.

Lord Diamond

This is a very unfortunate situation. Both sides of the Committee are entirely agreed that certain proposals on which the Government have set their heart should proceed. Indeed, both sides entirely agree that these proposals should proceed with due speed. We ask the Government, "How long do you think it is all going to take?" Perhaps they wish to add on a year or two years, but there must be time-limit.

The Government cannot come before this Committee and ask for powers which will extend to the next government but four, if necessary, with regard to proposals which the present Government have in mind. That is totally unreasonable. Some calculation must be made of what is needed. The Government can add on any possible contingency allowance for time and put that in the Bill, but to say, Where the Secretary of State is at any time proposing is an affront to the Committee. We are not here to give the Government blank cheques. We are here in order to improve the Bill and to get the business of the Government through. I appeal to the noble Earl to give the matter further thought.

3.38 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 70; Not-Contents, 114.

DIVISION NO. 1
CONTENTS
Airedale, L. Kilmarnock, L.
Amherst, E. Leatherland, L.
Ardwick, L. Listowel, E.
Attlee, E. Lloyd of Hampstead, L.
Aylestone, L. McIntosh of Haringey, L.
Banks, L. McNair, L.
Blease, L. Mason of Barnsley, L.
Bonham-Carter, L. Mishcon, L.
Bruce of Donington, L. Nicol, B.
Burton of Coventry, B. Phillips, B.
Carmichael of Kelvingrove, L. Ponsonby of Shulbrede, L.
Cledwyn of Penrhos, L. Ritchie of Dundee, L.
David, B. Sainsbury, L.
Dean of Beswick, L. Seear, B.
Diamond, L. Seebohm, L.
Donaldson of Kingsbridge, L. Serota, B.
Elwyn-Jones, L. Shackleton, L.
Ennals, L. Shaughnessy, L.
Ewart-Biggs, B. Somers, L.
Ezra, L. Stallard, L.
Falkland, V. Stedman, B.
Gallacher, L. Stewart of Fulham, L.
Graham of Edmonton, L. Stoddart of Swindon, L.
Grey, E. Strabolgi, L.
Grimond, L. Taylor of Blackburn, L.
Hampden, V. Tordoff, L. [Teller.]
Hanworth, V. [Teller.] Underhill, L.
Harris of Greenwich, L. Wallace of Coslany, L.
Hayter, L. Wells-Pestell, L.
Howie of Troon, L. Whaddon, L.
Hunt, L. Williams of Elvel, L.
Hunter of Newington, L. Winchilsea and Nottingham, E.
Ilchester, E.
Jeger, B. Winstanley, L.
John-Mackie, L. Winterbottom, L.
Kennet, L.
NOT-CONTENTS
Airey of Abingdon, B. Bessborough, E.
Aldington, L. Birdwood, L.
Alexander of Tunis, E. Birk, B.
Alport, L. Blatch, B.
Arran, E. Boyd-Carpenter, L.
Auckland, L. Brabazon of Tara, L.
Beaverbrook, L. Broadbridge, L.
Belhaven and Stenton, L. Brougham and Vaux, L.
Beloff, L. Butterworth, L.
Belstead, L. Caccia, L.
Caithness, E. Lovat, L.
Campbell of Alloway, L. Lucas of Chilworth, L.
Carnegy of Lour, B. Lytton, E.
Cayzer, L. Mackay of Clashfern, L.
Chelwood, L. Macleod of Borve, B.
Coleraine, L. Manchester, D.
Constantine of Stanmore, L. Marley, L.
Cottesloe, L. Merrivale, L.
Crickhowell, L. Mersey, V.
Croft, L. Milverton, L.
Cromartie, E. Morris, L.
Cullen of Ashbourne, L. Mottistone, L.
Dacre of Glanton, L. Mowbray and Stourton, L.
Davidson, V. [Teller.] Munster, E.
De Freyne, L. Nelson, E.
Denham, L. [Teller.] Norfolk, D.
Dundee, E. Nugent of Guildford, L.
Eccles, V. O'Brien of Lothbury, L.
Effingham, E. Onslow, E.
Ellenborough, L. Orkney, E.
Elton, L. Orr-Ewing, L.
Faithfull, B. Pender, L.
Ferrers, E. Pennock, L.
Fraser of Kilmorack, L. Porritt, L.
Gainford, L. Rankeillour, L.
Glenarthur, L. Renton, L.
Gridley, L. Richardson, L.
Hailsham of Saint Marylebone, L. Rippon of Hexham, L.
Rodney, L.
Harvey of Prestbury, L. St. Davids, V.
Harvington, L. St. John of Fawsley, L.
Havers, L. Saltoun of Abernethy, Ly.
Hesketh, L. Sanderson of Bowden, L.
Holderness, L. Sandford, L.
Home of the Hirsel, L. Sandys, L.
Hood, V. Selborne, E.
Hooper, B. Selkirk, E.
Hylton-Foster, B. Sempill, Ly.
Jay, L. Skelmersdale, L.
Jenkin of Roding, L. Slim, V.
Jessel, L. Strathcarron, L.
Killearn, L. Strathcona and Mount Royal, L.
Kinnaird, L.
Lane-Fox, B. Thorneycroft, L.
Lauderdale, E. Trumpington, B.
Layton, L. Vaux of Harrowden, L.
Long, V. Vinson, L.
Lothian, M. Ward of Witley, V.

Resolved in the negative, and amendment disagreed to accordingly.

3.46 p.m.

Lord Williams of Elvel moved Amendment No. 2: Page 1, line 6, after ("proposing") insert ("to Parliament").

The noble Lord said: This amendment questions the status of a proposal by the Secretary of State that the property or functions of an electricity board or water board should be transferred to another body corporate. We believe that the status of this proposal is left unclear and above all that such a proposal ought to come before Parliament.

The amendment is in a very simple form and I have not tried to be at all sophisticated in its drafting. It is up to the Government of course to decide in what form such a proposal might come before Parliament; nevertheless, it is our belief that that should happen.

The powers conferred by the Bill, particularly by Clause 1, are very considerable indeed. Under Clause 1(1) the new functions of the utility or the Electricity Council, shall include the power to do anything which in the opinion of the utility … is appropriate for … facilitating the implementation of the proposal for the transfer". In practice it appears that the Secretary of State need only form an intention in some manner which is then publicised and which can then be called a proposal for these powers to be triggered without any further recourse to the parliamentary process. As we now know, there is no time limit within which the Bill operates. There is in consequence no guarantee that the powers potentially available will not rest on the statute book for a number of years.

Although the noble Earl said that he wishes to bring forward the privatisation programme as quickly as possible, we on this side of the Committee still feel that it is vitally important that Parliament should have an opportunity to discuss this proposal and, therefore, that the proposal should be laid before Parliament. I beg to move.

Lord Renton

I have some sympathy for the noble Lord, Lord Williams, on this amendment. My problem arises from the fact that the first line of subsection (1) is so uncertain in its expression and effect. It reads: Where the Secretary of State is at any time proposing that any property or functions of a relevant public utility should be transferred", and so on. One wonders to whom the proposing is to take place. Is it to the Secretary of State himself? Is it to his department? Is it to the "relevant public utility" mentioned in the second line of the subsection? Is it to Parliament? Is it to the nation? To whom is it made? We should be given some idea. The noble Lord may have hit the nail on the head but we shall not know until we hear from the Minister.

Lord Ezra

The amendment proposed by the noble Lord, Lord Williams of Elvel, ties in with the previous amendment, which has been rejected by the Committee; namely, that we want to know from this side of the Committee where we stand. The Government are taking such very wide powers under this clause that we feel that some definition is required. Surely it is not unreasonable to suggest under our due processes that the proposal that the Secretary of State might have at any time should be submitted for debate to Parliament. I very much hope that the noble Earl will be able to agree to this amendment.

Lord Diamond

I too should like to fully support this amendment. I am very interested in the comments that have come from the other side of the Chamber. Naturally, we pay more attention to those and I expect that the Government do too. So far as I am aware the only time in which the word "proposing" is used without an object is when the proposer is on his knees with a bunch of flowers and he is making a proposal. I do not know whether that is a further alternative that might be included in the definition of those words. We are all making the same point that the whole of this clause is drafted so widely as to include anything under the sun. We really ought to have some control of it, and the control proposed in this amendment is the natural and obvious one of parliamentary control.

The Earl of Caithness

I should like to thank the noble Lord, Lord Williams of Elvel, and also the noble Baroness, Lady Nicol, for the way in which they have put down these amendments at an early date. Some of his amendments are perhaps more relevant to future legislation and some strike at the very heart of the Bill. The noble Lord said at Second Reading that he dislikes this Bill. These amendments are therefore not surprising. This amendment itself strikes at a fundamental principle of the Bill. The noble Lord, Lord Williams of Elvel, said that it is not sophisticated. If it is not sophisticated, it is done with great charm and it is an absolutely deadly amendment.

The reason why the Bill comes before the Committee is that doubts have been expressed about the powers of the water authorities and the electricity supply industry to co-operate now with the Government as we develop our proposals for privatisation and restructuring. There is a great deal to do in relation to both water and electricity, if the main legislative proposals are to come before Parliament in good order and in good time. We need to be sure that there is no inhibition on the two industries in helping us to draw up that legislation, and in doing so, to anticipate the effects of that legislation. Furthermore, there are matters outside the legislative field where it is important that the industries should be given immediate attention if the privatisation process is to go smoothly and in accordance with our timetable. For example, detailed attention will need to be paid at an early stage to the drawing-up of long-form reports, as a preliminary to preparing prospectuses, well in advance of our introducing the relevant legislation. This will involve expenditure, and quite possibly the exercise of the powers in this Bill.

This amendment is aimed at preventing any co-operation on the drawing up of legislation. It is also aimed at stopping any of the other work from happening until our main legislation is in Parliament. If we were to suppose that the relevant legislation was to be introduced later this year—I said in relation to the last amendment that I cannot anticipate the contents of next session's Queen's Speech—the effect of this amendment would be to delay the planning process on the part of the two industries by some eight or nine months. That would not be acceptable to the Government.

The "proposing" as identified by my noble friend Lord Renton, is proposing to anyone, in particular the utilities. I have given an explanatory statement abut the principle of the Bill which is to clarify the law so that this can proceed. The Committee will know that this was not necessary with the privatisation of other works such as British Telecom and British Gas. Such a Bill was not necessary. It seems that the requirement of this amendment would only seek to delay the process quite unnecessarily.

Lord Renton

My noble friend says that the object is to clarify the law. In doing so, should we not ensure that the law is clear? In view of the statement made by my noble friend that it is not appropriate to insert the words of the amendment—namely, "to Parliament", between now and Report stage—perhaps the Minister would consider the possibility of inserting after the word, "proposing" the words, "to any utility or body corporate". That seems to be what the noble Lord has in mind.

The Earl of Caithness

Perhaps I may answer the point raised by my noble friend. Of course one of the great strengths of the Committee is to make legislation clear. That is something I am keen to do with this piece of legislation which is now before us. I will take away my noble friend's comments and look at them between now and another stage.

Lord Williams of Elvel

I am glad that the noble Earl has been impressed by the arguments of the noble Lord, Lord Renton. I also hope that he is going to be impressed by some of the arguments that I am going to make. I do not necessarily believe that the formulation put forward by the noble Lord is the exclusive one. We need to have clear laws, as the noble Lord said. We need to know what a proposal is and not merely to know to whom it is made, with great respect to the noble Lord, Lord Renton. We also need to know in what form it is made and how it is made. Then we can say, "This is a proposal under the Public Utility Transfers and Water Charges Act." If the noble Earl is going to look at the suggestion put forward from his Benches, perhaps he will look at the suggestion of introducing some kind of formulation to describe how we can identify a proposal which is under this Bill. If the Minister can give us that assurance I am quite happy.

The Earl of Caithness

The noble Lord, Lord Williams, is being increasingly ingenious in trying to get me to make commitments and to give assurances to the Committee. What I said to my noble friend was that I would look at the point he was making in order to see whether it needs to be clarified. If so, I would then consider how best to do it. In doing that, I shall bear in mind what the noble Lord says. Of course what I have said is without commitment.

Lord Williams of Elvel

I am grateful to the noble Earl for going, I suppose, half-a-step down the road which I believe both the noble Lord, Lord Renton, and I and others would wish him to go. Let us hope that in the course of his reflections between now and Report stage that he can go further along the way. I hope he recognises that there is a major problem. As the noble Lord said, if we are going to clarify the law let us at least try to make it clear. We from this side would certainly wish to have a clear definition of what constitutes a proposal under this particular Bill. I hope that the noble Earl will be able to come up with one before the Report stage. In the meantime, I beg leave to withdraw this amendment.

Amendment, by leave, withdrawn.

Lord Diamond moved Amendment No. 3: Page 1, line 6, after ("that") insert ("as part of a scheme of privatisation").

The noble Lord said: We are essentially on the same point that the Committee has been discussing. I share the view which has been expressed that the proposal is in terms which are far too wide for it to be recognised or identified. The noble Lord, Lord Williams of Elvel, wants a proposal under this Bill to be capable of being identified. I could not agree with him more. Any proposal of any kind might come under this Bill the way it is drafted at the moment. The rubric gives some hint as to what it is all about. The rubric says: Power to act in relation to proposals for privatisation. Where in this clause is the word "privatisation" mentioned? It appears nowhere at all. The Explanatory Memorandum says that the electricity supply industry and the water authorities should have adequate powers to prepare for privatisation. We all know that is what it is all about. The Government have produced a White Paper and they have made their intentions very clear both at the general election (so I am told) and subsequently. The Bill is to give powers in relation to a proposal concerning privatisation. Why on earth not say so? That would help to identify what kind of proposals we are talking about. That is why I am proposing that there should be inserted the words: as part of a scheme of privatisation The first line of the clause will read: Where the Secretary of State is at any time proposing that as part of a scheme of privatisation any property or functions … should be transferred

Property or functions could be transferred in any way and not necessarily as part of a scheme of privatisation. They could be transferred as part of a scheme of reorganisation of a public utility company. There is not a word in the clause itself to say that these powers relate to privatisation. Yet the Government say that that is what it is about; the explanatory clause says that that is what it is about; and the rubric says that that is what it is about. It is a new proposition that the country should be governed by rubric. I have never heard of that one before. I am suggesting that the clause itself should make the position clear.

I cannot simply finish on that point. The rubric goes on, very wisely, to say, proposals for privatisation etc.". That final word is a lovely one to use. It can cover anything that occurs to anybody at any time of the day or night. We wonder what "etc." refers to here. The word makes it perfectly clear that the clause as it exists at the moment is by no means limited to proposals for privatisation. It can be directed to proposals for privatisation and to other proposals which have nothing whatever to do with privatisation. In order to help the Government make it clear to the people of this country what they are about, it is proposed that they should say what they have said from the Front Bench opposite and from the Front Bench in another place. It is proposed that they should say in the Bill itself what they are doing. What they are doing is giving powers in relation to a proposal which is part of a scheme of privatisation. I beg to move.

4 p.m.

Lord Ezra

In supporting my noble friend's amendment, I should like to say that we are doing the very task that we have to do in relation to legislation. We are trying to make absolutely certain that what passes through our Chamber is clearly and indubitably understood by those who have to carry out the law. Clause 1 of this Bill is very unclear in many respects. The amendments so far moved have been an attempt to introduce clarity. What my noble friend has just said is precisely devoted to that end. Is this; intended to be a move towards privatisation, or is it not? If it is, what is wrong with saying so? We would then all know where we stand.

Baroness Phillips

I should like to support the amendment. I would have spoken on the other two amendments but that was not necessary because my noble friend stated the case so well. This is a frightening piece of legislation. Apparently so simple, it will give the Government great powers. I notice use of the "in" word, "corporate". We are told that everything is corporate and that a body is corporate. There is nothing in the definition clause to say what a "body corporate" is. It obviously comes under "etc.". If the Government are to hand over our water authorities and electricity boards to the private sector, they should at least have the courage to state it in the Bill. That would spell out exactly what this small and apparently innocent Bill is all about.

The Earl of Caithness

I fully understand the thinking that lies behind this amendment which the noble Lord, Lord Diamond, has moved with his usual clarity. Perhaps I may begin by assuring the Committee that the Bill had its origin in our intention to privatise the water industry and the electricity supply industry and the need as we saw it to confer explicit powers on those industries to co-operate with us in developing our privatisation proposals. That is the purpose of Clause 1, and its purpose will be fulfilled, I have no doubt, within the lifetime of this Parliament. Once the industries become plcs there will no longer be—and I quote—"relevant public utilities" within the meaning of Clause 1, so these powers will have become redundant.

I would, however, emphasise that our proposals for the water industry also include proposals to set up a National Rivers Authority. This proposal has a validity in its own right. I fully accept that it had its origins in our thinking about privatisation. When we concluded that it was not possible for one private body to regulate another we were moving inexorably in the direction of having to establish a National Rivers Authority or something like it.

However, we have also, independently, come to the view that it is becoming more and more difficult to justify the continuing role of the water authorities as one of the polluters and also the regulators of our river system. This is sometimes described as combining the roles of poacher and gamekeeper. The results of the river quality survey, carried out in 1985, show that the long-term improvement in the quality of our rivers and water courses has faltered, and in some cases gone into reverse. I am certainly not blaming the water authorities entirely for that. However, the institutional separation of regulatory from utility roles will help combat present difficulties. That separation, I repeat, has a validity in its own right.

Subsection (1) is drafted to encompass proposals for the transfer of property and functions of the utilities to other corporate bodies which may be in the private or public sectors. In the case of the water industry these transfers will be to successor companies which will be privatised and to the NRA, a public sector body. The establishment of the NRA is not part of the privatisation proposals but part of the proposals for restructuring the industry. The effect of the amendment would be to confine the preparatory powers of the water authorities to the transfer of water supply and sewerage functions to successor companies and to prevent them from preparing for the transfers of property and their remaining functions to the NRA.

I do not know where the noble Lords, Lord Diamond and Lord Ezra, stand in regard to their thoughts on the NRA, but we believe that it is necessary and is a move in the right direction in view of the poacher-gamekeeper position in which the water authorities find themselves. That is why the clause is drafted as it is and that is why the noble Lord's amendment is so restrictive.

Lord Williams of Elvel

We are grateful to the Minister for expanding his brief on the intentions behind the legislation. Indeed, he said more or less what the noble Lord, Lord Belstead, said at Second Reading. It is perfectly proper that he should repeat what the noble Lord said. However, if I may say so with the greatest respect, that has nothing to do with the problems raised by the proposed amendment.

If the Government do not accept this or a similar amendment we are left with the Bill as drafted which gives the Secretary of State power for an indeterminate period, without further recourse to Parliament, to act in relation to proposals, to propose (perhaps by lying in his bath and proposing to a dog; we do not know how he will propose) that certain things will be done and that powers will be given for acts to be done by other people for unspecified purposes. That is the point we have reached in the Bill and that is why we dislike this formulation. Between now and Report stage I hope that the noble Earl will think about what I and the noble Lord, Lord Diamond, have said because it is a problem for us if we are to act as a House of Parliament.

Lord Nugent of Guildford

Before my noble friend replies to that point I should like to raise a further matter arising from the short speech he has made justifying the very broad terms in which Clause 1 is drafted. He told us that he will set up the National Rivers Authority. Indeed, he has published a document about it. It would seem to me that the Bill is the natural place in which to take powers to do so. Yet the National Rivers Authority rates a mention only in the Explanatory and Financial Memorandum.

We are told that this is to happen. But when and how will it happen? We know, or we think we know, that in the next Session of Parliament there will be major legislation which will set up the new privatised structure of the industry. However, it would hardly seem appropriate that the National Rivers Authority should be part of such legislation, especially as my noble friend is relying on the soon-to-become National Rivers Authority to justify part of his position now. It seems to me that he has some obligation to explain where the powers to set it up will come from. People are most interested in the authority. It is going to be responsible for regulatory, environmental and conservation functions which affect the whole community. We should all like to know just how my noble friend intends to set up this organisation, who the people will be who will run it, how they will do it and what will its constitution be.

It is true that there is a broad outline of those functions in the admirable pamphlet which my noble friend has published, but that has to be put into legislative form before it can become a reality. I should stress that I intended to raise this point on Clause 10 stand part, but as my noble friend has been good enough to give me a hook on which to hang my short point by mentioning the National Rivers Authority and what he intends to do about it, I think that now is the appropriate time to ask him how he proposes to set up the NRA and when he will show those proposals to the world in a piece of legislative machinery.

Lord Renton

I should like to follow up the rather important point just raised by my noble friend Lord Nugent of Guildford. When we have a Bill which needs to have a good deal read into it between the lines, as it were, as happens with Clause 1, it is only right and proper that we should refer to the Explanatory Memorandum, although we have no power over its contents. However, I think in this case we should take note of exactly what the Explanatory Memorandum says in its first sentence. I ask the Committee to take note of the following important words: The Bill ensures that water authorities in England and Wales, and the electricity supply industry in England, Wales and Scotland have adequate powers to prepare for". It then goes on to mention two matters. The first is "privatisation"; the second is: for the creation of a National Rivers Authority". Therefore we are in the rather odd position of being asked to prepare for the creation of something which does not exist; it is not on the statute book or in the Bill. I find that situation rather strange and no doubt my noble friend will wish to turn his very diligent attention to it.

Baroness Phillips

Before the Minister replies, perhaps he could clarify one point. In his speech he rather concentrated on water, using the example of the poacher and gamekeeper; dealing with pollution on the one hand and polluting on the other. How would he apply that argument to electricity? Surely an electricity authority does not pollute at the same time as supply. In my view any comment he makes is tied up with those two matters right throughout the Bill. They may in fact be separated in the Explanatory Memorandum but each clause refers, on each occasion to the two matters with which we are concerned: water on the one hand and electricity on the other. Can he explain the poacher and gamekeeper argument in relation to electricity?

4.15 p.m.

Lord Diamond

We are most grateful to the noble Earl for what he said by way of explanation but, unfortunately, there is a lot more explaining to be done. I should like to clear the following point straight away because it may help in the argument. He asked where we stood on the NRA. The answer is that we think it is a very good idea, subject to seeing the details of it. The National Rivers Authority is not a piece of privatisation; it is a reconstruction of a public body as part of a scheme of privatisation. That scheme of privatisation has been made clear by the Government and appears, as the noble Lord, Lord Renton, has just reminded us, in the Explanatory Memorandum as the second of two main objects of the Bill.

I must stress that nowhere in the Bill are the words "National Rivers Authority"—at least, certainly not in this clause—and yet it is an essential part of what is contemplated by the powers being sought under the clause. Nowhere in fact is it mentioned. It is of fundamental importance because the Bill is mainly concerned with giving utility companies the powers to prepare for something definite. They know that something will happen to their industry and they had better get on with preparing for it. I have no objection to that. But what are they to prepare for? No doubt they will assume that they are to prepare for what is described in the statements issued by the Government, but there is nothing in the Bill about that aspect. They can only act wisely and cover themselves with regard to the expenditure they incur if they are preparing for matters for which they have power under the Bill.

Let us then examine a little more closely what has happened so far with regard to water to see whether it might happen in respect of electricity. As regards water, what the Government first proposed—to use the important word in this clause—was complete privatisation; that is, everything owned by the water companies was to be privatised and transferred to plcs. However, they then decided to withdraw all their proposals and subsequently decided to re-introduce such proposals in a very different form because they were not to be entirely for privatisation.

It was proposed that certain very important functions should not be privatised but that they should be retained in the public sector under a new body to be called the National Rivers Authority. We think that that was a very wise alteration of plan, but it was a complete alteration of what was in the Government's mind. I ask the Committee to bear in mind that we are talking about an amendment which proposes a scheme of privatisation—not privatisation in the round—so that the public utilities will know what it is that they are intended to do.

I turn now to electricity. At present the Government's plans—I say at present because they may well change them—are to privatise all the electricity functions. We know that one of the important and essential functions of the CEGB is electricity generation. We also know that there is a great argument taking place as to whether its powers should be privatised or retained as a single entity under some public body, serving what would then be privatised industries.

It may be that, just as the Government have changed their mind with regard to the National Rivers Authority, they may subsequently change their mind with regard to electricity generation. Then, because there has been no scheme for privatisation, all the expenditure that these utility companies have incurred in preparing for the privatisation of electricity will to some extent be wasted because there is some different proposal for which they have to prepare. Surely they are entitled to have a scheme of privatisation put before them so that they will know where they are. The proper place for that, I repeat, is not in the Explanatory Memorandum; it is in the Bill itself.

While we are on this, I seek the assistance of the Government on how to deal with the problem of the rubric, which talks about power to act in relation to proposals for privatisation. Unless the Government accept this amendment or something like it which talks about a scheme of privatisation, this is a very misleading rubric. It tells the nation that the Bill is about something when there is not a word in the clause itself to justify it. What if we do not like that? What if the Committee decides that it is not right and proper for a Bill to go from this Chamber which gives a totally misleading impression in a rubric? I do not know how one alters a rubric; I have never had to put down an amendment on one. I have always understood that a rubric just followed the pattern of the Bill. We should certainly want to know a great deal more, if the Government are not going to accept an amendment which justifies the rubric, as to why the rubric should appear.

Lord Renton

Will the noble Lord give way? I think the difficulty which he has expressed and which my noble friend Lord Nugent and I also expressed earlier could be overcome by there being a purpose clause at the beginning of the Bill. It would come before Clause 1 and its substance would be very much what is in the first paragraph of the Explanatory Memorandum. On the Legal Aid Bill recently the Lord Chancellor himself introduced a purpose clause. He had one drafted which helped very much in the interpretation of the Bill. I certainly think that the same solution could well be applied to this Bill.

Lord Diamond

I am grateful to the noble Lord, Lord Renton, who is very well informed on these matters of legislation and procedure. It may be that that is an alternative which will suggest itself to the Government. We do not mind in the slightest whether it is done in the form of this amendment, which has stood the test so far in the discussion which has gone on. It has indicated that what we all need is a scheme of privatisation which shows exactly what is proposed. We do not mind whether it is done in this form or in an intentions clause, which is another way round it.

At all events, under either alternative we want something in the Bill which we can read and know has legislative effect. So I hope that the noble Earl will give this matter very careful consideration and bear in mind our great anxieties about this misleading rubric and also about powers being granted in this way without at any time referring to Parliament for something which may be privatisation or—although it is not likely—nationalisation, both covered by the Bill in just the same way. If the Government want to introduce schemes of nationalisation I dare say they could summon a certain amount of support from all sides of the Chamber. That is what this clause gives them power to do. I am sure I have made my point sufficiently clear. I hope the Government will respond to it.

The Earl of Caithness

I understand the concern of noble Lords and the noble Baroness on this matter. What the clause is designed to do is to permit my right honourable friend the Secretary of State and the utility companies to start work in preparation for privatisation. The noble Lord, Lord Diamond, knows full well that when those proposals have finally been prepared and submitted they will have to come before Parliament. Again, it is a point which I mentioned earlier that matters such as the exact form of the NRA are for the main Bill. If we were to put a reference to privatisation or to the NRA in the main body of the Bill, it would have to be precise in bringing forward what our proposals will do.

Lord Williams of Elvel

I am sorry to interrupt the noble Earl. A moment ago he referred to proposals coming before Parliament in the form of the main legislation. Are we to understand that the word "proposal" as used in this clause means the main legislation when it comes before Parliament and that is the proposal which the Secretary of State will make?

The Earl of Caithness

That is how it will end up. However, until one can have the powers to start discussions formally with the authorities or with the electricity industry on what is going to happen, it is a chicken and egg situation. When we have presented our proposals and worked them up, we can then present a Bill to Parliament. At the moment we cannot do that. It is a problem with the NRA. It is very much a chicken and egg situation. If it were to be written onto the face of the Bill, we should have to be very precise about what was to be privatised and what was to be the NRA. We cannot do that because we do not have the proposals which this clause enables us to put forward.

Lord Sefton of Garston

If the noble Earl will allow me to intervene, perhaps I may say that I am getting rather puzzled. It seems to me that the principle is that somebody on this side of the Committee is saying that the powers accorded to the Secretary of State in this Bill are not specific and they could be applied to situations other than privatisation. That is what is being said on this side of the Committee. What the Minister has to do is to satisfy the Committee that these proposals are a paving Bill only for privatisation and the establishment of the National Rivers Authority. That is the issue.

If the Minister will address himself to that and tell the Committee that the powers in the Bill are specific to those two objects, perhaps we shall be satisfied. At the moment the Minister has got nowhere near understanding the point, let alone replying.

The Earl of Caithness

I am very grateful for that invervention. The noble Lord, Lord Sefton of Garston, has hit the nail on the head. It is in order to bring forward proposals, but not all the proposals necessarily include privatisation. This is for the restructuring of the two industries, but until we get the powers to enable us formally to discuss that we cannot discuss the proposals with the electricity industry or the water industry. That is what is delaying matters. It is a chicken and egg situation.

Lord Sefton of Garston

That makes it worse. If I understand the Minister rightly, he is now saying that the powers may not just be accorded in the Act for privatisation which is contemplated by the Government and there may be something else. If this Bill allows the Government to do something else, it may be that if the Government found undue difficulty in getting somebody to buy the water authority or the electricity authority they would want to change their mind and go for a reorganisation. Under this Bill they would be able to do it and start the procedure for that reorganisation. If they were to do that, I am sure that this Committee would want to know what kind of reorganisation it was. So the Minister must satisfy us that it is specific to those powers.

The Earl of Caithness

That is exactly the point of the main Bill. It will come before noble Lords.

Baroness Seear

Why cannot the Minister say, if this is what he is trying to convey to us, that the proposals to be brought to Parliament are for privatisation and the establishment of a National Rivers Authority? Why cannot he put that in, and then we shall know what he is talking about?

The Earl of Caithness

That is one of the difficulties. Until we get the authority to make the proposals, what we have suggested is that the National Rivers Authority should be set up. But, as the noble Baroness knows, there are two White Papers on the electricity industry, one by my right honourable friend the Secretary of State for England and Wales and the other by my right honourable friend the Secretary of State for Scotland. Some of the thoughts in the White Paper may be changed in view of comments, but this clause and the Bill are what enable us to take matters a stage further in order to bring the main Bill before noble Lords. That will be the moment for the Chamber to decide whether or not what the Government propose as a result of the powers conferred in this Bill is acceptable.

I was interested in what my noble friend Lord Renton said on the intention clause. I should like to look into that to see if it is possible to bring that into this legislation given the fact that as I understand it, this matter is slightly different from the Legal Aid Bill. This is a chicken and egg situation. That is one of the points I should like to look at between now and the next stage of the Bill.

To be absolutely clear to the Committee I should say that we are seeking powers in order to enable my right honourable friend the Secretary of State to start discussions in order to bring forward the main proposals.

4.30 p.m.

Lord Diamond

I never expected the Government to bring forward as a reason for this Bill and for the wording of this Bill the fact that they are not ready to put their privatisation proposals to the nation. That has happened once already and the proposals were all withdrawn. We all know that that happened with regard to water.

If the Government are not ready to put forward a scheme for the privatisation of water they should say so and wait until they are ready. It is wholly irresponsible when the Government are not ready to invite the utility companies concerned to incur any expenditure which they like and which the Government wish them to incur and to give them the powers to examine proposals which the Government have not yet clarified in their own mind and which may turn out to be quite different. It is quite wrong that that should happen.

The Earl of Caithness

I shall try once again to get the message through to the noble Lord, Lord Diamond. He would be the first to criticise the Government and the water authorities if there were not a long-term prospectus for the privatisation. He would be the first to get up and say, "This is absolutely wrong. It goes against all the Companies Acts". The noble Lord, Lord Williams of Elvel, would he very close on the noble Lord's heels to tell me that. This clause enables us to fulfil those kinds of requirements.

Lord Diamond

To put it politely, I find it very difficult indeed to accept what the noble Earl has just said. The noble Earl has said a number of things. He has said that it is impossible for the Government to start discussions with the utility companies on the details of the proposals. I find that very difficult to understand. I cannot see why the Government should not go and start discussions with the utility companies here and now. They have the full powers to do that.

Is the noble Earl telling us in one sentence that the main purpose of the privatisation of the electricity industry is to stop government interference—as the Government call it—and at the same time telling us that the Government have no power to talk to the electricity industry about their plans for privatisation? I am afraid that that really is just not tenable. The clear situation as we now find it is that the Government do not have the foggiest idea of what they propose to do. If that be so, that is all right; they should give the matter further examination. It is not the first time that the Government have found themselves in this position. It is the second time. That is all right. The Government should give the matter further examination but in the meantime they should take the matter away. The Government should not come to the Chamber with a Bill which is intended to give powers in relation to proposals for precise privatisation schemes for the water industry and the electricity industry when they do not have the foggiest idea of what they want to do.

I repeat what I said previously: we are very unhappy indeed about the rubric and we shall seek to support the noble Lord, Lord Renton, in his examination of this matter and in his proposal that some kind of addition to this Bill should be made, possibly at the start, so that the Bill tells the nation what the Government are intending to do and does not conceal it from the nation.

A number of suggestions have been made. The noble Earl was good enough to say that the suggestion made by his noble friend Lord Renton would be looked at. I think that it is so self-evident that something more should be done that the Government, when they think about this quietly, will come to the conclusion that this clause should be clarified. In the hope of that and on the understanding of what was said by the noble Earl and without putting any additional words into his mouth with regard to the noble Lord, Lord Renton, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Hesketh

I beg to move that the House do now resume for the Statement.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.