Water Bill

HL Deb 06 June 1989 vol 508 cc755-92

4.58 p.m.

Consideration of amendments on Report resumed on Clause 1.

Lord Graham of Edmonton moved Amendment No. 3:

Page 2, line 15, at end insert ("and shall include persons representative of—

1. (i) conservation and environmental organisations;
2. (ii) recreational and sports organisations;
3. (iii) consumers; and
4. (iv) local authorities").

The noble Lord said: My Lords, perhaps I may help the House by making a brief reference to page 2. Clause 1 sets out the composition and some of the functions of the National Rivers Authority. The House is well aware that the National Rivers Authority is crucial and important. We are inviting the Minister to say something helpful about how important it is. Subsection (2) states: The Authority shall consist of not less than eight nor more than fifteen members of whom—

1. (a) two shall be appointed by the Minister; and
2. (b) the others shall be appointed by the Secretary of State".

We understand the significance of that.

This amendment returns to the issues which were raised on Amendments Nos. 5 and 7 at the Committee stage. At that stage the Opposition moved an amendment to establish a different representational structure for the National Rivers Authority. I remind the House that at that stage two objections were raised to the amendment. The first was that it would enable direct appointments to be made to the NRA, and that would slightly enlarge the size of the NRA from a maximum of 15 to a maximum of 18 persons. The noble Lord, Lord Renton, who is very assiduous in these matters said on 2nd May at col. 70 of the Official Report that it would be a possible alternative structure for appointees, but he voiced doubts about a body to which representatives were appointed directly by other organisations.

The amendment seeks to meet the detailed objections that were raised. We want to include persons representative of conservation and environmental organisations, recreational and sports organisations, consumers and local authorities. All those appointments would be made by the Secretary of State. We ask that he will be required to include persons representative of such groups; that is, suggested to him by or appointed by him from among the conservation groups, recreational and sports organisations, consumers and local authorities.

The purpose of the amendment is to seek a statement from the Government that they intend to have a proper range of persons on the National Rivers Authority board. The Government may point out that it is their intention to appoint from environmental interests and recreational groups anyway. But the Minister and his advisers will have noted from what has been said so far that it is not clear that there is an intention that the voice of the consumer and local authorities be heard on the board of the National Rivers Authority.

I am sure that the Minister will be pleased that we are mindful of the helpful attitude that the Government have displayed over representation on the regional rivers, fisheries and flood defence committees and that they have some independent standing within the NRA. The joint membership of such bodies will be incompatible with such a role. I hope that the Government will go further than they have to date in confirming their intention to ensure that the NRA reflects the main areas of interest and concern, even if the persons appointed to it are not direct representatives of any constituent interest. I am well aware that the Minister is likely to jib at what he might say would be reserved places on a body of this kind in the gift and the fiefdom of the interests that we have listed.

We want the Minister to tell us that there is a clear intention that the bodies, the groups or the areas of interest that we have specified are among those that he intends to see represented on the NRA. I beg to move.

The Earl of Balfour

My Lords, I am concerned about this amendment. I feel that the National Rivers Authority's fundamental principle is to deal with water quality objectives and control of pollution. The conservation and environmental organisations and the recreational and sports facilities are surely already fully covered under Clause 8. I do not believe that we should unduly strengthen the powers of that important Clause 8 in dealing with the environmental and recreational duties. Equally I must query the expression "consumers". Consumers of what? Except in Chapter IV of Part III under Clause 140, which deals with salmon and freshwater fisheries, I do not think that the National Rivers Authority has anything to do with consumers in that sense of the word. Consumers of water are dealt with by the water undertakers. The local authorities are already very much involved in everyday matters, but I believe that this important body, the National Rivers Authority, must have people on it who are experienced in water quality and control of pollution more than anything else. It will be only a small body. That is why I cannot support the amendment.

Lord Addington

My Lords, I should like to support the amendment for the simple reason that the four groups mentioned on the Marshalled List are directly concerned in what the NRA is doing: that is, ensuring water quality. The conservation and environmental organisations surely should have at least a representative on this body. I hope that there will be more than one. The recreation and sports organisations have a direct role to play. I suggest that in a Bill dealing with the privatisation of water some provision should be made for the consumers of water to have some form of representation either from a consumer body or from some other body.

The local authorities will be involved in every single aspect of providing a water authority for the people by whom they are elected. I suggest too that they deserve to be represented. I give my support to the amendment.

The Earl of Caithness

My Lords, we have made it clear on a number of previous occasions that our intention will be to appoint to the NRA board members with knowledge relevant to the functions of the NRA. Last week, my right honourable friend the Secretary of State announced the names of 12 people who will in due course be appointed to the NRA board under the chairmanship of my noble friend Lord Crickhowell. I am sure that your Lordships will accept that we have in these people brought together a team with a wide variety of experience who will be able to speak authoritatively on the important issues with which the NRA will be concerned.

However, this amendment would impose a statutory requirement on the Secretary of State to appoint members representing specific interests. Such a requirement would lead to members feeling mandated to represent a particular interest which is something we feel strongly should be avoided.

For that reason I disagree with what the noble Lord, Lord Addington, has said. Your Lordships will be aware that our aim is to have an NRA board where all members take a broader interest than any specific expertise or background that may have led to their appointment. I am confident, and I am sure your Lordships will join me in sharing this confidence, that the people we have now selected will successfully carry forward the NRA's tasks in the months ahead.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for indicating that the 12 members of the board have been named. Unfortunately I have missed the appointments. Can the noble Earl tell us whether there are 12 men or a mixture of men and women? I do not doubt their integrity or their ability to do the job for which they have been appointed, but it would be helpful to me later to study their backgrounds. Clearly there will be a biographical line or two about all of them.

There is a fundamental difference here. The Minister fell into what I would call a trap. We are not asking that these people will represent, but that they will be representative of. There is a distinction. I can understand why the Minister jibbed on a previous occasion when it was suggested that these people should represent the views of their respective bodies. That is why we have changed this slightly to give more flexibility. I listened carefully to what the noble Earl, Lord Balfour, said. There is a clear difference of philosophy between what he said and what we are suggesting. He was man enough to say that he disagreed with our approach completely. In his view the only qualification there should be is that the board should be capable of managing water control and that they should know something about water and its qualities.

I imagine that there is not a person in the land who could not claim to know something about water and its qualities. It is a question of degree and giving confidence to the people of the land. I am certain that the Minister and his colleagues will be satisfied that the newly appointed embryo members of the National Rivers Authority will be competent businessmen and businesswomen who will all have a background of some kind. Collectively they may be capable of saying that they represent the views of these people. But I do not think it is helpful to consumers to say that someone who is seen to be specially interested and experienced in one subject can represent the views of consumers in general. The noble Baroness, Lady Oppenheim-Barnes, has spoken with great authority because she is the chairman of the Consumers' Council. In their wisdom, this and previous governments have believed that the voice of the "consumer" should be heard in the land. To dismiss local authorities as having a special role to play by not giving them a voice and by saying that they have much on their plate shows a difference in attitudes.

Can the Minister say a little more about the appointees? It would be helpful to me before I conclude my suggestions.

The Earl of Caithness

My Lords, with the leave of the House, the noble Lord will find a copy of the press release in the Library. The Secretary of State has said that the following people will be appointed. Dr. John Bowman, who is secretary to the Natural Environment Research Council. Peter Brandt, who was a merchant banker. Peter Coverdale, who has enormous experience of land drainage work. Lady Digby, who has been a valuable member of the Wessex Water Authority. Professor Ronald Edwards, who is professor of applied biology at the University of Wales Institute of Science and Technology and a member of the Welsh Water Authority. Sir Hugh Fish, who has been chairman of the Natural Environment Research Council since 1985. David Kinnersley, who is a former chief executive of North West Water Authority and from 1970 to 1973 was director of the Association of Rivers Authorities. The noble Lord, Lord Mason, Lord Graham may have met on previous occasions. He is well known in your Lordships' House. He is a particularly good sportsman and was a well-known Labour Party spokesman on agriculture, fisheries and food. Dennis Mitchell, who is chairman of the Regional Fisheries Advisory Committee and Environmental Panel for the South West Water Authority. Mrs. Karen Morgan, who is managing director of Marine Logic. John Norris, who is also well experienced in flood defence and land drainage in the Anglian Water Authority since 1971. John Wheatley was director of the Central Sports Council from 1983 to 1988.

Noble Lords will see a wide range of interests covering all the functions of the NRA. I am sure that we shall have every confidence in those people to take forward the valuable work of the NRA.

Lord Graham of Edmonton

My Lords, I listened carefully and tried to pick holes in what the Minister said. But when he came to the name of "Fish" representing water interests I gave up. Obviously, Sir Hugh Fish has a great contribution to make.

The Minister has been helpful. I am sure that the interests which I sought to be represented on the committee will, on close analysis, be seen to be fairly faithfully represented by those men and women. I am glad that the appointees are men and women. I also detected a good geographical spread of representatives around the country. It is important that outside the basic opposition or support for the privatisation of water people have confidence that such powerful committees are guided by men and women capable of drawing on their experience. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Lord Graham of Edmonton moved Amendment No. 4:

After Clause 1, insert the following new clause: ("Regional Divisions of Authority .—(1) it shall be the duty of the Authority—

1. (a) to establish and maintain regional divisions of the Authority for the different regions of England and Wales;
2. (b) to consult the regional division for any region as to any proposals of the Authority relating generally to the manner in which the Authority's functions in that division are to be carried out;
3. (c) to consider any representations made to it by the division for any region (whether in response to consultation under paragraph (b) above or otherwise) as to the manner in which the Authority's functions are carried out in that region; and
4. (d) subject to the overall policy and financial control of the Authority to delegate to the division its functions as they relate to that region.

(2) The duty to establish and maintain regional divisions imposed by subsection (1) above is a duty—

1. (a) to establish and maintain a regional division consisting of not less than six nor more than ten members for each area which the authority considers it appropriate for the time being to regard as a region of England and Wales for the purposes of this section; and
2. (b) to ensure that the persons appointed to each such division include persons—
1. (i) representative of local authorities situated in whole or part within each said region; and
2. (ii) who appear to the Authority to have an interest in matters likely to be affected by the manner in which the Authority's functions are carried out in the region in question and are persons who have experience of and have shown capacity in some matter relevant to the functions of the Authority.
3. (c) to ensure that the persons appointed in accordance with paragraph (b) above are not members of the Authority.").

The noble Lord said: My Lords, this new clause seeks to redefine the concept of the regional divisions of the authority. The amendment returns to the issues which were raised in Amendment No. 41 tabled in Committee. In the light of a document produced by Ministers at the last moment, my noble friend Lord McIntosh declined to move it at that stage. It was from the NRA advisory committee covering a number of its functions. The amendment is not identical to Amendment No. 41 but sets out a less-ambitious structure for local representation.

Its purpose will be apparent. The Government have argued that the NRA will be a relatively decentralised body operating through divisions corresponding with the existing water authority regions. It has established a structure of advisory committees to correspond with these regions. They will work with the NRA and provide it with valuable advice from outside interests as to the carrying out of its functions.

In Committee the Government have made clear that the structure of regional river advisory committees will include representatives of local authorities; agricultural, forestry and land-owner interests; conservation and landscape interests; industry and commerce; the national parks authorities and other public bodies. There is some hope that the regional committees will be bodies with a proper and balanced view of the business before them. Nevertheless, they will be advisory.

The amendment seeks to complete the jig-saw puzzle by setting out clearly a possible structure for the regional divisions of the authority to which the Government have referred. It will require the authority to delegate its powers and duties to the regional level rather than the uncertainty of the clearly administrative arrangements which are apparently proposed and which will have no place in the Bill. Furthermore, each regional division will have its own board of members to oversee its operations.

Members of the main NRA should be persons with experience relevant to the functions of the divisions. The new clause calls for at least one person to be appointed to the division which will have six to 10 members to represent local authority interests. However, all appointments will be made by the authority. The only constraints on membership of a division will be the one now recognised by the Government; that none of its members should also be members of the main NRA.

In my view, this is an opportunity for the Government to put flesh on the bones of a brief statement about the likely profile of the NRA. A body with a local board with which people can identify and feel a closer connection is more likely to be successful and popular than a remote body based in one place. The national body will be free to pursue overall strategic objectives and to allocate resources and priorities between the regions. Each region will develop a close and detailed knowledge of rivers, coastal areas and other waterways in its area. There will also be a closer monitoring relationship with industry and the relevant water plcs. The infusion of an appointed board to oversee the work of the division will prevent it from becoming too narrowly specialised in its management and outlook.

It was over 100 years ago that the great constitutional writer, Walter Bagehot, pointed to the advantages of an outsider in a bureaucracy, such as a Minister or other appointee, who could take a slightly detached and sceptical view of the expert considerations of the senior officers, see their needs with greater clarity and apply common sense and a little urgency to its activities. At page 199 of The English Constitution he wrote: The intrusion from without upon an office of an exterior head of the office, is not an evil, but that, on the contrary, it is essential to the perfection of that office. If it is left to itself, the office will become technical, self-absorbed, self-multiplying. It would be likely to overlook the end in the means; it will fail from narrowness of mind; it will be eager in seeming to do; it will be idle in real doing. An extrinsic chief is the fit correcter of such errors".

The amendment seeks to carry into effect much of the philosophy behind that quotation. I beg to move.

Lord Renton

My Lords, yes; but I wonder what Bagehot would have said if he were asked to contemplate the duality which this amendment would create because Clause 2 of the Bill which is not to be repealed—and the noble Lord obviously intends from what he said that it should be left on the statute book—establishes advisory committees in different regions.

Then we have the amendment which as well as having advisory committees is to establish regional divisions of the authority itself. I am not at all sure how that would work. You would have board members of the regions appointed for the regions who are presumably to be members of the board at the centre as well. They would have to sit with the advisory committees which are established under Clause 2. It seems to me that there would undoubtedly be overlapping and there would be doubts as to the respective authority of regional board members and members of the advisory committees. They would have to separate their functions somehow or combine them somehow.

I should have thought it was much better—and this is a centralised situation and the noble Lord, Lord Graham, was using Bagehot to try to justify that—to keep the centralised authority under the statute of the National Rivers Authority; but in exercising their centralised authority, let them be advised by committees of local people at the regional level who could then enable the NRA to carry out its responsibilities in the light of that advice.

Having spoken in a general way in an attempt to answer the interesting speech made by the noble Lord, Lord Graham of Edmonton, perhaps I may point out that it is really rather interesting to compare the new clause which he has set out with Clause 2 of the Bill. Subsection (1) of the new clause starts: It shall be the duty of the Authority and then goes on in the case of the Bill to say: to establish and maintain advisory committees whereas in the new clause it states: to establish and maintain regional divisions". Three paragraphs of the new clause are exactly the same as are in the Bill. However, paragraph (1)(d) is added in the new clause which states: subject to the overall policy and financial control of the Authority to delegate to the division its functions as they relate to that region and the Bill does not have that.

I grant your Lordships that in the Tory Party I believe we tend to be non-centralisers. However, here for the first time we have a National Rivers Authority. As I understand it, it would be contradictory to its real purpose, which is to have a policy which is common to all the rivers of this country, subject to advice from local committees, and ensuring that the standards that are maintained throughout the rivers system of this country are consistent. Surely it is best to have that responsibility by statute centralised but carried out in each region in the light of advice from the advisory committees.

We go on to subsection (2) of the Bill and subsection (2) of the clause. Again, it starts off with a similarity subject to the change from regional division to advisory committee and it goes on to say in the case of the Bill that the people appointed are those: who appear to the authority to have an interest in matters likely to be affected by the manner in which the Authority carries out any of its functions in the region in question; and (ii) consist wholly or mainly of persons who are not members of the Authority". That seems sensible. However, here we find that the regional divisions are to be representative of local authorities which have very limited responsibilities regarding rivers under the Bill and which appear to the authority also to have that interest which I have described so far so similar.

However, when we come to paragraph (c), we again find that the persons appointed in accordance with paragraph (b) are not members of the authority. The regional people who are to be established under the amendment will not have the advantage of holding responsibility at the centre where the statutory responsibility is to lie. I am sorry that this matter is rather complicated, but I am trying to make it clear.

As to subsections (3) and (4) of Clause 2 of the Bill, there is no arrangement in the new clause; but that is rather important because in subsection (3) we find the arrangements to be made for paying the chairman and other members of the advisory committee whereas there is no arrangement put forward in the clause for paying the members of the regional divisions who are not to be members of the board. So that would seem to be a gap in what the noble Lord has proposed. These days we cannot expect suitable people to do that sort of important work for nothing.

I do not believe that I need refer to subsection (4) because that refers to Scotland. The Bill states: carried out in any area of Scotland or of the territorial sea which is adjacent to any region". Those are the functions of the authority referred to. I am sorry that this is rather laborious, but the argument I am trying to put forward is this; namely, that if this amendment were to be accepted, it would alter completely the scheme which has been put forward in the Bill for us to have a National Rivers Authority for the first time with its responsibility at the centre but obtaining advice from local people as should be the case. I should not have expected my noble friend to accept this amendment.

5.30 p.m.

The Earl of Caithness

My Lords, I am grateful to the noble Lord, Lord Graham of Edmonton, for mentioning Walter Bagehot. It enables me briefly to reminisce. I remember studying Walter Bagehot for British Constitution A-level and I find that I still have some of his books on my shelves at home. However, I must not digress into those increasingly long ago days.

As your Lordships will know, and as my noble friend Lord Renton has reminded us, the NRA will be a major new national body. I stress the word "national", as did my noble friend. Since the December 1987 government Statement setting out our proposals for the NRA we have received overwhelming support for the concept of a single national regulatory body as provided for in the Bill.

It is of course true that the NRA will have a strong regional presence. Initially, the NRA will be organised into 10 regional units based on existing water authority boundaries and most of its functions will be carried out in these regions which will be headed by a regional general manager. The Bill also provides that each region will have three committees—an executive flood defence committee, a fisheries advisory committee and a river advisory committee. The NRA Advisory Committee envisages that the chairmen of these regional committees should meet with the regional general manager under the chairmanship of an NRA board member, who would be given specific oversight of that region, to form a regional advisory board. The purpose of the regional advisory board will be to assist the regional general manager in resolving any difficulties at local level and to enhance other links between the NRA centrally and its regions.

However, we strongly oppose any suggestion that there should be an executive board in each region as this amendment would provide. The mischief behind such an arrangement would seriously confuse lines of responsibility between the NRA board and its regional staff and undermine ministerial accountability to Parliament for NRA functions. It would also seriously diminish the ability of the NRA to carry out its statutory duties.

As regards local authority involvement at regional level, local government interests will continue to be fully represented on the regional flood defence committees where local authorities will retain the majority membership. This is only right and proper because flood defence is funded by a precept on local authorities. A committee with a local authority majority should therefore—as happens at the moment and as we propose should continue—determine the precept and the flood defence programme for its area. The consultative document prepared by the NRA Advisory Committee also made it clear that local government would be one of the interests represented on the new regional rivers advisory committees. These advisory committees need to reflect local interests but are not answerable to them and a greater role for local government in NRA's affairs at regional level is not appropriate.

Lord Graham of Edmonton

My Lords, I am grateful to the noble Lord, Lord Renton, who has taken great care in pointing out the conflict or dilemma between my new clause, after Clause 1, and leaving Clause 2 in the Bill. He drew attention to those parts of the existing Clause 2 which, if left in the Bill, would be substantial additions to the new clause. He referred to the question of payment which we certainly accept is a proper part of the Bill and part of the nexus of managing these affairs.

I had to smile when the noble Lord said that the Conservative Party is a decentralising party. He could have fooled me. Over the past five, six or seven years no government have been more centralising or autocratic than the present Government in respect of powers. He should tell local government, doctors, teachers and a whole range of people in British life that this Government believe in decentralising, leaving to the perimeter, and releasing power from the centre. The Bill is contrary to that concept. But the fact that the Government are putting into the hands of a few people at the centre powers that, in our view, could properly be given to the perimeter is nothing new to us. It is a surprise to the noble Lord but not to many of us.

I take the point the noble Lord made that there could well be conflicts between the powers, or centres of power, which my new clause would undoubtedly set up. But, as Walter Bagehot was pointing out, the possibility of friction is no bad thing.

However, the Minister has been very fair in pointing out—it is one of the values of the later stages of a Bill that more goes on record—how he sees the functions of these bodies working. He has done good service to the House and to a great many other people in pointing to the limited powers that will be given to the regional rivers advisory committees and also the manner of bridging the gap between the national body, which obviously must have power, and the local people. If that works it will certainly be in the interests of the NRA to have a working arrangement—a good working arrangement—with local people at the periphery.

However, I am satisfied that the Minister believes that this will work. We certainly hope that it will. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [The National Rivers Authority]:

Lord Graham of Edmonton moved Amendment No. 5: Page 191, line 39, leave out sub-paragraph (4).

The noble Lord said: My Lords, this amendment in the name of my noble friend Lord McIntosh of Haringey will be familiar not least to the noble Lord, Lord Ezra. The genesis of the amendment is substantially that of Amendment No. 15 to which the noble Lord, Lord Ezra spoke in Committee on 2nd May at col. 103. On that occasion he argued that the approval of the Treasury should not be required for the details of remuneration and pensions paid by the NRA or for detailed staffing arrangements. In support of his case the noble Lord, Lord Ezra, quoted the noble Lord, Lord Crickhowell, who said at Second Reading: We have been repeatedly told by Ministers that the NRA is to be a strong and independent body. Yet the Bill provides that its management arrangements should all be subject in some detail to the approval of the Secretary of State and the Treasury, which in practice means their officials. I am talking about what may be described as pay and rations matters … We face a situation that those responsible for running the NRA are to be second guessed by the officials on a whole range of day today matters … I have asked that the whole issue should be looked at again".—[Official Report. 17/4/89; col. 582.]

In reply, the noble Lord, Lord Hesketh, rejected at col. 104 the suggestion that civil servants would "second guess" the decisions of the NRA. He said that he accepted the views of the noble Lord, Lord Crickhowell, that the NRA should be a strong and independent body with proper management responsibilities. It was also, however, the case that parliamentary accountability for the use of public funds required Treasury control. The right balance would be struck in the financial memorandum to be drawn up between the department and the NRA.

The amendment is tabled again to hear more details about the contents of the financial memorandum. Without these the House may feel that it has not heard enough about how this small but nonetheless significant matter is to be handled. If parliamentary accountability is now being used as the justification for all the powers which have accrued to Ministers in the course of the past 10 years, notably of course in local government, then this is a novel argument from a Government which used to pride themselves on reducing government controls. I detect in that sentence echoes of the debate we have just concluded.

It seems strange that the Government are determined to keep detailed control over the salaries and expenses of the members of the board yet have refused so far to allow the NRA to borrow, even with constraints set by the Secretary of State, for a planned programme of environmental works. In the same way a surplus from the NRA in any year is to be carried back to the Treasury. The Government display a clearer idea of how they want to run the NRA as regards the bureaucratic details than concerning its wider environmental functions and the means by which they will be carried out. The Minister stated that there would be no second guessing of NRA decisions, but he did not explain how that will be achieved. This amendment is asking for further details of how that will be done. I beg to move.

Lord Ezra

My Lords, as my name has been mentioned and as I moved a similar amendment at the previous stage, I wish to say that this is a matter of some concern to many of us in this House. We have welcomed the establishment of the NRA and we believe that it is going to do a very useful job. But as the noble Lord, Lord Crickhowell, himself said, there seems to be some doubt as to the freedom with which it can operate. If such detailed matters as are indicated here are to be dealt with by the government department responsible and the Treasury, it is to be doubted that in more important matters it will not also be supervised.

If this body is to become merely an emanation of a government department, let it be stated very clearly and then we shall all know where we stand. However, if it is to be a body which it is intended should operate independently to safeguard the environmental interests of the nation as regards the water supply industry, then I believe that this kind of control by government should be reduced to the absolute minimum. The noble Lord, Lord Hesketh, has said that there is to be a financial memorandum which will lay down the details of how this control is to be exercised. He now has the opportunity to tell us what is in this financial memorandum. Will it in fact limit the intrusion of the government department and the Treasury in the conduct of the affairs of the NRA or will it be drawn up as broadly as the Bill itself? I believe that these are matters of legitimate concern to this House, bearing in mind that we wish to see the NRA succeed.

Lord Renton

My Lords, I wish to support this amendment. There may be a mistake in the list of groupings because it seems that this amendment should clearly be taken with Amendment No. 7, which proposes to leave out sub-paragraph (6) of paragraph 3 in Schedule 1. Paragraph 6 reads: The consent of the Treasury shall be required for the giving of an approval under this paragraph". It is almost the same point. On previous occasions on other Bills I suggested that it is sheer nonsense, in these days of collective Cabinet responsibility and with all the palaver that we know takes place as part of the machinery of government, that in addition to a Secretary of State and the Minister of Agriculture being involved, the Treasury shall also be involved. I am open to correction by my noble friend on the Front Bench but, as I understand it, the estimates and the expenses of the National Rivers Authority are to be carried on the estimates and accounts of the Minister of Agriculture or those of the Secretary of State for the Environment. I am not sure which it is; perhaps it is somehow divided between the two.

Bearing in mind that there is that ministerial responsibility and that such responsibility is mentioned at almost every turn in establishing the National Rivers Authority, it seems quite absurd and redundant that the clammy hand of the Treasury should be placed on it as well. I hope that one day the Government will get rid of this nonsense and that we shall not see reference to the consent of the Treasury appearing in Bills quite so often. I had hoped that wisdom had already been seen in this respect because we have had several Bills in this Session in which the expression has been omitted. I hope that even yet it may be omitted on this occasion.

5.45 p.m.

Lord Hesketh

My Lords, I believe that there is a slight problem here because we have finished up by speaking to two amendments; namely, Amendments Nos. 5 and 7. After this amendment, I am proposing to move Amendment No. 6 and to speaks the same time to Amendment No. 7. The issue is considerably narrower as regards Amendment No. 5, which addresses itself purely to matters concerning the members of the board of the NRA.

I made clear in Committee that it is standard practice for all non-departmental public bodies that if the chairman and members who are appointed by Ministers are to be paid, then their level of remuneration must be determined by the Ministers concerned with Treasury approval. I see no reason to depart from what is normal practice for bodies and, indeed, water authorities, that the Ministers who will appoint members to the NRA Board should be required to seek the approval of the Treasury. I cannot accept that it detracts from the independence or strength of the NRA for it to be required to secure the agreement of the Treasury to the pay and pensions of members of the NRA board. It is surely reasonable that the Treasury should seek to maintain some consistency and compatability between different NDPB boards.

As regards the remarks made by my noble mend Lord Crickhowell at Second Reading, at the Committee stage I clearly pointed out that we were listening to what my noble friend had to say. As regards the question of pay and rations, I would like to think that we have been more flexible concerning the rations, but we are unable to abolish the quartermaster.

Lord Graham of Edmonton

My Lords, I am disappointed at what the Minister has said. He rests his case on the fact that what we have said is not new and that it is standard practice besides being normal. I wonder when the Minister and others will feel that it is proper to break away from precedent. Surely that is done after having listened to the arguments. If the arguments have failed that is one aspect, but the Minister substantially rested his arguments on the questions of precedent, custom and practice. The Minister certainly has not satisfied me.

We listened very carefully to what the noble Lord, Lord Crickhowell, said, and those of us on this side of the Chamber will have seen him nodding his head at one or two of the points that were made during this short debate. I am not minded to leave this matter alone as we have done in other circumstances. I believe that the House should be invited to express an opinion. We desire to give not just more power but more power over a very limited range of functions. This new body should be treated with respect and given stature. In many places stature is measured not only by the size of the salaries but also by the ability of the people at the top to make decisions of this kind. The noble Lord, Lord Renton, used the phrase, "the clammy hand of the Treasury". As a Minister many years ago he probably speaks with more authority than I as regards the machinations of those in the Treasury with clammy or other hands when they are dealing with such issues.

Lord McIntosh of Haringey

My Lords, sticky hands.

Lord Graham of Edmonton

My Lords, perhaps I should say sticky fingers, but I shall not go to the extremities. I believe the case has been made in that the Government have been invited to make a small relaxation from custom and practice but they have decided not to do so. I intend to invite the House to express a view.

5.49 p.m.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 133.

DIVISION NO 2
CONTENTS
Addington, L. [Teller.]	McNair, L.
Amherst, E.	Masham of Ilton, B.
Ampthill, L.	Mason of Barnsley, L.
Ardwick, L.	Molloy, L.
Auckland, L.	Nicol, B.
Aylestone, L.	Northfield, L.
Blease, L.	Ogmore, L.
Blyth, L.	Parry, L.
Brooks of Tremorfa, L.	Perry of Walton, L.
Callaghan of Cardiff, L.	Phillips, B.
Carmichael of Kelvingrove, L.	Pitt of Hampstead, L.
	Ponsonby of Shulbrede, L. [Teller.]
Carter, L.
Cledwyn of Penrhos, L.	Prys-Davies, L.
Cocks of Hartcliffe, L.	Rea, L.
David, B.	Renton, L.
Davies of Penrhys, L.	Rochester, L.
Dean of Beswick, L.	Ross of Newport, L.
Dormand of Easington, L.	Russell, E.
Elwyn-Jones, L.	Scanion, L.
Ewart-Biggs, B.	Seear, B.
Ezra, L.	Serota, B.
Fisher of Rednal, B.	Shepherd, L.
Gainsborough, E.	Stedman, B.
Gallacher, L.	Stoddart of Swindon, L.
Galpern, L.	Strabolgi, L.
Glenamara, L.	Taylor of Blackburn, L.
Graham of Edmonton, L.	Taylor of Gryfe, L.
Grey, E.	Taylor of Mansfield, L.
Harris of Greenwich, L.	Tordoff, L.
Howie of Troon, L.	Underhill, L.
Hughes, L.	Walston, L.
Hunter of Newington, L.	Whaddon, L.
Jeger, B.	White, B.
Listowel, E.	Williams of Elvel, L.
Lockwood, B.	Willis, L.
Lovell-Davis, L.	Winchilsea and Nottingham, E.
McCarthy, L.
McIntosh of Haringey, L.	Winstanley, L.

NOT-CONTENTS
Abinger, L.	Joseph, L.
Aldington, L.	Kaberry of Adel, L.
Alexander of Tunis, E.	Kimball, L.
Allerton, L.	Kinloss, Ly.
Arran, E.	Lauderdale, E.
Balfour, E.	Layton, L.
Beaverbrook, L.	Long, V.
Belstead, L.	McFadzean, L.
Bessborough, E.	Mackay of Clashfern, L.
Blatch, B.	Macleod of Borve, B.
Borthwick, L.	Margadale, L.
Boyd-Carpenter, L.	Marley, L.
Brain, L.	Marshall of Leeds, L.
Brookeborough, V.	Massereene and Ferrard, V.
Brookes, L.	Merrivale, L.
Brougham and Vaux, L.	Mersey, V.
Bruce-Gardyne, L.	Middleton, L.
Caithness, E.	Monson, L.
Campbell of Alloway, L.	Morris, L.
Campbell of Croy, L.	Moyne, L.
Carnock, L.	Munster, E.
Carr of Hadley, L.	Nelson, E.
Clinton, L.	Norrie, L.
Clitheroe, L.	Nugent of Guildford, L.
Constantine of Stanmore, L.	Onslow, E.
Cork and Orrery, E.	Orkney, E.
Cottesloe, L.	Oxfuird, V.
Craigmyle, L.	Pender, L.
Craigton, L.	Peyton of Yeovil, L.
Crickhowell, L.	Radnor, E.
Cross, V.	Rankeillour, L.
Darcy (de Knayth), B.	Renwick, L.
Davidson, V. [Teller.]	Rippon of Hexham, L.
Denham, L. [Teller.]	Rochdale, V.
Dilhorne, V.	Saint Brides, L.
Dundee, E.	St. John of Bletso, L.
Eden of Winton, L.	St. John of Fawsley, L.
Elibank, L.	Saltoun of Abernethy, Ly.
Elles, B.	Sanderson of Bowden, L.
Faithfull, B.	Seebohm, L.
Fanshawe of Richmond, L.	Shannon, E.
Ferrers, E.	Sharpies, B.
Foley, L.	Skelmersdale, L.
Fortescue, E.	Somers, L.
Fraser of Carmyllie, L.	Stanley of Alderley, L.
Fraser of Kilmorack, L.	Stodart of Leaston, L.
Glenarthur, L.	Strathcarron, L.
Gray of Contin, L.	Strathclyde, L.
Greenway, L.	Sudeley, L.
Grimston of Westbury, L.	Swinfen, L.
Grimthorpe, L.	Teynham, L.
Hailsham of Saint Marylebone, L.	Thomas of Gwydir, L.
	Thurlow, L.
Halsbury, E.	Torrington, V.
Hardinge of Penshurst, L.	Trafford, L.
Harmar-Nicholls, L.	Tranmire, L.
Harvington, L.	Trefgarne, L.
Havers, L.	Trumpington, B.
Henderson of Brompton, L.	Vaux of Harrowden, L.
Henley, L.	Vinson, L.
Hesketh, L.	Waldegrave, E.
Hives, L.	Wise, L.
Holderness, L.	Wyatt of Weeford, L.
Hooper, B.	Wynford, L.
Hylton-Foster, B.	Yarborough, E.
Jenkin of Roding, L.	Young of Graffham, L.
Johnston of Rockport, L.	Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.57 p.m.

Lord Hesketh moved Amendment No. 6: Page 191, line 43, leave out ("numbers and").

The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendment No. 7. Amendment No. 7 would remove the requirement for the Treasury to approve the numbers and terms and conditions of service of NRA staff. As I made clear in Committee, it is normal for staff of a non-departmental public body to have terms and conditions subject to the Secretary of State's approval, with the agreement of the Treasury. The main responsibility for control and accountability for questions concerning a non-departmental public body's staff, pay and conditions rests with the sponsor department.

However, we recognise the importance of giving the NRA proper management responsibility, and have taken very careful note of the comments of my noble friend Lord Crickhowell at Second Reading.

That is why we have brought forward government Amendment No. 6 which removes the requirement for the approval of the Secretary of State—and the Treasury—to the numbers of staff employed by the NRA. This is not of course the same as Amendment No. 7 which would also remove the requirement for the Treasury's, although not the Secretary of State's, approval to the terms and conditions of staff. We could not accept the removal of the whole of this subparagraph relating to Treasury control, because, as I made clear at Committee stage, Ministers are ultimately answerable for the use of public funds by the NRA, and this must include the terms and conditions on which it employs staff.

However, we recognise that it is important to avoid unnecessary controls. The control on the numbers of staff does seem to be an unnecessary control. What is important is that there is a proper control on the total running costs of the NRA. We accept that, within that total cost, it is entirely reasonable for the NRA management to decide on the precise numbers of staff that it employs. Again, as I made clear at the Committee stage, we would hope to ensure that the detailed arrangements between the NRA and the department strike the right balance between public accountability and the need to encourage mangement responsibility. The existence of a requirement for ministerial approval of terms and conditions of NRA staff does not mean that Ministers and civil servants will be second guessing all the decisions of the NRA on these matters. I am quite sure that workable arrangements can be devised that meet both the requirements of public accountability and, importantly, the requirements for the NRA to manage its own organisation with the necessary degree of autonomy and independence. I beg to move.

6 p.m.

Lord McIntosh of Haringey

My Lords, the Minister did not read that speech with a great deal of conviction and I can understand why. The fact of the matter is that by agreeing—and we welcome his agreement—that the Treasury and the Secretary of State should no longer have control over the numbers of National Rivers Authority staff, he has blown a gaping hole in his case against Amendment No. 7. That amendment says that the Treasury should not have control over the terms and conditions of service of staff.

The only conceivable point for retaining Treasury control over the terms and conditions of service is the control of public expenditure. But as soon as the Government have agreed that the numbers of staff are not to be controlled centrally by the Treasury and by the Secretary of State there is no longer any control over the aggregate amount of public expenditure. Therefore the argument against Amendment No. 7 disappears.

Amendment No. 7 says that the Treasury should no longer have control over the terms and conditions of service; in other words, it is trying to avoid a particularly useless and even nasty little piece of interference by the Treasury in what should be a proper management responsibility of the National Rivers Authority. The authority is recruiting staff and has already named the staff who will form part of the authority when it is established all over the country.

Such staff possess a wide variety of technical and scientific skills and also have local knowledge of managerial ability. Therefore Civil Service scales are not appropriate for such staff. Such terms and conditions must be negotiated according to the needs of the National Rivers Authority. It is a new kind of authority as the Government continually remind us; it is a new regulatory body and is a more detailed body than there is for any other privatised industry. However, according to the Government, we must still have Treasury control over the terms and conditions of service.

If the Government had continued to resist the urging of the noble Lord, Lord Crickhowell, on Second Reading—and of other noble Lords who spoke on Second Reading and also in Committee—and had not agreed to bring forward Amendment No. 6, we would not have agreed with them but we would at least have seen the logic of their position. However, now that they have agreed to lose control over the aggregate expenditure of the National Rivers Authority on its staff, what on earth is the point of them keeping control of the terms and conditions of service? I urge the Government to think again on the matter. I think that they have got themselves into an impossible position in this respect.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 7: Page 192, line 24, leave out sub-paragraph (6).

The noble Lord said: My Lords, I think the right thing for me to do in the circumstances is to move Amendment No. 7 in order to receive a Government response. Although Amendments Nos. 6 and 7 were grouped together, the debate took such a truncated form that there was no opportunity for the Minister to reply to the issue of the relationship between the two. I beg to move.

Lord Renton

My Lords, again I support this amendment. I shall, however, be interested to hear what my noble friend says in response. It seems to me that the principle involved is almost the same—although not quite—as it was on Amendment No. 5 where the Government won a handsome majority. Therefore it would be a waste of time to vote again on this amendment, but the principle is established and we shall be interested to hear what the Government have to say on the matter.

Lord Howie of Troon

My Lords, I should like to support my noble friend on Amendment No. 7. What worries me about the Government's reply on the matter is that if sub-paragraph (6) remains, which requires "the consent of the Treasury", what is there left for the Secretary of State to do? There are various references to him in this part of the schedule, including sub-paragraph (3), where it specifies that certain actions are to be carried out with his approval or consent. However, what is the point in the Secretary of State giving his approval or consent to such matters if at the end of the day the Treasury has the final say?

There is little point in the Minister saying, as I think he said—although I may be mistaken—that the Treasury will not ask to second guess; but, of course, it is asked to do so. Indeed it is inherent in and central to the manner in which sub-paragraph (3) is drafted. I agree with what the noble Lord, Lord Renton, said about voting again on the matter so soon after the last Division; there seems little point in so doing. However, in my view the Minister should take the matter away and look more closely at it. I hope that he has listened to what my noble friend Lord McIntosh and the noble Lord, Lord Renton, said about such matters and that he will realise that second guessing is inherent in this part of the Bill and therefore should be removed therefrom.

Lord Crickhowell

My Lords, I hesitated throughout the debate on the Bill to speak about the powers to be given to an authority which it is intended that I should chair. It seemed to me that that course of action was the right one. However, on Second Reading—and, indeed, when speaking on an earlier amendment—I sought to give guidance to the House about the advice given to the Government by the advisory committee. As my words have been quoted back to me on many occasions during this debate, I think that it would be right if I gave some clarification on the views of the NRA Advisory Committee in the matter.

The truth of the matter is that the amendment put forward by the Opposition, which was defeated earlier today, did not really address the issue which is now being debated; it addressed the issue of whether the pay and pensions of the members of the authority should be supervised. I have no objection to the principle that the pay of the members of the authority should be decided by the Government, along with members of other such authorities.

The issue I raised on Second Reading was a separate issue to which this sub-paragraph refers. It is what I described as a pay and rations matter. I do not disguise the fact that the advice which the NRAAC has given is that it would have preferred to have had a more relaxed regime than is contained in the Bill. There are precedents elsewhere; for example, the Civil Aviation Authority is treated as a nationalised industry and controls such matters itself. However, we are far too late in the proceedings of this Bill to follow that particular route. Nevertheless, I have taken comfort from the progress which has been made.

I welcome the fact that the control over numbers has been deleted by the Government by way of amendment and I am very much encouraged by the words used by my noble friend, when responding earlier, about the terms of the financial memorandum. I say that because if the Bill were to pass through this place unamended, the terms of that memorandum would be most important.

There have been published documents issued by the Government about the arrangements for non-departmental public bodies. There was such a major document issued in 1985. That document makes clear that where less than 50 per cent. of the finance of a public body comes from public funds, there should not be detailed control over such matters. Therefore, I am increasingly optimistic that what my noble friend is saying is that the financial memorandum will be drafted in such a way so that the NRA will indeed be able to control the pay and the terms and conditions of service of its employees, its directors and its senior management, and that it will have reasonable management flexibility for so doing. However, such issues are not being settled and are not dealt with in this amendment. I do not support the particular amendment because that does not seem to me to be the point here.

The advice being given to the Government at present by the NRAAC is that the financial memorandum should be drafted in a way which allows the NRA to have the fullest possible control over the management of its own affairs. That seems to the NRAAC to be sensible, both from the point of view of managing a large and important public body and from the point of view of the government department which should not be wasting a great deal of time deciding whether an individual should have one type of car or another or whether management should, or should not, be able to pay £1,000, more or less, to recruit someone. It is unlikely that those decisions will be taken better in the department. In the light of what my noble friend has said, I hope that when we come to agree the financial memorandum, the Government will accept the advice of the NRAAC.

Baroness Blatch

My Lords, I sympathise entirely with the sentiments expressed by my noble friend Lord Renton and Lord Crickhowell. I invite my noble friend the Minister in his reply to the amendment to give us an assurance that the terms of reference for the financial memorandum will reflect the widest degree of operational management consistent with good management, given that the Government have to have a view about the overall financial parameters. One would expect that to be so.

To add to the example of deciding on one make of car or another, it is also possible to envisage bonus packages and so forth. So long as the overall financial parameters are not breached, we should go for the maximum possible managerial freedom. I hope that my noble friend's reply will contain some assurances that the financial memorandum will reflect the NRA's wide managerial control.

Lord Ezra

My Lords, so far as pay and rations are concerned, there is no doubt that on a reading of this paragraph of the schedule, the Treasury will have the last word. If the financial memorandum is to modify that, all well and good. However, the schedule, and after all this is what the Government propose should be enacted, says: The Authority may pay such pensions, allowances or gratuities…in respect of …its officers or employees as it may, with the approval of the Secretary of State, determine". The final sub-paragraph provides: The consent of the Treasury shall be required for the giving of an approval under this paragraph As far as I can see, what that says is that once the NRA has recruited its staff and has decided what it would like to pay them, how it would like to grade them and what conditions of service it would like to offer, it would then have to negotiate with the Secretary of State. He, in turn, would have to pass a memorandum to the Treasury which would go through it with a fine toothed comb and either agree or disagree. That is what the Bill says.

If the financial memorandum is going to say something different, let us hear about it. As things stand, the subject about which the noble Lord, Lord Crickhowell, has complained is precisely what the Bill says should be done; namely, that the Treasury should determine pay and rations.

6.15 p.m.

Lord Hesketh

My Lords, as always, the noble Lord, Lord McIntosh, has produced a seductive argument. He says that even though this is a non-departmental public body it is a different kind of non-departmental government body, so the Government's argument that there should be parity of arrangements with previous non-departmental bodies should not apply. The noble Lord will not be surprised to find that I do not agree with that analysis.

The terms and conditions of service of people in the public service are properly matters in which Ministers and the Treasury can have an interest. However, that does not mean that Civil Service terms and conditions must be applied. What the sub-paragraph provides for is that the terms and conditions of NRA staff must be agreed by Ministers. We are not saying that they have to fulfil Civil Service conditions.

I agree entirely with my noble friend Lady Blatch that the Government's primary concern is to control overall financial parameters; it is not to encumber the NRA with bureaucracy and red tape. My noble friend Lord Crickhowell clearly set out what he felt was the right way to approach the matter. I can only say that I agree with what he said. He was clear in what he required to be done. The control and responsibility at the end of the day must rest with Ministers. That is a fact that we shall not be able to get away from. We cannot avoid it. Because of that, I am unable to shift my position as much as the amendment would require me to do. I am sure that the noble Lord, Lord McIntosh, will understand why. If he were at this Dispatch Box he would be saying exactly the same.

Baroness Carnegy of Lour

My Lords, before my noble friend sits down can he say whether we shall know before Third Reading what is in the financial memorandum? I intervened in Committee to say that the argument that we have always dealt with non-departmental public bodies in a certain way is no argument at all. Unless the financial memorandum is satisfactory and there is some independence so that this type of arguing with the Treasury is avoided. I do not believe that the House will want to accept the Bill as it stands. It may at the next stage accept an amendment of the kind moved by the noble Lord.

Lord Hesketh

My Lords, discussions are taking place with the department, the NRAAC and the Treasury. We are satisfied that the arrangements will provide what we propose—a sensible basis for NRA management independence together with a recognition that the NRA will be responsible for spending money which is voted by Parliament. That is what I was trying to say. I have said it again. I hope that it has partically satisfied my noble friend Lady Carnegy of Lour.

Lord Renton

My Lords, if I may have the leave of the House to speak again, perhaps I may ask my noble friend before he sits down why, if that is so, we need sub-paragraph (6) which says: The consent of the Treasury shall be required for the giving of an approval under this paragraph

Lord Hesketh

My Lords, with the leave of the House, we return to the position that I took three amendments ago which is that we cannot abolish the quartermaster.

Lord McIntosh of Haringey

My Lords, as a former quartermaster's clerk, never having aspired to the rank of quartermaster, I wonder whether the Minister appreciates a quartermaster's range of activities. One thing that quartermasters do not cover is pay, although they do cover rations.

Leaving aside the arrangements within the Royal Artillery, which is the only part of the Army I know, the Minister has not responded adequatley to the concerns which have been expressed, principally from his own side of the House. When we have the noble Lords, Lord Crickhowell, and Lord Renton, and the noble Baronesses, Lady Carnegy of Lour and Lady Blatch, all asking him to think again about this matter—there was not one voice raised in his support—I wonder whether he would not be well advised to give a little more than he has done so far.

The noble Lord, Lord Ezra, made the point clearly. Whatever may be in the financial memorandum—we do not know that—the Bill is clear. The Bill, as amended, says that the Treasury and the Secretary of State have no control over the numbers of staff, so they have no control over the amount of money being spent; but they have control over the terms and conditions of service, which is the detail upon which the staff are to be appointed. That is patently absurd. It is a failure of logic with which the Government have not caught up on their thinking. I do not blame them. It is a complicated Bill. I can see how they have got themselves into this trap. They are in a trap, and they must find some way out of it.

If the Minister wishes to stop me dividing the House, he will have to come up with something better than that and take advantage of the leave which I am sure the House will give him. As things stand, this is not a satisfactory situation, and as amended the Bill is not satisfactory; it is not coherent as amended. I ask the Minister whether there is anything else he can say to us.

Lord Trafford

My Lords, before the noble Lord sits down, he said just now that it was contradictory to free the number of employees but to control the remuneration terms and all the rest of it. We had the example of cars. In many circumstances in the public sector or the quasi-public sector numbers are very often not dictated by the Treasury—although they are paid by the Treasury—where the total global sum is distributed by the authority concerned, usually on a fixed rate of the basis of remuneration, terms and conditions, but not specifying numbers.

Although I accept much of what the noble Lord says, I hope he will accept that it is not always true that it is necessarily an anomaly. I might add in parenthesis that it would seem that there is some confusion here between the argument which the noble Lord is putting forward and what my noble friend the Minister is saying. The confusion appears to be that my noble friend says that there will be a global sum, subject to Treasury approval, and many other noble Lords, including the noble Lord, Lord McIntosh, say, "Ah, but what we want is to have that control removed". If I am right—and I am asking whether that is what my noble friend is saying—it would seem to me that there is less argument than there would appear to be. Provided the Treasury approval goes only to the global sum but allows the NRA the other independence with regard to numbers, managerial control and so forth, I cannot see that I or my noble friends would have any difficulty in understanding that the ultimate control of the distribution of public money—that is the global sum—must lie with the Treasury.

Lord McIntosh of Haringey

My Lords, I am very glad that I had not sat down before the noble Lord intervened because he made my point very clearly. The point is that there is no global sum laid down in the Bill. A global sum was in effect laid down in the Bill previously because there was Treasury control over numbers and terms and conditions of service. But now that the control over numbers has been removed, there is no global sum left in the Bill.

Therefore the noble Lord's very quarter-hearted support of the Government fails completely. The plain fact is that if we have removed control over one part of it, we cannot have a global sum. If we have a global sum we cannot remove one element of the control and leave the other element untouched.

Lord Trafford

My Lords, I am sorry to interrupt the noble Lord again but, with respect, what he is saying is not so. This is the method by which large parts of the public sector expenditure are controlled. They are given this money and told to get on with it, so to speak. The numbers, the decisions, the executive freedom and all the rest of it lie with them. In that sense this has not changed. It does not alter the fact that ultimately the Treasury has control. What it does alter is merely the freedom to employ the numbers appropriate to the management considerations which the NRA may exercise.

With respect to the noble Lord, I think he has misinterpreted my remarks. They were not supposed to be half-hearted, quarter-hearted or anything else in support of the Government. I hoped that I was trying to clarify the position. I was asking both the noble Lord, Lord McIntosh, and my noble friend about this. So long as we are arguing on the question of whether or not it is within a global sum that the control of the Treasury is exercised, or whether that will be the intention of the Government, that is quite a different kettle of fish from the position for which the noble Lord is at present arguing.

Lord McIntosh of Haringey

My Lords, the answer is very simple: there is no global sum anywhere on the face of the Bill. We are asked to rely on a financial memorandum which we have not seen. I suggest to the House and to the Government that it is not adequate to rely on a financial memorandum which we have not seen. Unless it can be shown clearly to the contrary, the concerns of noble Lords on all sides of the House that what is being maintained here is a control of the detail of employment without a control on the total sum of money involved will not go away. I believe I was asked to give way to the noble Lord, Lord Boyd-Carpenter.

Lord Boyd-Carpenter

My Lords, I was not asking the noble Lord to give way. When he has finished his observations I shall say a few words too.

Lord McIntosh of Haringey

My Lords, I think that the noble Lord will be out of order. It is my amendment and I am supposed to be winding up on it. We are at Report stage.

Lord Boyd-Carpenter

My Lords, then perhaps the noble Lord will give way, with his habitual courtesy and adroitness. He stung me into an intervention simply by the observation he made that the Minister was faced with a debate in which there had not been a single speech in support of the Government. As I understood the speech of my noble friend Lord Trafford, it was broadly favourable to the Government. I think it would be quite wrong for my noble friend the Minister to go back to his department and say that there was no support for these words in your Lordships' House.

These words are frequently used in statutes. They are a common form where one is dealing with the employment of people in what one may call the public sector. There is nothing unusual about them. Therefore the onus is perhaps on the noble Lord opposite to say why the NRA should be exempted from a control which applies to a great many other people in the public sector.

I should like to widen the debate a little because I think there is a real point of substance and of principle here in the way that we work government. In the public sector, if one section of workers obtains an advance in pay quite out of line with what the main body of people in the public sector receive, that is then used as grounds for agitation, for action of all sorts, to try to upgrade all the rest to the level of those who, because there has been no Treasury control, have received an increase.

I cannot remember whether the noble Lord faced these problems in government, as I did. If he did have to face the problem of very high totals of expenditure on the public service, of the inflationary effect of large increases in pay in the public service, I think he would realise the very natural and proper concern of the Treasury to keep some control over it. Of course, it is money for old rope for leaders of the trade unions concerned because they are able to say, "Look, the NRA has got this wonderful settlement. The whole of the Civil Service should have it". It is only too easy for them.

However, if we look at it from the point of view of those who have to conduct the affairs of state and manage the public economy, the picture is very different indeed. The Treasury has always—in my view rightly—taken the view that strict control of rates of remuneration in the public sector should remain in the Treasury. If there is an overwhelming case it can agree to an exception. But in general the idea is to prevent increases out of line with the rest of the pay of the service. Those can and will, from all experience, be used to undermine the existing rates and to support increases.

Therefore I say with great respect to the noble Lord that the Government are not without support on the matter. Those of us who served at the Treasury—and I had the honour of doing so for two stints—know that there are real and valid reasons for maintaining this control. I know, equally from experience, that it is all too easy to say, "Oh, the Treasury is restrictive, and all the rest of it; why should it have these powers?", but the noble Lord, like your Lordships, knows that it is upon the Treasury's management of the economy that the well-being of our country depends.

Lord Renton

My Lords, before my noble friend——

Noble Lords

Order!

Lord McIntosh of Haringey

My Lords, I do not think that an intervention can be intervened in. There can be one intervention at a time. I had better maintain my position at this Dispatch Box without sitting down and let other noble Lords come in, one after another, rather than together.

The noble Lord, Lord Boyd-Carpenter, has given renewed evidence of his three most distinctive and endearing characteristics. First, he has given evidence of his outstanding skill as a debater; secondly, he has given evidence of his Treasury experience; and, thirdly, he has given evidence of his unalterable loyalty to the Government in all circumstances. That has never yet been breached to my knowledge. As I believe the noble Lord knows, I have never held a position in government, but I have met a payroll for nearly a quarter of a century. When one meets a payroll one sets oneself a budget which covers not only pay but all the activities of one's company or organisation. In doing so, one takes into account how much one can allow oneself for manpower and how much one can allow oneself for other things.

Earlier we debated the issue of subcontracting. It was pointed out with some reason, particularly by the noble Lord, Lord Renton, that the NRA should have the power to subcontract some of its activities where they were not suitably carried out by the permanent staff. Therefore the NRA must have the power to strike a balance on any occasion between non-direct manpower costs and the manpower part of its total budget. Therefore the argument of the noble Lord, Lord Boyd-Carpenter, that it may be tempted, without Treasury control, to run amok, so to speak, and to break public pay guidelines falls to the ground.

I forget who mentioned the Civil Aviation Authority. However, there are previous examples of public bodies which do not have this detailed control over pay and conditions.

6.30 p.m.

Lord Boyd-Carpenter

My Lords, when the Civil Aviation Authority was set up, originally the pay scales in the authority were determined by the Department of Trade, under which it worked. However, after a year or two, no doubt partly as a result of education by the then chairman of the CAA, we got rid of that and obtained freedom.

Lord McIntosh of Haringey

My Lords, I am delighted to have the noble Lord's confirmation. Perhaps the noble Lord now regrets that he was not in his seat when his noble friend Lord Renton referred to the clammy hand of the Treasury. The situation is as it was before these interventions, all of which I may say I very much welcome. The situation is that the Government are in an impossible position. If the Minister is to avoid a vote which will depend, with the exception of the noble Lord, Lord Boyd-Carpenter, for a majority for the Government on those who have not heard the debate, he should intervene and say he will think about the matter again before Third Reading.

The noble Lord, Lord Renton, said that a second Division would be undesirable and unnecessary. However, as has been made clear by the noble Lord, Lord Crickhowell, the point on which we divided before was a different point. It was concerned with the pay of the members of the authority. The noble Lord, Lord Crickhowell, quite understandably said that he had no strong feelings on that matter. We are now concerned with a much more important issue than the pay of members of the authority. We are now concerned with the managerial responsibility of the National Rivers Authority and its ability to construct a budget encompassing manpower and other costs in a sensible and independent way. This is a very important matter and a much more important one than that contained in Amendment No. 5. I suggest to the Government that they would be well advised to have second thoughts on this matter before I am forced to sit down for the final time.

Lord Hesketh

My Lords, with the leave of the House, I shall again rise. It is interesting that we have turned round 180 degrees. I was addressed by the noble Lord, Lord McIntosh, as regards the fact that he felt the NRA was unable to fix its own rates of pay. When I rose finally to point out to the noble Lord, Lord McIntosh, that that was far from the case, and that with the passing of Amendment No. 6 we had also removed any control on numbers of employees of the NRA thereby, I believe, satisfactorily answering his point in that area, the noble Lord then turned the agrument round and said we were not talking about that. He said we were talking about global control.

The noble Lord, Lord McIntosh, may believe he has a run going for him on this side as well as on the other side of the House. However, he cannot expect me to stand here and say that the Treasury is willing to abrogate all responsibility for expenditure. I cannot do that and that is why I am not willing to give him what he is asking of me now.

Lord McIntosh of Haringey

My Lords, the noble Lord leads the interventions of other Ministers who have not heard the debate. I suppose that the right thing for me to do is to seek an opportunity to discuss the matter with the noble Lord between now and Third Reading. I do not think his response has adequately reflected the arguments that have been made.

We all agree, of course, that the National Rivers Authority has to have a budget. However, we are saying that within that budget, particularly now that controls over the numbers of employees have been removed—in other words, the head count has been removed—this vestigial control over terms and conditions of service is simply out of keeping with the rest of the Government's intentions. That is where we stand. Without in any way withdrawing the arguments that I have made and which have been so widely supported by noble Lords on all sides of the House, I think it is best that I withdraw the amendment and seek an opportunity to discuss the matter.

If, on the other hand, Ministers are now indicating that they will not give me permission to withdraw the amendment, I must say three things. First, there are other ways of raising this matter than the form of words used for this amendment. The issue will not go away simply by denying me permission to withdraw my amendment. Secondly, I think it is an abuse of the procedures of this House not to allow me to withdraw my amendment simply because the Government are embarrassed by the argument. Thirdly, the clear intention in denying me the right to withdraw my amendment is to avoid discussions between now and a later stage. I reject all of those three suppositions. I beg leave to withdraw the amendment.

The Deputy Speaker (The Earl of Listowel)

My Lords, is it your Lordships' pleasure that this amendment be withdrawn? As many as are of that opinion will say, "Content"; to the contrary, "Not-Content". I think the Not-Contents have it. Clear the Bar.

6.37 p.m.

On Question, Whether the said amendment (No. 7) shall be withdrawn?

Their Lordships divided: Contents, 69; Not-Contents, 111.

DIVISION NO 3
CONTENTS
Addington, L.	Kagan, L.
Airedale, L.	Listowel, E.
Ampthill, L.	Lockwood, B.
Aylestone, L.	Lovell-Davis, L.
Birk, B.	McIntosh of Haringey, L.
Blatch, B.	McNair, L.
Blease, L.	Mason of Barnsley, L.
Blyth, L.	Molloy, L.
Bottomley, L.	Mountevans, L.
Brain, L.	Nicol, B.
Brooks of Tremorfa, L.	Northfield, L.
Bruce of Donington, L.	Ogmore, L.
Callaghan of Cardiff, L.	O'Neill of the Maine, L.
Carmichael of Kelvingrove, L.	Parry, L.
	Pitt of Hampstead, L.
Carnegy of Lour, B.	Ponsonby of Shulbrede, L. [Teller.]
Carter, L.
Cledwyn of Penrhos, L.	Rea, L.
Cocks of Hartcliffe, L.	Renton, L.
David, B.	Ross of Newport, L.
Davies of Penrhys, L.	Russell, E.
Dean of Beswick, L.	Serota, B.
Dormand of Easington, L.	Stedman, B.
Elwyn-Jones, L.	Stoddart of Swindon, L.
Ewart-Biggs, B.	Strabolgi, L.
Ezra, L.	Taylor of Gryfe, L.
Forester, L.	Taylor of Mansfield, L.
Gallacher, L.	Tordoff, L. [Teller.]
Galpern, L.	Underhill, L.
Glenamara, L.	Walston, L.
Graham of Edmonton, L.	Whaddon, L.
Grey, E.	White, B.
Harris of Greenwich, L.	Willis, L.
Houghton of Sowerby, L.	Winchilsea and Nottingham, E.
Howie of Troon, L.
Jeger, B.	Winstanley, L.

NOT-CONTENTS
Ailesbury, M.	Cross, V.
Allerton, L.	Davidson, V. [Teller.]
Arran, E.	Denham, L. [Teller.]
Ashbourne, L.	Dilhorne, V.
Balfour, E.	Dundee, E.
Beaverbrook, L.	Eden of Winton, L.
Belstead, L.	Elibank, L.
Bessborough, E.	Elles, B.
Borthwick, L.	Elliott of Morpeth, L.
Boyd-Carpenter, L.	Faithfull, B.
Brookeborough, V.	Ferrers, E.
Brookes, L.	Fortescue, E.
Brougham and Vaux, L.	Fraser of Carmyllie, L.
Caithness, E.	Gisborough, L.
Campbell of Alloway, L.	Glenarthur, L.
Campbell of Croy, L.	Gray of Contin, L.
Carnock, L.	Grimston of Westbury, L.
Clitheroe, L.	Hailsham of Saint Marylebone, L.
Colwyn, L.
Constantine of Stanmore, L.	Halsbury, E.
Cork and Orrery, E.	Hardinge of Penshurst, L.
Cottesloe, L.	Harmar-Nicholls, L.
Craigmyle, L.	Harvington, L.
Craigton, L.	Havers, L.
Crickhowell, L.	Henley, L.

Hesketh, L.	Pender, L.
Hives, L.	Radnor, E.
Holderness, L.	Rankeillour, L.
Hooper, B.	Renwick, L.
Hylton-Foster, B.	Rochdale, V.
Jenkin of Roding, L.	Saltoun of Abernethy, Ly.
Johnston of Rockport, L.	Sanderson of Bowden, L.
Joseph, L.	Sharples, B.
Kaberry of Adel, L.	Skelmersdale, L.
Lauderdale, E.	Stanley of Alderley, L.
Layton, L.	Stodart of Leaston, L.
Long, V.	Strathclyde, L.
Macleod of Borve, B.	Sudeley, L.
Margadale, L.	Swinfen, L.
Marley, L.	Teynham, L.
Marshall of Leeds, L.	Thomas of Gwydir, L.
Massereene and Ferrard, V.	Thomas of Swynnerton, L.
Merrivale, L.	Torrington, V.
Mersey, V.	Trafford, L.
Middleton, L.	Tranmire, L.
Monk Bretton, L.	Trefgarne, L.
Morris, L.	Trumpington, B.
Moyne, L.	Vaux of Harrowden, L.
Munster, E.	Vinson, L.
Nelson, E.	Westbury, L.
Norrie, L.	Wise, L.
Nugent of Guildford, L.	Wyatt of Weeford, L.
Onslow, E.	Wynford, L.
Orkney, E.	Yarborough, E.
Orr-Ewing, L.	Young of Graffham, L.
Oxfuird, V.	Zouche of Haryngworth, L.

Resolved in the negative, and Motion disagreed to accordingly.

6.47 p.m.

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 60; Not-Contents, 106.

DIVISION NO. 4
CONTENTS
Addington, L.	Jeger, B.
Airedale, L.	Kagan, L.
Ampthill, L.	Listowel, E.
Birk, B.	Lockwood, B.
Blatch, B.	Lovell-Davis, L.
Blease, L.	McCarthy, L.
Brain, L.	McIntosh of Haringey, L.
Brooks of Tremorfa, L.	Mason of Barnsley, L.
Bruce of Donington, L.	Molloy, L.
Callaghan of Cardiff, L.	Mountevans, L.
Carmichael of Kelvingrove, L.	Nicol, B.
	Northfield, L.
Carnegy of Lour, B.	Ogmore, L.
Carter, L.	Parry, L.
Cledwyn of Penrhos, L.	Pitt of Hampstead, L.
David, B.	Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L.	Rea, L.
Dormand of Easington, L.	Renton, L.
Elwyn-Jones, L.	Ross of Newport, L.
Ewart-Biggs, B.	Russell, E.
Ezra, L.	Serota, B.
Forester, L.	Stedman, B.
Gallacher, L.	Stoddart of Swindon, L.
Galpern, L.	Strabolgi, L.
Glenamara, L.	Taylor of Gryfe, L.
Graham of Edmonton, L.	Tordoff, L. [Teller.]
Grey, E.	Underhill, L.
Harris of Greenwich, L.	Whaddon, L.
Houghton of Sowerby, L.	White, B.
Howie of Troon, L.	Winstanley, L.

NOT-CONTENTS
Ailesbury, M.	Kaberry of Adel, L.
Allerton, L.	Kenilworth, L.
Arran, E.	Lauderdale, E.
Balfour, E.	Layton, L.
Beaverbrook, L.	Long, V.
Belstead, L.	Macleod of Borve, B.
Bessborough, E.	Margadale, L.
Borthwick, L.	Marley, L.
Boyd-Carpenter, L.	Marshall of Leeds, L.
Brookeborough, V.	Massereene and Ferrard, V.
Brookes, L.	Merrivale, L.
Brougham and Vaux, L.	Mersey, V.
Caithness, E.	Middleton, L.
Carnock, L.	Monk Bretton, L.
Clinton, L.	Monson, L.
Clitheroe, L.	Morris, L.
Colwyn, L.	Munster, E.
Constantine of Stanmore, L.	Nelson, E.
Cork and Orrery, E.	Norrie, L.
Cottesloe, L.	Nugent of Guildford, L.
Craigavon, V.	Onslow, E.
Craigmyle, L.	Orkney, E.
Crickhowell, L.	Orr-Ewing, L.
Cross, V.	Oxfuird, V.
Darcy (de Knayth), B.	Pender, L.
Davidson, V. [Teller.]	Radnor, E.
Denham, L. [Teller.]	Rankeillour, L.
Dilhorne, V.	Renwick, L.
Dundee, E.	Rochdale, V.
Elibank, L.	Saltoun of Abernethy, Ly.
Elles, B.	Sanderson of Bowden, L.
Elliott of Morpeth, L.	Sharpies, B.
Faithfull, B.	Skelmersdale, L.
Ferrers, E.	Stanley of Alderley, L.
Fortescue, E.	Stodart of Leaston, L.
Fraser of Carmyllie, L.	Strathclyde, L.
Gisborough, L.	Sudeley, L.
Glenarthur, L.	Swinfen, L.
Gray of Contin, L.	Teynham, L.
Grimston of Westbury, L.	Thomas of Gwydir, L.
Hailsham of Saint Marylebone, L.	Thomas of Swynnerton, L.
	Trafford, L.
Hardinge of Penshurst, L.	Tranmire, L.
Harmar-Nicholls, L.	Trefgarne, L.
Harvington, L.	Trumpington, B.
Havers, L.	Vaux of Harrowden, L.
Henley, L.	Vinson, L.
Hesketh, L.	Westbury, L.
Hives, L.	Wyatt of Weeford, L.
Hooper, B.	Wynford, L.
Hylton-Foster, B.	Yarborough, E.
Jenkin of Roding, L.	Young of Graffham, L.
Johnston of Rockport, L.	Zouche of Haryngworth, L.
Joseph, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.54 p.m.

Lord Gallacher moved Amendment No. 8: Page 195, line 1, leave out sub-paragraph (3).

The noble Lord said: My Lords, in moving this amendment on behalf of my noble friend Lord Mclntosh of Haringey, I shall speak also to Amendment No. 9. The amendment returns to concerns raised at the Committee stage by the noble Lord, Lord Moran, and others. The issue is the removal of the funding constraint on the NRA Whereby the Secretary of State may require any surplus held by the authority, whether on capital or revenue account, to be paid to the Treasury. The amendment would remove that power.

The noble Lord, Lord Moran, spoke in detail at he Committee stage about the functions of the NRA and its likely expenditure profile. He pointed to government assurances that the NRA would be given all the resources that it needed but drew attention to the fact that such resources were vulnerable to the extent that they relied on the Exchequer grant. I made a similar point on Second Reading. So did other noble Lords.

In the view of the noble Lord, Lord Moran, the scope for the NRA to raise funding through charges to a greater extent than presently envisaged would be preferable. However, the fact that any surplus might be appropriated by the Treasury would make it more likely that it would be spent before the end of the financial year. Equally, the opposite view could be taken; namely, that any balance should be spent on the environment before being taken back to the Treasury and that any other policy on the part of the Government would be at the expense of the environment. A rush to spend balances before appropriation is not conducive to planned expenditure.

If the Government's objective is to exercise a financial discipline on the NRA and not allow it to become profligate in spending grant, it would surely be possible to devise a system whereby, if the authority becomes regularly and substantially profitable after the initial years, its grant could be progressively adjusted over a period of time. What is undesirable is that unspent funds, which could be put to good use, should have to be given to the Consolidated Fund. The Government say that they do not require the NRA to make a profit. The issue is that an increase in income for the NRA from various water users is a possible source of spending on the environment.

Much has been made of the need to raise water charges to consumers to cover that spending. Although the amounts involved may not be substantial, designated schemes under the particular control of the NRA could benefit directly from relatively small amounts of well targeted expenditure. That point was also made by several noble Lords at the Committee stage. If the Government are concerned that the money might be spent other than wisely on environmental projects, it would presumably be within their power, either by amendment to the Bill or by direction to the NRA, to establish the basis on which the money should be spent or invested.

As I have said, that is the purpose of Amendment No. 8. Amendment No. 9 is consequential. I beg to move.

The Earl of Arran

My Lords, as the noble Lord, Lord Gallacher, has pointed out, this amendment and the principles and policies behind it were very well aired in Committee by my noble friend Lord Hesketh who said that the NRA will be a public sector body exercising monopoly powers in respect of some of its functions. It must therefore be subject to the financial controls appropriate to a body responsible for voted expenditure. These controls do not allow the carrying over of large surpluses or deficits from one year to the next. We have made clear that the right way for a national body like the NRA to be funded is by grant-in-aid from the Exchequer.

Part of the planning process required for deciding the necessary levels of grant-in-aid for the NRA will involve the NRA in providing accurate and reliable forecasts of its income and expenditure. We accept that it may sometimes be necessary for the NRA to carry over relatively small amounts of cash at the end of a financial year to allow for the normal flow of business. We do not anticipate that the NRA will carry forward deficits on the majority of its functions. With proper planning the NRA should be able to work within its budgets. If cash-flow requirements so dictate, there is provision under paragraph 18 of Schedule 1 for the NRA to undertake temporary borrowing within the year concerned. In an extreme case, there could be an application for additional grant-in-aid.

We must make it absolutely clear that if a large surplus were to arise that would indicate that grant-in-aid had been given to the NRA in advance of need; taxpayers would have contributed more than was necessary towards its funding. The only other way in which the NRA could generate such a surplus would be if, at some time in the future, it was in a position to raise more in charges than it needed to finance its activities and did so—in other words, that it began to make a profit. In either of these situations, the appropriate course must be for the Exchequer to recover the surplus. The fact that the NRA depends for its funding on the Treasury must mean that any surplus should be returned to the Treasury. I should emphasise that the position with regard to flood defence is rather different. First, it will not require the support of grant-in-aid as the costs of the NRA's flood defence work will be met entirely through local authority precepts and MAFF and Welsh Office capital grants. Secondly, we recognise that with this major area of NRA activity factors such as the weather may sometimes lead to significant disruptions to planned work programmes or to the need for extra work. Provision already exists with Section 47 of the Land Drainage Act 1976 for the carrying forward of any excesses or deficiencies that may arise on water authorities' land drainage accounts as a result of changes to the planned annual programme of works. That power will transfer to the NRA when it takes up the water authorities' responsibilities for flood defence.

I hope that what I have said has convinced your Lordships that Amendments Nos. 8 and 9 are undesirable. The power to recover surpluses which is set out in sub-paragraph (3) of paragraph 15 of Schedule 1 is well precedented. It is a discretionary power that could be used only after consultation with the NRA.

I should like to repeat once again, as we have so often done in the past, the firm undertaking that the NRA will be provided with the resources it needs to carry out its functions. There is absolutely no need for it to create surpluses to fulfil its duties.

With that particular explanation of the amendment, I hope that the noble Lord may see fit to withdraw it.

7 p.m.

Lord Gallacher

I am grateful to the noble Earl, Lord Arran, for the reply he has given on Amendments Nos. 8 and 9. There is a point on which the Government's case is rather weaker than he made out; this emerged in some detail during our deliberations in Committee. It is that the NRA could cater for a wider range of activity than its grant will allow by raising modest charges on a number of activities on the strict understanding that those charges would be devoted to environmental purposes, and in that way the environmental aspect of the NRA's work would be strengthened. Indeed, the Minister did not rule out that possibility in his reply.

However, it would be a major disincentive, both now and in the future—if such a policy were to be pursued by the NRA and responded to in measure by those who were making a contribution towards those environmental improvements—if the basis of contribution was that there was a strong likelihood that, as a result of creating a surplus at year end, whether on revenue or capital account, the money so subscribed would fall to the Consolidated Fund. That seems to be a disincentive of a major kind. From our point of view it means that the NRA is going to be circumscribed in that particular respect, even though I accept the Minister's assurance that for its normal functions the NRA is going to be amply funded by the Government. That is a welcome announcement and confirms what we were told at Second Reading and at the Committee stage.

In addition, we should take note of the fact that the flood expenditure of the NRA is excluded from the possibility of appropriation of surplus. As the noble Earl has said, that also is covered by existing legal provisions.

On the question of recovering surpluses, I particularly welcome the assurance which the Minister gave me that this power will not be used in respect of main grant; he said, first, that it is a discretionary power and that it certainly will not be used even if surpluses begin to emerge without extensive and prior consultation with the NRA. I am sure that that assurance will be welcomed by the NRA and by those who are charged with the responsibilities which the Bill will place upon that body. In that light, and given that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

Lord McIntosh of Haringey moved Amendment No. 10: Page 196, line 31, after ("loan") insert ("and with the consent of the Treasury").

The noble Lord said: With Amendment No. 10 I should like to speak also to Amendments Nos. 11 and 12.

These amendments concern a matter which was debated at some length in Committee but which deserves a further airing in the rather different form that we have now put it forward because of the concerns which were expressed about the amendments brought forward by the Government at Report stage in another place. The House will recall that the Secretary of State introduced amendments at Report stage in another place—which I say at once were intended to be helpful—which gave the National Rivers Authority the power to borrow for unplanned expenditure on flood damage. The words which the Secretary of State used were expenditure: for which it had been impossible to plan".

We argued in Committee that that did not make very good sense because experience in the recent past had been that there were a substantial number of items of flood relief expenditure which ought to be planned and which ought not to be treated as an emergency. The money would be more effectively spent if such items were planned rather than treated as an emergency. Yet they were of such a size that to finance them out of current expenditure rather than out of borrowing would be a big mistake financially. The particular example which was given was the Thames Barrier which cost £105 million. If similar expenditure had to be financed without borrowing, it would have to come from the precepts of the regional land drainage committees and therefore from the county councils or metropolitan borough councils in the area.

The point about very large items of flood relief expenditure is that if they are any good they have a very long pay-back period. They are supposed to provide benefits over a very long period of time. In any other kind of business it would be thought to be proper for this to be treated as capital expenditure on which borrowing is possible rather than treated as current expenditure and required to be recouped entirely from precepts over the year or perhaps two or three years in which the expenditure actually occurred. The effect of treating it as current expenditure would be that there would be very large increases in the precepts on local authorities. This would start to cause a great deal of damage to the Government's control of local authority expenditure to which we know the Government pay so much attention.

The noble Lord, Lord Crickhowell—I am sorry to introduce his name again—in his Second Reading speech questioned whether the Secretary of State's restriction to expenditure for which it had been impossible to plan was wise. I agree with him. From the point of view both of sensible thinking about flood relief expenditure and the sensible financing of very large projects it is desirable that the expenditure should be based on borrowing powers and that it should be possible for it to be spread over a considerable period of time.

I am well aware that once one starts this line of argument one comes up against the clammy hand of the Treasury, as the noble Lord, Lord Renton, has so recently and felicitously put it. One comes up against the argument that one cannot have uncontrolled borrowing because that affects the public sector borrowing requirement even at a time when, as at present, we do not have any public sector borrowing requirement. We have only a public sector debt repayment.

Therefore in Amendment No. 10, instead of taking the phrase out, we have inserted, "with the consent of the Treasury". I can see that the noble Lord, Lord Renton, does not like it. However, if the noble Lord, Lord Boyd-Carpenter, were in his place, he might agree that substantial amounts of borrowing ought not to take place without the knowledge of the Treasury. I can well understand the argument that it should be with the consent of the Treasury.

In Amendment No. 11 we are talking about the planned programme of works or emergency measures. In Amendment No. 12 we are widening it somewhat to talk about "programmes for the improvement of the environment". These are already the functions of the National Rivers Authority under Parts I and III of the Bill. The programmes for both flood relief and improvement to the environment are the proper concerns of the National Rivers Authority. We are not proposing in any way to extend the functions of the National Rivers Authority. The programmes may involve substantial amounts of expenditure with a very long pay-back period for which in any normal business borrowing would be right; they should be treated as capital expenditure. We are providing that the Treasury should have an overall control in order to maintain its control of the public sector borrowing requirement.

I believe that these amendments are a responsible reflection of the discussion that took place at Committee stage. I believe that they make good business sense for the National Rivers Authority. They reflect the concerns expressed at Second Reading by the noble Lord, Lord Crickhowell, and others. They do not involve any threat to public expenditure controls because of the requirement for Treasury consents. I commend the amendments to the House.

7.15 p.m.

Lord Renton

My Lords, I am surprised that the noble Lord should move Amendment No. 10. He will not be surprised that I oppose his amendment very strenuously. In Schedule 1 we already have the nonsense of the consent or approval of the Treasury being required on nine different occasions. I need not take up time referring to them. However, there are nine of them. If we add what is in paragraph 15(3) we bring it up to 10 because sub-paragraph (3) refers to "consultation with the Treasury".

The noble Lord, Lord McIntosh, wishes to bring the score to a total of 11. If I may say so, the one to which he has spoken is most inappropriate to the circumstances that we find here. It is a question of the authority being given power to borrow otherwise than by way of temporary loan—the implication there is that for temporary loans it does not need the consent from anyone; it can obtain them—such sums in sterling from the Secretary of State or the Minister as it may require for capital purposes in connection with flood defence functions.

Any loans obtained from the Secretary of State or the Minister have to appear on the accounts presented by the Secretary of State or the Minister to Parliament. That the consent of the Treasury should also be required is overdoing it. It is redundant. It is unnecessary. The Secretary of State or the Minister will have to take responsibility for presenting their accounts to Parliament and receiving ex post facto approval for the loans that they have made to the National Rivers Authority, to do work which Parliament says that it has to do.

Why should we bring in the Treasury yet again? It is quite unnecessary. What is more, all these references to obtaining the consent of the Treasury are an adverse reflection on the machinery of Government. If the machinery of Government is working properly—as it normally does—the consent of the Treasury is quite unnecessary. I do not wish to use too strong an expression; but it is not very complimentary to Ministers, including the whole of the Cabinet, to keep on putting into a statute that they shall obtain the consent of the Treasury.

One of these days I hope that the Government on both Front Benches in both Houses will wake up to the poor compliments that they are being paid by having to have these words constantly inserted in statutes. The fact that they have been inserted for years—and we know that they have—does not mean to say that they should be inserted for the rest of time.

I hope that on reflection the noble Lord, Lord McIntosh of Haringey—who showed great wisdom earlier on this matter—will say to himself, "No, perhaps this is not an amendment that I ought to press."

Lord McIntosh of Haringey

My Lords, before the noble Lord sits down—since he will not have another opportunity to answer although I shall—I observe, first, that he makes these comments about the Treasury in the absence of his noble friend Lord Boyd-Carpenter. Secondly, would he care to pass a judgment—that I would much respect—on my other amendments, Amendments Nos. 11 and 12 which are substantive amendments.

Lord Renton

My Lords, I had not taken up time. I have considered them. The noble Lord's other amendments make it even worse. I shall say why in relation to one of them. The noble Lord wants the consent of the Treasury to be obtained for a loan for emergency measures in pursuance of these functions of flooding control. Goodness me, my Lords, the Treasury can take a long time! It therefore makes matters worse.

Baroness White

My Lords, I am still a little unclear about the attitude of the noble Lord, Lord Renton. I can understand, and to a great extent share, his feelings about the Treasury. Anyone who has been the chairman of even the most modest quango knows how infuriating the Treasury can be. I am all for freeing oneself from the clammy hand, or what I would call the Gladstonian dead hand of the Treasury, wherever possible. However, I am very much concerned about Amendment No. 12. There could well be a situation in which it could be to the advantage of environmental interests if the borrowing powers of the National Rivers Authority were possibly extended, not necessarily including the Treasury. I hope therefore that serious consideration will be given to Amendment No. 12, in addition to the difficulty about Amendment No. 10. I must admit that I was not here for the Committee discussion on this matter. Therefore I hesitate to do more than draw attention to what I suppose to be a highly desirable amendment at this stage of our deliberations.

Lord Renton

My Lords, before the noble Baroness sits down, I agree that it would be less harmful if the consent of the Treasury did not have to be obtained. Therefore if Amendments Nos. 11 and 12 were moved without Amendment No. 10, that might be a little less harmful.

The Earl of Arran

My Lords, as the noble Lord, Lord McIntosh of Haringey, pointed out, the substance of the amendments had a good airing in your Lordships' House during the Committee stage. They were given a somewhat draughty reception by my noble friend Lord Caithness.

Amendment No. 10 would require that borrowing by the NRA, other than by way of temporary loan and as set out in the remainder of paragraph 18, shall be subject to the consent of the Treasury. It is perhaps difficult to reconcile the Opposition's usual aversion to the Treasury's involvement in matters affecting the NRA's financial arrangements with the wording of Amendment No. 10. But I should point out that as the making of loans will be subject to the Treasury's approval, as my noble friend Lord Renton has already pointed out, under Schedule 1, paragraph 19(1), Amendment No. 10 is unnecessary. Amendments Nos. 11 and 12 have the more substantial effects of enabling the NRA to borrow for a planned programme of flood defence works, and for its environmental improvement programmes.

As my noble friend Lord Caithness explained in Committee, we considered very carefully the extent to which the NRA would need borrowing powers before amending the Bill in another place so as to provide for the possibility of borrowing in respect of its flood defence function. As my right honourable friend the Secretary of State made clear when these amendments were introduced, the use of borrowing powers for flood defence is normally intended to be restricted to circumstances where works are needed for which it had not been possible to plan. This is because water authorities have generally managed without significant new borrowings in respect of flood defence in recent years. There is therefore no reason why the NRA should not be able to provide for the normal run of its flood defence works without recourse to borrowing. The possibility of an unexpected need for major expenditure—as could occur after a major flooding emergency—is the main reason we consider that it is right for the NRA to have borrowing powers.

However, we noted the point made by the noble Lord, Lord McIntosh, in Committee that when there was an extensive programme of flood protection works it could be difficult for local authorities to fund the NRA's precept out of a single year's revenue income. We accept that there are circumstances where this could be the case. But we do not consider it right that it should be the NRA that should borrow in these circumstances. It must be right for the authorities themselves to take decisions to defray expenditure, given that the NRA's flood defence work will be carried out ultimately for them and paid for by them. It will be possible for local authorities to receive credit approvals to cover such borrowing under the new capital finance system.

We see no case for borrowing for the remainder of the NRA's functions. These functions are generally supported by Exchequer grant-in-aid, or there is the facility in the Bill to pay grant-in-aid in respect of these functions. This means that it will always be possible to take account of the need for major capital expenditure in the public expenditure survey bids submitted by the NRA. On the rare occasions when a major capital project was required, increased grant-in-aid could be paid to finance it. There is therefore no need for the NRA to borrow on these functions. In this respect and with these arguments I ask the noble Lord to withdraw the amendment.

Lord Crickhowell

My Lords, perhaps I may say how much I welcome the recognition by the Government of the advice given by the NRA that there might be a problem over local authority precepts. It was our principal remaining point of concern, particularly in the light of the fact that the amendment moved in another place is entirely satisfactory as a clause. The only issues that concerned us were the statements made by Ministers at the time about its application. I do not understand the details of the local authority borrowing mechanisms enough to comment about the way in which this will work, but it is a recognition that will be welcomed throughout all the organisations involved in the flood defence work around the country, among which there was great anxiety about these points.

The fact that the Government have recognised this problem and believe that they have brought forward a solution will be particularly welcome, especially as the clause as it stands is satisfactory, so long as the Government recognise that there is a problem and interpret the matter in the most reasonable and practical way.

Lord McIntosh of Haringey

My Lords, two issues have been raised in the debate. If the noble Lord, Lord Renton, will forgive me, there was the minor or secondary issue, and the other was the substantive issue of how to secure major capital works and planned programmes for flood relief and for environmental improvement, paid for sensibly. On the first issue, which is Treasury consent, I should have been prepared if necessary to withdraw that amendment and to pursue Amendments Nos. 11 and 12. The noble Lord, Lord Renton, has a point about the need for Treasury consent. All I can say is that introducing Amendment No. 11 is evidence, if evidence were needed, of my concern for the proprieties, my moderation, my anxiety to achieve results by agreement rather than by confrontation, which has always been a feature of my approach to these matters. But if I find myself criticised from the left by the noble Lord, Lord Renton——

Lord Dean of Beswick

From the left, my Lords?

Lord McIntosh of Haringey

From the left—then I listen very carefully to what he says. However, the question does not arise because the noble Earl, Lord Arran, has made what appears to me on the face of it a very useful reply. I should like to read it carefully before deciding whether any further action is required at another stage.

As I understand what the Minister has said, where substantial items of expenditure ought to be spread over a number of years the local authorities may—I can understand why he cannot say "shall", because not all proposals for capital expenditure are of equal value—be given the credit authority to borrow money for the purpose. It is better that such borrowings may be eligible for Exchequer grant, which would not otherwise be the case. If that is so, and if having studied the Minister's words carefully the local authorities are satisfied that this is an adequate protection, I merely thank him and I shall not return to the matter. If there are any other concerns on reading the Minister's remarks, I am sure he will understand that I shall feel obliged to return to the matter.

The Minister has shown a recognition of the issue at stake. It is on that basis that it is appropriate that I should seek the leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 11 and 12 not moved.]

The Earl of Arran

My Lords, with your Lordships' agreement, this may be an appropriate stage at which to break for dinner. I suggest that we return to the Report stage at 8.30 p.m. I beg to move that further consideration on Report be now adjourned.

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