HL Deb 06 July 1989 vol 509 cc1278-98

1 Clause 37, page 39, line 32, after "of" insert "wholesome".

2 Page 39, line 33, at end insert— (aa) for providing water of a standard of wholesomeness prescribed under section 38(2A) or (2B) below".

3 Clause 38, page 40, line 16 at end insert— (2A) Without prejudice to the generality of the duty conferred by subsection (2) above, regulations under that subsection shall include in any standard of performance a requirement for an undertaker to achieve the levels of drinking water quality specified in EEC Directive 80/778 by a date not later than the date specified by the Secretary of State under subsection (2B) below in respect of each undertaker. (2B) The date or dates to be specified by the Secretary of State by order under this subsection shall be that or those which either—

  1. (a) Not later than 31st December 1989, have been agreed by the Secretary of State and the European Commission; or
  2. (b) Where no such agreement has been reached by the date referred to in paragraph (a) above, 1st September 1993.
(2C) Where, before the date specified in an order under subsection (2B) above, any further terms of a Directive by the European Commission relating to drinking water quality are introduced, the Secretary of State shall, in consultation with the Commission, by regulations establish the shortest timetable for compliance by each water and sewerage undertaker as he considers to be reasonably practicable.".

4 The Commons disagreed to these amendments for the following reason: Because adequate provision is made, without the amendments, for ensuring that water supplies that do not comply with EC Drinking Water Directive 80/778 will do so as quickly as possible, taking account of the practicalities, and the making of workable schemes for guaranteed customer standards would become impossible as a result of uncertainties about the effect of the amendments.


4A Lord McIntosh of Haringey rose to move, That this House do not insist on their Amendments Nos. 1 to 3 to which the Commons have disagreed but propose the following amendment in lieu thereof—

After Clause 80, insert the following new Clause:

"Publication of investment programmes.

—(1) The Secretary of State shall, before any date on which shares in any undertaker are to be offered for sale, publish an investment plan in respect of each such undertaker specifying the steps to be taken by that undertaker in order to secure compliance in respect of the supply of drinking water with such parameters of EC Directive 80/778 or other directives relevant to the quality of drinking water as may be specified in regulations made under this section.

(2) The Secretary of State shall before publishing any plan under subsection (1) above, consult the European Commission as to the timescale and content of the proposed investment plan.

(3) The Secretary of State shall for the purposes of subsection (1) above specify as a parameter to which this section applies any parameter of a relevant directive, a breach of which is likely, in his opinion to carry a significant risk of danger to the health of any person.".

The noble Lord said: My Lords, some Members of your Lordships' House will know that it is not my general practice to seek to overturn amendments when the Commons have overturned our own amendments. My general view is that the Commons, as the elected Chamber, ought to have the last word on these matters. However, in this case it seemed necessary to put down a further amendment in lieu, and there are specific reasons which have arisen since the matter was considered in Committee in your Lordships' House—and indeed even since the matter was considered in another place on Monday—why the amendment should be put forward.

I beg to move that this House do not insist on their Amendments Nos. 1 to 3 to which the Commons have disagreed but propose in lieu thereof the new clause, which has the sub-heading, "Publication of investment programmes" as set out in the Marshalled List.

As I said, there are specific reasons since this matter was last considered which make it necessary for the House to consider the issue again. The most important perhaps arises from the visit of the Minister of State for Water and Planning, Mr. Michael Howard, to Brussels last Wednesday when he met Sr. Carlo Ripa de Meana, the European Commissioner for the Environment. When that meeting was reported by the Secretary of State in another place, he described the meeting as a constructive and fruitful discussion. He claimed that the commissioner accepted the Government's resolve in the matter.

I do not know what is meant by "accepted the Government's resolve in the matter." It is clearly a phrase designed to mean as little as possible. But whatever the Secretary of State intended, the fact of the matter is that this was a meeting at which no negotiation whatsoever took place. It was the first occasion when Mr. Howard had met the commissioner, and I have confirmed that there was no negotiation of any kind at that meeting. It was largely a formal meeting.

To claim the support of the European Commission for the removal of our amendments, as in effect the Secretary of State did, is not an adequate representation of what took place and it ran the risk of misleading honourable Members in another place about the position of the European Community in respect of drinking water quality directives.

Not only was that a non-meeting in the negotiating sense, but this has been confirmed by the fact that only yesterday the European Commission issued a decision to the British Government—not on drinking water quality on this occasion but on river water quality. The Commission decided that it would apply to the European Court of Justice, to seek compliance by the British Government with two directives: one of 1983 on cadmium and one of 1984 on hexachlorocyclohexane, or HCH, because the UK is in breach of those directives, which in the first case should have been implemented by 26th September 1985 and in the second case should have been implemented by 1st April 1986.

The note from Brussels states that the UK is in breach of the directive on various aspects. It states that the directive has been implemented by means of circulars which are not public, may be changed at any time and are not even seen to be binding for the administration. It states that the circulars do not contain some of the quality objectives required by the directive and do not require the competent authorities to fix emission standards for each individual cadmium discharge and that the UK authorities have failed to establish a report on each quality objective chosen and applied by them.

So it is clear that we are debating this in a context where, even on matters which have not been debated in this House, the British Government are still failing to meet the Commission's requirements as regards water quality in this country. The British Government forced the Commission to go further than the reasoned opinion which was debated in your Lordships' House on drinking water quality, to the final stage of the process, which is a decision to apply to the European Court of Justice. It is quite clear that there has been no effective meeting of minds between the British Government and the Commission on water quality. It is also quite clear that any claims that this legislation satisfies the Commission are very wide of the mark. That is why it is necessary to come back.

There is the additional factor that only today the accounts of the regional water authorities have been published. We have not yet had a chance to study them, and no doubt the Minister has not had a chance to study them either. However, it will be very interesting to see whether the investment expenditure of the regional water authorities shows that there is any significant progress as regards improving drinking water quality and river water quality. We shall have to seek another occasion than the passage of this Bill in order to debate that matter in your Lordships' House, but it is another example of the matters which should have been available before the passage of the Bill was sought. It is another of the aspects in which the Water Bill is clearly inadequate.

The new clause that I have tabled does not seek to reinstate the amendments to which the Commons disagreed. It is different from them in three important ways which I believe answer the points that were made by the Secretary of State in another place when the matter was debated. First of all, we are not specifying a particular date for compliance. The Secretary of State put forward the extraordinary argument that any date for compliance would be illegal because the date for compliance was 1985 and therefore it should be done straight away. He is not saying that it will be done straight away; he is merely saying that a reasonable and feasible date cannot be put forward. It is obvious that that is an extraordinary argument, but it is not one that I wish to enter into now. Therefore, we have not put a date down, but we have said that before the shares are offered for sale there should be an investment plan published for each undertaker specifying the steps to be taken in respect of the supply of drinking water within the parameters of EC Directive 80/778, which was the one referred to in our earlier amendments, and other directives relevant to the quality of drinking water as may be specified in regulations.

We make two further provisions: first, that the Secretary of State shall consult the European Commission. We are not suggesting that the Secretary of State should agree with the European Commission because clearly it is not in our power to direct Secretaries of State to agree with anyone who is not in the control of the British Government. Thirdly, we are proposing in the third part of the new clause the restriction of breaches under this section to those which carry, in the opinion of the Secretary of State, a significant risk of danger to the health of any person. In other words, we are answering the point made by the Secretary of State in another place when he said that some of these water quality standards were cosmetic, and that, like manganese and iron, they affected the colour or clarity of the water but did not affect matters of health.

We are now talking about a new clause which would require an investment plan to be produced with a timetable for compliance before flotation; that that plan should be the subject of consultation with the European Commission and that it should be restricted to those matters of drinking water quality which carry a significant risk of danger to health. I cannot for the life of me think why the Government should not accept these amendments because all of the things we are asking here will have to be in the prospectus anyway. But what is necessary is that there should be other reasons apart from commercial reasons for their being in the prospectus.

No sensible investor would wish to apply for shares unless there was an accepted timetable for the improvement of drinking water quality standards, as it is clear that that has a fundamental effect on the viability of the water companies and the price of their shares. However, it does not seem to us satisfactory that that should be only in the prospectus. It seems to us necessary that Parliament should specify that the investment plan and the compliance programme should be on the face of the Bill. Only in that way can Parliament fulfil its fundamental responsibility both to water consumers and to the potential investors in the water companies.

I suggest to the House that these are improved amendments. They answer the points made by the Secretary of State in another place in rejecting our amendments, and they provide real protection to water consumers and to investors in the industry. I commend them to the House. I beg to move.

Moved, That this House do not insist on their Amendments Nos. 1 to 3 to which the Commons have disagreed but propose in lieu thereof the new clause (Publication of investment programmes) set out in the Marshalled List.—(Lord McIntosh of Haringey.)

Lord Boyd-Carpenter

My Lords, I have always admired the ingenuity of the noble Lord, Lord McIntosh, but he has excelled himself this afternoon. He began with the very proper affirmation that he did not favour this House getting into conflict with another place by a direct rejection of its views and insistence on an amendment which it had rejected. He then sought to justify this amendment in a very curious way by references to a meeting in Brussels which he himself described as a non-meeting and whose relevance to this discussion would therefore seem to be a trifle tenuous. He further suggested that what the Commission was talking about at the moment was a reason for a very last minute amendment to the Bill. The noble Lord knows perfectly well that international discussions on matters of this kind need to take time. To try, on the pretext of their relevance, to slip in a further amendment to a Bill in its final stage is a misuse of language.

If the Commission has views that it wishes to express, I am perfectly certain that my noble friend in the Government will have discussions with it. But the idea that we should in great haste, at the last minute at this stage of the Bill, slip in something which the noble Lord thinks may appease the Commission does not seem to make very practical sense.

Let us look at the amendment which the noble Lord proposes. He hastens to disassociate it from the earlier amendment which, in circumstances which your Lordships will well recall, was carried. However, it has certain basic similarities, and in particular it has the similarity that it is plainly intended at least to slow up and to hinder the process of privatisation. That of course is the real purpose—

Noble Lords

Hear, hear!

Lord Boyd-Carpenter

My Lords, I notice that noble Lords opposite say "Hear, hear". I am glad to carry them with me. That was the real purpose of the earlier amendment and that is the purpose of this amendment.

If noble Lords will look at the first paragraph they will see that the Secretary of State has to publish an investment plan before any shares are offered. What is meant by "an investment plan"? That is surely one of the vaguest of matters. It makes it extremely difficult to foresee the future. It would be extremely difficult for a new company to make arrangements if an investment plan is imposed on it by the Secretary of State. If an investment plan means anything, it means the allocation of certain specified sums, year by year, although the situation may well change, though prices may well change, though needs may well change. The rigid framework of an investment plan, though designed in theory to assist in the provision of purity of water, in practice would put the new companies in a straitjacket. Nobody knows better than the noble Lord that any such provision would be at least an immense discouragement to investors who were disposed to take up the offer and buy shares in the company that is being privatised.

Then there is the extraordinary provision in paragraph 2 that the Secretary of State must consult the Commission. The noble Lord went out of his way to say that he did not intend by that that the Secretary of State should be bound by the views of the Commission, but that he should consult the Commission. No doubt there are circumstances in which the views of the Commission might be helpful, but few things are less helpful than statutory consultation of that kind. It means that an approach has to be made, and if there is disagreement that disagreement has to be published. It will become known. What useful purpose would be served by a formal consultation, ending in disagreement, and followed by publication of the disagreement, with all the ill will and difficulty that that would cause?

Then there is the extraordinary provision, barely comprehensible, referring to: any parameter of a relevant directive". As I understand it, it means that, subject to the direction of the Secretary of State, the new company would have to follow any new provision, any new order or any new decision that emerges over the years. There again, nobody knows better than the noble Lord that that would be a very great discouragement to investors.

We have reached the final stages of this Bill. Your Lordships have decided, after long debate—and no one can complain that the debate has been unduly short—that the water industry shall be privatised. The only effect, and I suggest the only purpose, of the amendment is to make that process, if not impossible, at any rate a great deal more difficult. To that extent it simply echoes the purpose, though the phraseology is different, of the earlier amendment which another place rejected.

In those circumstances, I hope that your Lordships will feel that, whatever the merits for the future of discussions with the Commission and whatever the merits of the guidance which the Secretary of State can undoubtedly give to the new water companies, to impose this straitjacket on the companies at this moment would be utterly destructive of the work which your Lordships' House and another place have done in going forward with the privatisation of water.

I cannot help recalling, because it is most relevant, that this argument is a great reinforcement of the argument for privatising water. Years ago one drank tap water in this country with complete confidence. At that time one was advised very strongly when on the continent of Europe not to drink tap water but to buy expensive bottled water. Then the industry was nationalised. Under nationalisation the process has apparently been reversed and we are now in the strange position—very strange to those of us who were brought up under the older dispensation—of being told that English tap water is dangerous and European and continental water is safe. If one wants a stronger argument against nationalisation than that one will need to go a long way to find it.

3.45 p.m.

Lord Ezra

My Lords, we are concerned here with the quality of drinking water. It is clear from debates in this House and the other place that there is no disagreement about the need for us as a country to conform with EC Drinking Water Directive 80/778. The only issue is the timing. When your Lordships' House previously considered this subject we concluded that a time should be set, and the time that we proposed was 1993. The other place—as is reflected in the document before us—considered that that could not be done, taking account of the practicalities, but that there are schemes in hand to bring it about at the earliest practical date. That is the issue.

The amendment which the noble Lord, Lord McIntosh of Haringey, has put forward suggests that, in view of the fact that there is agreement that we should achieve those standards of drinking water quality and there is disagreement about the date, the prospectuses for the sale of these companies should include a clear indication about what the companies intend to do in order to achieve those standards. As a potential shareholder, if I should be so persuaded, I would want to know that. The country having committed itself to achieving those standards, I would want to know what is to be done and what measures are to be taken by the companies to achieve those standards.

I am a little surprised that the noble Lord, Lord Boyd-Carpenter, should oppose the amendment. All it asks for is that potential shareholders should be very clear about what, as a result of a decision of Parliament, will be required of the companies to achieve those objectives. I think that it is very fair and proper that the prospectuses should state that.

Looking at the matter quite objectively, I should say that this is a very fair amendment in view of the agreement that we have reached that water standards should achieve the levels set out in the European Commission's directive. On those grounds, I strongly support the amendment proposed.

Lord Trafford

My Lords, I congratulate the noble Lord, Lord McIntosh, on the way in which he presented the proposed new clause. I also associate the noble Lord, Lord Ezra, in those congratulations for his remarks, because they are indeed seductive. However, I prefer to address myself to the amendment and its consequences rather than to an argument about the wholesomeness of water.

I do not think that there is any noble Lord on any side of this House who does not agree that we require a certain level of wholesomeness of water in the near future. As the noble Lord said, up to a point it is a question of timing. The noble Lord, Lord McIntosh, suggested that in bringing forward his amendment he was in some way facilitating that process, benefitting the consumer, and also benefitting the investor who would then know what he was buying.

This is a seductive amendment because it is a wrecking amendment. If the amendment were carried and became part of the Bill, if there were to be disagreement between the Secretary of State and the European Commission and there was a public row about the contents of the so-called investment plan, at the least that would cause great delay. Incidentally, the term "investment plan" appears nowhere in the Bill. I assume that it refers to the prospectus, but I do not know because we have not been enlightened on that point. It could cause a to-ing and fro-ing both about the content—the new clause refers to the content—and the timescale, so there is delay and argument about the content.

What does that mean in effect and in practice? It means something quite different to what the noble Lords, Lord McIntosh and Lord Ezra, have argued. In effect, it means that we are asking the European Commission to decide the content of the prospectuses and, therefore, the date of the prospectuses and the price of the flotation. In other words, the amendment drives a coach and horses straight through the central core of the Bill. It takes away even from Parliament, let alone from the Secretary of State, the decision with regard—

Lord Ezra

My Lords, perhaps—

Lord Trafford

My Lords, I shall give way in a moment. It effectively takes away from the Secretary of State—that is not immediately apparent, but it is apparent if one reads carefully between the lines of the amendment—powers with regard to the price, date and timescale of water privatisation which, as my noble friend said, the House has in principle approved. The noble Lord, Lord Ezra, wished to intervene.

Lord Ezra

My Lords, I thank the noble Lord for permitting me to speak at this stage. I should merely like to say that that is certainly not what I was saying. I was saying that if we—as two Houses of Parliament—agree that we shall attain the objectives of the directive set out in the EC regulations, it is not unreasonable that, when the companies are floated, they should indicate how they are to achieve what Parliament has decided that they should achieve.

Lord Trafford

My Lords, I thank the noble Lord for those comments. I do not think that they contradict anything that I have said. I congratulated the noble Lord on the persuasiveness with which he spoke on the wholesomeness of water. I do not disagree with what he said. I am addressing the amendment. He addressed a general principle with which many might agree. He then jumped a huge intellectual step and said, "The amendment will achieve those objectives". I do not think so. That is the point of our difference. It is not with regard to the achievement of satisfactory water. I certainly do not disagree with him on that point.

I believe that, in his intervention, the noble Lord is again trying to suggest in some way that the amendment will achieve those objectives. My argument is that it will not achieve those objectives because first—I do wish to go over what I have said before—it will wreck the Bill. It is essentially a wrecking amendment. Secondly—I had not developed this point prior to the noble Lord's intervention—there are three secondary considerations. However, the most important is that the proposal drives a coach and horses through the Bill.

The Secretary of State is allowed to choose any number of parameters from the very many in the EC directives. That means that he can pick and choose whichever he likes. If the measure has to apply to the health of any person, it could in many respects make a nonsense of the situation. Perhaps I may give an example from personal experience. Many noble Lords will know that I work in the field of renal dialysis. One of the great dangers for people on renal dialysis is the high aluminium content in the blood. That is achieved because for various reasons substances which contain aluminium are given. That is in addition to the question of dialysis water and ordinary water feeding every machine. Those people are therefore peculiarly susceptible to the problem. To make the water fit for any healthy person, and particularly for those people in this group, one would need deionisers all over the country.

I know that that is not what the noble Lord was saying, but, if one puts things like that on the face of the Bill, that is what it could mean. That is how those who wish to wreck the undertaking could take advantage of the loopholes and drive a coach and horses through the Bill.

Surely the proposal would be an administrative nightmare. We cannot put forward the prospectus—I assume that that is what the investment plan means—until such time as tile European Commission has been consulted. I do not know how long that will take. I do not know what will happen if there is argy-bargy backwards and forwards between London and Brussels. I do not know what will happen if there is disagreement. I do not know how the flotation would be carried out if most or even part of the so-called investment plan were subject to disagreement.

However, despite what I call those secondary points—the administrative nightmare, people's health and innumerable other grounds from which one could pick and choose—I come back to the fundamental point that the House has already approved in principle the privatisation of water with the intention that the industry should be floated later this year. The new clause would wreck that proposal. It would wreck it in theory and in practice. Anyone who reads between the lines of the new clause will inevitably come to the conlcusion that it is a wrecking amendment. It is for that reason—not because of any disagreement about the quality of water—that I hope noble Lords will reject the amendment.

Lord Molloy

My Lords, I am of the opinion that the speech by the noble Lord, Lord Trafford, to which we have just listened, is one of the most exaggerated I have heard in 35 years of political life. To describe this as so dangerous a new clause that it will smash the privatisation of the water industry is a crass absurdity.

We are not now arguing about whether water should be privatised or not; it will be privatised. The new clause proposed by my noble friend suggests that in so far as water will now be privatised and, therefore, that British water will be in private hands—Italian and Japanese as well as British—the House is of the opinion that there should be certain directives to defend the position under privatisation. In my view, it is absurd that those people will henceforth control British water, despite the fact that it droppeth from the heavens above.

However, those people should not be able to say that they can do whatever they like because they own British water. A sensible Parliament would impose certain responsibilities and restrictions. I hope that the House will look at the matter in that light. The word "privatisation" does not tell us much; it does not tell us who will ultimately be the owners of British water. The British people would like some idea of what restrictions or responsibilities—responsibilities rather than restrictions—will be placed upon them. That is the idea behind the new clause.

When the noble Lord, Lord Boyd-Carpenter, speaks of the last minute of a debate in Parliament, I must ask: what is wrong with the last minute? Is there something superior about the first minute and all middle minutes so that, as the debate goes on, the responsibility of the last minute diminishes? That is equally absurd. On the basis of the absurdities that we have heard from the noble Lords, Lord Boyd-Carpenter and Lord Trafford, all that I ask in support of my noble friend's amendment is that we should agree to the new clause, not for any party-political reasons whatsoever—

Noble Lords


Lord Molloy

My Lords, I have already said that I am surprised that noble Lords opposite do not agree with me that it is almost certain that water will be privatised. Do they disagree with that? What a silence! Henceforth, do they not also agree that certain responsibilities should be placed on those who will ultimately own the water and that, at the same time, it might be prudent and sensible to co-operate with the EC with regard to safety in the supply of water? On those simple grounds, I believe that people have the right to see that Parliament places responsiblities on those who will own the water. Parliament must ensure that there is sensible co-operation with other countries. On that basis—it is a very simple request—I hope that the House will agree to support my noble friend Lord McIntosh.

4 p.m.

Lord Renton

My Lords, whether or not your Lordships agree with privatisation, I am sure that we all wish progress to be made as soon as possible when the Bill has reached the statute book. But my great fear with this amendment is that in fact it will delay matters very badly. Placing a responsibility on each of the the water undertakers in effect to obtain permission from the European Commission before its investment plan can be approved not only introduces a bureaucratic process which was not in the Bill before but is bound to lead to delays, as has been pointed out.

Quite apart from that, I must say that subsection (3) of this amendment introduces an extraordinary situation. It may not be fully realised but when it refers to parameters there are already 66 parameters—that is, detailed tests. They are contained in either EC Directive 80/778 or the other directives referred to in subsection (1). As my noble friend Lord Boyd-Carpenter pointed out, there is no end to the number of parameters that may be added in the future.

What then shall we do? We could find that each water undertaker, for perhaps several million consumers of drinking water, would be at risk of having the whole of its investment plan and the whole of its attempts to purify its water held up because one consumer complained that there was one parameter which fitted his case that had not been met. As my noble friend said, that would be an administrative nightmare.

I hope that those noble Lords who have been tempted and perhaps seduced by the terms of the amendment, which at first sight may look as though it has something to commend it, and have been tempted and perhaps seduced by the calm way in which the noble Lord, Lord McIntosh, introduced it at this late stage, will realise that to accept this amendment strangely and paradoxically enough would be to defeat its own purpose. It is a self-defeating amendment.

Lord Addington

My Lords, I originally supported the amendment which was rejected by the other place. I supported it on the grounds that it would improve the standards of drinking water and that a certain standard would be met by a certain date. The amendment was not about the privatisation of water; it concerned the health of people who happen to be drinking water and the surety and safeguards that they would have for their health.

This new series of amendments has the same aim. I appreciate, as the noble Lord, Lord Trafford, said, that every now and again there appears one person who might be affected by one particular substance in the water. I would go further and expand his remarks to say that there are numerous people who might be affected by any number of substances in foods. I have a terribly bad reaction to rye in my diet but I have no intention of suing or taking anyone to court because they happen to have grown rye or allowed it to enter my food in some disguised form.

The whole emphasis of this amendment is to make sure that people will have safeguards and that there is a set standard which will be met in their drinking water supply. The European standard is one that is readily available. Moreover we are a member of the European Community. I suggest that making sure that we have some kind of plan or way of knowing when that standard will be met would not be a wholly bad thing. We should know when we are going to do things. People should know when they have to meet targets.

That sort of guarantee surely will not be a drawback to privatisation. Ultimately, if people know that those standards will be met and there is some way of making sure that they are met, we shall not have to endure this kind of debate and procrastination about when investment should take place. I suggest that private companies may possibly be a little less responsible to the general public than governments have been. As has been brought out in debate after debate in this House, virtually every single government, even those way back before I was even born, have fallen down on their duty to invest in the water industry.

Baroness Blatch

My Lords, in my mind there is no doubt that this is at worst a wrecking amendment and at best it is certainly a delaying amendment, as my noble friend Lord Renton said. I believe that the noble Lord, Lord McIntosh, and his colleagues have done much to create a perception which distorts the real situation. Therefore I want to deal with some of the misinformation that has been propounded throughout the whole passage of the Bill through the House.

Indeed, there are 66 requirements of the EC directive. Of those, 19 concern aesthetic or naturally occurring substances, 24 concern substances which are undesirable in water in excessive amounts, four concern hardness or softness, 13 concern toxic substances and 6 concern bacteriological content. Most supplies in this country and in Wales comply with those requirements and the majority of non-compliance relates to colour or turbidity, which are not related to health. Indeed those requirements which are concerned with health are treated with the utmost urgency. Bacteriological and toxic requirements are probably the highest on people's list of concerns. Of those 19 requirements in that particular field, most of them are met. Indeed, in England and Wales we have always had the highest standards of bacteriological purity in water. There are only three areas—small suppliers which do not conform—and they are already being dealt with.

With reference to the toxic parameters, there are small pockets of non-compliance. For example, there are 100 people who receive water with small excess amounts of cadmium; that too is in hand and being dealt with.

The other area of concern is nitrates. All supplies currently meet medical requirements. Nevertheless some supplies, as we all know, are higher than the limits in the directive. These too are being tackled and most supplies should be up to standard by 1993; all supplies should be up to standard by 1995. So the health aspects of drinking water are well in hand.

Many of the other requirements—for example, the colour and turbidity to which I referred earlier—require wholesale replacement of pipes and apparatus. That cannot be done overnight and it is almost impossible immediately to say how long it will take. But it is also worth noting that in thousands of homes in this country there are still large quantities of lead piping. That too has to be dealt with. It is not of course under the control of either the water authorities or the water companies.

The water companies will be required on every single one of those 66 requirements to negotiate with the Secretary of State. They will have to draw up a contract and that contract will be very one-sided. It will be one-sided in the sense that the water companies will have to deliver to the standards required by the contract. They will have no powers to vary the contract. In fact the only variable power will lie with the Secretary of State, who will have the power to toughen the contracts. Therefore it seems to me that that work is also well in hand. As a last resort the companies too, if they continue not to comply with the standards, can lose their licences. That is a full backstop on the part of the Secretary of State.

Finally, there is the point about shareholders. It is my view that if the shareholders want a dividend, then pressure from them, from the community and from the Government to conform to the standards will be very real. Shareholders will not wish their companies to be constantly risking financial penalty.

I believe therefore that this amendment is not acceptable. The highest priority must be given to programmes for maintaining safe water. Programmes to improve taste and colour and the other aspects which do not affect health will take longer. Programmes are in hand and are being negotiated. It is worth repeating that most of our water supplies meet all the EC requirements. The deficiencies that exist affect only some supplies, and most of these concern appearance and taste.

The noble Lord, Lord McIntosh, and his Labour colleagues, as I said earlier, have been responsible for scaremongering on this issue. They have put about this information and they have been quite successful. They ought to congratulate themselves on the fact that they have convinced the public at this time that our water is undrinkable. I support a sustained programme for improving our drinking water.

Lord McIntosh of Haringey

My Lords, I have been accused in person of scaremongering in this House. Is that in accordance with Standing Order No. 29, which relates to asperity of speech?

Baroness Blatch

My Lords, as a relatively new girl I am not sure of the rules of the House. If it is not in accordance with the rules of the House, I apologise. I am saying that there has been large scale scaremongering and misinformation on this issue. Drinking water in this country is drinkable and is safe. I drink it and I have survived. There are many noble Lords a great deal older than me who have drunk our drinking water and they still survive. We should get the whole issue into context.

I support the sustained programme of improvement to meet all these standards. I believe that the systems are already in place to ensure that the companies will be required to achieve compliance in the shortest possible practical time. I shall oppose the amendment and support the Government.

4.15 p.m.

The Earl of Caithness

My Lords, of the 350 or so amendments that your Lordships made to the Bill, the other place have disagreed with only six covering just two groups. I am sure that your Lordships will agree that that is a clear indication of the value of our work as a revising Chamber, and of the many important modifications that your Lordships have made which will pass into legislation.

However, I indicated at Third Reading that we could well return to this group of amendments when they had been considered in the other place. I know the importance that your Lordships attach not only to meeting Community directives but also to improving the quality of our drinking water supplies. Let there be no doubt that the Government share that concern. I welcome the fact that in Amendment No. 4A the noble Lord, Lord McIntosh of Haringey, now also concedes that Amendments Nos. 1 to 3 would not have been the right way to achieve those improvements. Since there seems likely to be an agreement about the case for not insisting on Amendments Nos. 1 to 3, I shall say no more about them unless your Lordships would like me to do so, except for one point.

The amendments specify a date for compliance with the Community drinking water directive requirements which is later than that set in the directive. The amendments would therefore conflict with Community law. The legal duty must be to comply now, and that is what the Bill will provide once these amendments are removed.

The noble Lord, Lord McIntosh of Haringey, has shifted his ground and indeed his argument, and is concerned with the progress of our improvement programme. Your Lordships will be glad to hear that we are well advanced in our consideration of the programmes, and I can say that in all important areas we shall be able to comply well before 1993 in England and Wales. For example, the lead programme related to the directive is virtually complete now and the very few remaining areas should be dealt with in the next few months. The same can be said for any remaining microbiological problems at treatment works.

For nitrate there are only about 30 suppliers in the whole country still regularly exceeding the standard and most will comply in the next two or three years. The few remaining areas will require the installation of special denitrification equipment, and we need to be sure that this equipment is quite safe before bringing it into general use. I know that your Lordships would be the first to condemn us, and rightly so, if we did not go to those lengths to check the equipment.

For aluminium regularly exceeding the standard due to aluminium treatment, compliance should also be achieved within two or three years. Other supplies where improvements are needed relate to standards which have nothing to do with health, such as colour and iron, or which are purely precautionary, such as the pesticide standard. In most cases these standards are breached only at irregular intervals. We are still considering the timescale of these programmes.

I felt that the noble Lord, Lord McIntosh of Haringey, was keen to have another go at Britain as though we were the only country having difficulties in meeting Community directives. Let me remind the House that all member states are having difficulty in implementing the very strict standards in the drinking water directive. The Commission has started legal proceedings against all other member states except Portugal, which does not have to implement the directive until next year. France, Germany, Denmark, Italy and Belgium all have substantial problems with the nitrate standard. Germany and Italy are being proceeded against for not applying the pesticide standard properly. France, Belgium, Germany and Ireland are all alleged not to have fully incorporated the directive into national law. It would be interesting to see what would happen if the Commission had as much information about water supplies in other member states as we have provided in this country.

The noble Lord, Lord McIntosh, referred to two factors in particular; cadmium and HCH. The particular case referred to concerns technical legal aspects of the means of implementation of these directives. There is no allegation—I repeat, no allegation—that Britain is failing to control pollution by these substances. Indeed, we are as assiduous as any other member state in implementing the directives in practice and a good deal more assiduous than most. We undertook some time ago to give formal legal effect to the directives and relevant provisions have been included in Part III of the Water Bill. Regulations will be brought forward shortly so any action now by the Commission would, I submit to your Lordships, be quite redundant.

It was a pity that the noble Lord, Lord Molloy, did not take part in our earlier proceedings. He would have realised that we are not privatising water; we are privatising the water industry. I know that the noble Lord, Lord Ezra, would be happy to tell him of the advantages to the French of having an industry not in the public sector.

I have listened carefully to what has been said by all your Lordships and, despite the honeyed words of the noble Lord, Lord McIntosh of Haringey, I would say that there are difficulties with this amendment. I agree with my noble friend Lord Renton, in saying that we do not think it would be right for the Secretary of State to pick and choose among the 66 parameters in the community directives. As I have said, we are committed to a programme of compliance with all parameters as soon as possible, taking into account all the practicalities. I do not know how the Commission would take—but I would suggest to your Lordships not very kindly—to regulations that restricted investment plans to particular parameters.

The wording refers to substances which carry a significant risk of danger to the health of any person. That would mean going much further than the EC directive in respect of substances such as aluminium to cater for the needs of the very few who need water with no aluminium for kidney dialysis machines or water with no nitrates where some young babies require that in a few cases.

As my noble friend Lord Trafford said, with his great experience, it is more cost effective to provide special treatment and special supplies in those circumstances, and the cost of what the noble Lord, Lord McIntosh, is proposing is, I would submit to your Lordships, quite disproportionate to the benefits that can be achieved in other ways.

The noble Lord, Lord Addington, raised the difficulty he has with rye in his diet. However, the fact is that the noble Lord can avoid rye in his diet. But I would ask him to think this amendment through. This amendment would require all water supplies to be brought up to the highest standards for any person. Thus, to continue the analogy for the noble Lord, it would mean that because the noble Lord needed to avoid rye in his diet, rye should be excluded from all food sources. That is the effect of what we are considering.

As has been mentioned by my noble friend Lord Boyd-Carpenter, another effect of the amendment is to place responsibility for deciding the timing of privatisation on the European Commission. We cannot determine how long the Commission will take to consider the programmes and respond. Our experience on such matters is not good. It has taken four years to consider the much smaller drinking water programme that we put to them in 1985. I should not like to speculate on how long it will take to consider the proposed compliance programmes but we shall be sending them to the Commission shortly.

From my own experience, I was promised from the Commission in March last year that information would be given within six months; that is, by September last year. I took the opportunity to remind the Commission at the last meeting of the Council of Ministers that we were still waiting for that information.

A further reason for not supporting the new clause is the fact that the provisions already in the Bill adequately cover the subject. Programmes which are currently being discussed with the undertakers will lead to undertakings under Clause 20(5)(b) being submitted during September. Assuming that these are acceptable to the Secretary of State, he will serve a notice on the company saying that he is so satisfied. Under Clause 20(6)(b) he must publish a copy of the notice to bring it to the attention of all those affected by it. He must also serve a copy of the notice and of each undertaking on the director general, who is required to enter the undertakings in the public register. This register will be set up in September.

When we publish notices under Clause 20(6)(b) in September, I can assure your Lordships that information on all programmes will be made available. The nature and time scale of these programmes will be plain to everyone. It therefore surprised me that the noble Lord, Lord Ezra, did not seem to be aware that the prospectus is to be published later in the year and will also contain statements on the extent of the investment programmes, including those to comply with the drinking water directive. I put it to the noble Lord that his genuine concerns are already met by the conditions under the Bill.

I too read through this amendment, as my noble friends have done, and its clear to me that the main reason for it is to delay flotation. That is something that I hope your Lordships will not support.

Lord McIntosh of Haringey

My Lords, I am grateful to noble Lords who have taken part in this short debate. I am particularly grateful to noble Lords opposite, all of whose contributions have been remarkably helpful to my case. The noble Lord, Lord Boyd-Carpenter, whom I am delighted to see intervening on the Bill—I am sorry that we have not had the pleasure of his interventions before—criticised my reference to the Brussels meeting which he correctly described as a non-meeting. I mentioned the Brussels meeting because the Secretary of State prayed that non-meeting in aid when he persuaded Members in another place that our amendments were not acceptable. If he had not raised the matter, it would have been inappropriate for me to do so, but I question whether there was not, as I said earlier, a risk of another place being misled into thinking that the European Commission was satisfied with the British Government's programme of compliance when that is most certainly not the case.

The noble Lord, Lord Boyd-Carpenter, referred to the investment plan as a discouragement to investors. He was adequately answered by the Minister, who said that the prospectus itself will include statements on investment programmes and on compliance programmes. How can it be a discouragement to investors? The very least that investors must have is a statement of how, in what way, at what expense and in what timescale there will be compliance with the European Community directives. It is not in the interests of investors to run the risk of incurring financial penalties from the European Commission because there is non-compliance with drinking water standards.

Lord Boyd-Carpenter

My Lords, the noble Lord asked me a question and perhaps I can answer it. The great discouragement to investors would be this proposal, with its slow and cumbrous demand for an investment plan, totally different from what would be in the ordinary sensible prospectus either in the private or the public sector. The noble Lord knows that perfectly well.

Lord McIntosh of Haringey

My Lords, the noble Lord is making a distinction without a difference between a plan and a programme, and one which in a prospectus certainly has to be costed and has to include a timescale; otherwise it would be in breach of companies legislation.

The final point made by the noble Lord, Lord Boyd-Carpenter, was even more helpful. He criticised the decline in drinking water standards, as he said, since water was nationalised. It was his Government in 1973 and 1983 who took control of our public sector water from the local authorities and centralised it. If he calls that "nationalising", I am delighted to see his death-bed conversion to the principle which a Conservative Government overturned of local authority control of the water supply.

The noble Lord, Lord Trafford, was even more helpful. He claimed that our amendment required that we should be specifying on the face of the Bill a price, a date and a timescale. We say no such thing. As the Minister has made very clear, we have said that there should be an investment plan but that it should be confirmed by discussion and consultation with the European Commission and that it should cover only those parameters of European Commission directives which are concerned with health and where there is, in the opinion of the Secretary of State—that is the important thing to remember—a significant risk of danger to the health of any person. That does not mean every person. It does not mean that all water supplied to everybody has to be aluminium or nitrate free, and the Minister knows that as well as the noble Lord, Lord Trafford. But the requirement that the health of the general British public should be protected in accordance with European directives is not a very radical demand. It is not one which the Government might resist in any normal circumstances. They are resisting it at the moment only because they are determined to press ahead with water privatisation at any cost. The cost is to the consumers of water, to the health of the consumers of water and to the information to be provided to investors.

The noble Lord, Lord Renton, seemed to think that the amendment would mean that privatisation would be held up if one consumer complained about one parameter. The amendment does not say that and it cannot be interpreted to mean that. The Minister again has answered that point by saying what will be in the prospectus. The noble Baroness, Lady Blatch, when she was not descending to vulgar abuse, made the great mistake of referring specifically to cadmium. It is exactly cadmium that I referred to when I said that the British Government are not complying with European directives, have not complied with reasoned opinion and are now forcing the European Commission to go to the High Court.

The Minister had the nerve—I congratulate him on it—to repeat the claim that no deadline can be put on the improvement of our drinking water because the law states that we have to comply now. Those are his words. He went on then to say that the Bill states that we shall have to comply now. But we are not going to comply now. Everybody knows that. We shall not be complying now, by 1993 or probably even by 1995. What the Minister is saying is that the law is an ass. We are enacting a Bill which states something that the Government have no intention of complying with. That is what the Bill states and that is what will happen.

The noble Earl seems to think that by doing this we are saying that only Britain has problems with its drinking water quality. No such thing. I have referred to no other country in moving the amendment or at any other stage of the Bill. But it is Britain that we legislate for. That is why our responsibility is to protect the consumers of this country and to ensure that there is a realistic timetable for safeguarding their health by improving drinking water quality and protecting the investors by ensuring that there is a proper plan for putting things right, complying with the law and enabling the new privatised water companies to start off on a basis which is fair to the investors, fair to their shareholders and above all fair to the British public.

4.28 p.m.

On Question, That this House do not insist on their Amendments Nos. 1 to 3 to which the Commons have disagreed and do agree to the amendment in lieu thereof?

Their Lordships divided: Contents, 114; Not-Contents, 168.

Addington, L. Leatherland, L.
Airedale, L. Leicester, Bp.
Alport, L. Listowel, E.
Amherst, E. Llewelyn-Davies of Hastoe, B.
Ampthill, L.
Ardwick, L. Lloyd of Kilgerran, L.
Attlee, E. Lockwood, B.
Aylestone, L. Longford, E.
Banks, L. Lovell-Davis, L.
Beaumont of Whitley, L. McGregor of Durris, L.
Birk, B. McIntosh of Haringey, L.
Blease, L. McNair, L.
Bonham-Carter, L. Mais, L.
Boston of Faversham, L. Mayhew, L.
Bottomley, L. Milner of Leeds, L.
Briginshaw, L. Mishcon, L.
Broadbridge, L. Molloy, L.
Bruce of Donington, L. Monson, L.
Burton of Coventry, B. Mountevans, L.
Callaghan of Cardiff, L. Murray of Epping Forest, L.
Campbell of Eskan, L. Nathan, L.
Carmichael of Kelvingrove, L. Nicol, B.
Northfield, L.
Carter, L. Ogmore, L.
Cledwyn of Penrhos, L. Peston, L.
Cocks of Hartcliffe, L. Phillips, B.
David, B. Pitt of Hampstead, L.
Dean of Beswick, L. Ponsonby of Shulbrede, L. [Teller.]
Denington, B.
Donaldson of Kingsbridge, L. Rathcreedan, L.
Dormand of Easington, L. Rea, L.
Elwyn-Jones, L. Ritchie of Dundee, L.
Ennals, L. Rochester, L.
Ewart-Biggs, B. Russell, E.
Ezra, L. Sainsbury, L.
Falkland, V. Scanlon, L.
Fisher of Rednal, B. Seear, B.
Flowers, L. Sefton of Garston, L.
Foot, L. Serota, B.
Gallacher, L. Shackleton, L.
Galpern, L. Shepherd, L.
Gladwyn, L. Somers, L.
Graham of Edmonton, L. Soper, L.
Grimond, L. Stallard, L.
Hampton, L. Stedman, B.
Hanworth, V. Stoddart of Swindon, L.
Harris of Greenwich, L. Strabolgi, L.
Hatch of Lusby, L. Tordoff, L. [Teller.]
Henderson of Brompton, L. Turner of Camden, B.
Henniker, L. Wallace of Coslany, L.
Houghton of Sowerby, L. White, B.
Howie of Troon, L. Wigoder, L.
Ilchester, E. Williams of Elvel, L.
Jay, L. Willis, L.
Jeger, B. Winchilsea and Nottingham, E.
Jenkins of Putney, L.
John-Mackie, L. Winstanley, L.
Kearton, L. Winterbottom, L.
Kilmarnock, L. Young of Dartington, L.
Abercorn, D. Jenkin of Roding, L.
Abinger, L. Johnston of Rockport, L.
Airey of Abingdon, B. Joseph, L.
Alexander of Tunis, E. Kaberry of Adel, L.
Allenby of Megiddo, V. Kenilworth, L.
Annaly, L. Killearn, L.
Arran, E. Kinnaird, L.
Astor, V. Kitchener, E.
Barber, L. Knights, L.
Bauer, L. Lawrence, L.
Belhaven and Stenton, L. Layton, L.
Beloff, L. Lloyd of Hampstead, L.
Belstead, L. Lytton, E.
Bethell, L. McAlpine of Moffat, L.
Biddulph, L. Mackay of Clashfern, L.
Birdwood, L. Macleod of Borve, B.
Blake, L. Mancroft, L.
Blatch, B. Manton, L.
Blyth, L. Margadale, L.
Borthwick, L. Marley, L.
Boyd-Carpenter, L. Merrivale, L.
Brabazon of Tara, L. Mersey, V.
Brougham and Vaux, L. Monk Bretton, L.
Bruce-Gardyne, L. Monteagle of Brandon, L.
Caithness, E. Montgomery of Alamein, V.
Camden, M. Mottistone, L.
Campbell of Alloway, L. Mountgarret, V.
Carnock, L. Moyne, L.
Chelmer, L. Munster, E.
Chester, Bp. Murton of Lindisfarne, L.
Cockfield, L. Nelson, E.
Coleraine, L. Nelson of Stafford, L.
Colnbrook, L. Norrie, L.
Colwyn, L. Nugent of Guildford, L.
Cork and Orrery, E. O'Brien of Lothbury, L.
Cottesloe, L. Oppenheim-Barnes, B.
Crickhowell, L. Orkney, E.
Cullen of Ashbourne, L. Orr-Ewing, L.
Dacre of Glanton, L. Oxfuird, V.
Daventry, V. Pender, L.
Davidson, V. [Teller.] Peyton of Yeovil, L.
De Freyne, L. Platt of Writtle, B.
Denham, L. [Teller.] Plummer of St. Marylebone, L.
Dilhorne, V.
Dundee, E. Porritt, L.
Eden of Winton, L. Quinton, L.
Ellenborough, L. Radnor, E.
Elles, B. Rankeillour, L.
Elliott of Morpeth, L. Reay, L.
Elton, L. Reigate, L.
Erroll of Hale, L. Reilly, L.
Fanshawe of Richmond, L. Renton, L.
Ferrers, E. Renwick, L.
Fisher, L. Rodney, L.
Fraser of Carmyllie, L. Romney, E.
Fraser of Kilmorack, L. Sackville, L.
Gainford, L. St. John of Fawsley, L.
Gardner of Parkes, B. Sanderson of Bowden, L.
Glenarthur, L. Sandys, L.
Grantchester, L. Seebohm, L.
Gray of Contin, L. Sempill, Ly.
Greenway, L. Sharples, B.
Gridley, L. Shaughnessy, L.
Grimthorpe, L. Shrewsbury, E.
Hailsham of Saint Marylebone, L. Skelmersdale, L.
Slim, V.
Halsbury, E. Stevens of Ludgate, L.
Hanson, L. Stockton, E.
Hardinge of Penshurst, L. Strathclyde, L.
Harvington, L. Strathmore and Kinghorne, E.
Havers, L.
Hemphill, L. Strathspey, L.
Henley, L. Suffield, L.
Hesketh, L. Swinton, E.
Hives, L. Terrington, L.
Home of the Hirsel, L. Thomas of Gwydir, L.
Hood, V. Thomas of Swynnerton, L.
Hooper, B. Trafford, L.
Hylton-Foster, B. Trefgarne, L.
Ironside, L. Trenchard, V.
Trumpington, B. Wolfson, L.
Ullswater, V. Wyatt of Weeford, L.
Vaux of Harrowden, L. Wynford, L.
Waldegrave, E. Yarborough, E.
Watkinson, V. Young of Graffham, L.
Wise, L.

Resolved in the negative, and Motion disagreed to accordingly.

4.37 p.m.

The Earl of Caithness

My Lords, I beg to move that the House do not insist on their Amendents Nos. 1 to 3 to which the Commons have disagreed for the Reason numbered 4.

Moved, That the House do not insist on their Amendments Nos. 1 to 3, to which the Commons have disagreed, for the Reason numbered 4.

On Question, Motion agreed to.