Lords Sitting of 8 June 1989

Preamble
The House met at three of the clock Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chelmsford):
The LORD CHANCELLOR on the Woolsack.

Bus Operators: London Airport Charges
Baroness Burton of Coventry Baroness Burton of Coventry asked Her Majesty's Government:
Whether they have been informed by the Director General of Fair Trading of the decision reached by the Office of Fair Trading on the proposed plans by the British Airports Authority plc to increase charges to bus operators taking passengers to London's main airports, and if they will amplify their Answer of 15th March (Official Report, cols. 228–9).
Viscount Davidson: My Lords, the Office of Fair Trading is continuing its inquiries. It would be wrong for me to speculate on possible outcomes.
Baroness Burton of Coventry: My Lords, I feel sure that the Minister will agree that the Answer supplied to him today hardly provides the amplification asked for in the Question. Can he tell the House whether I am correct in believing that a decision is imminent? If so, can he say whether it will include not only the bus charges matter but also whether a reference should be made to the Monopolies and Mergers Commission, as mentioned by the noble Lord, Lord Brabazon, on 15th March at col. 228 of the Official Report, and which would come under the heading of competition and monopoly arising from other matters being looked into by the Office of Fair Trading?
Viscount Davidson: My Lords, I wish to say how pleased noble Lords are to see the noble Baroness in her usual place after her unfortunate accident.
Noble Lords: Hear, hear.
Viscount Davidson: My Lords, clearly it has not taken the wind out of her sails! I cannot say when a decision will be made. It is entirely in the hands of the Office of Fair Trading. It can investigate cases under the 1973 or 1980 Acts and refer them to the Monopolies and Mergers Commission if it believes that anti-competitive practices are being carried out or a monopoly situation exists. The Monopolies and Mergers Commission can then decide whether practices are against public interest.
Baroness Burton of Coventry: My Lords, the Minister and the House are very kind but not half as pleased as I shall be when I receive a good Answer! Can the Minister ensure that the British Airports Authority looks at what has been said today? Perhaps I may repeat a Question which I asked on 15th
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March. Do the Government approve of the monopolistic way in which the British Airports Authority exercises its position, especially since privatisation?
Viscount Davidson: My Lords, I have a copy of the Official Report of 15th March. However, all I could do would be to repeat my noble friend's Answer to that Question. I am sure that the chairman of British Airports Authority will read the report of today's exchanges. I wish that I could give the noble Baroness a better Answer but I am afraid that I cannot.
Lord Underhill: My Lords, does the noble Viscount recall that when the noble Baroness—and I join in welcoming her return—asked the Question of 15th March I also asked about the responsibilities of the CAA under the Airports Act 1986? I was informed that the CAA had not made any representations to the Office of Fair Trading, as has been done by the Bus and Coach Council. Can the noble Viscount say why the CAA, which has a responsibility for the airports and the passengers as well as the bus operators, has not made representations on the issue?
Viscount Davidson: My Lords, I understand that the CAA is awaiting the decision of the Office of Fair Trading in case its regulatory functions under the Airports Act 1986 need to be brought into play.
Lord Monson: My Lords, does the noble Viscount agree that, when compared with the fares for similar bus journeys from airports to the centre of other European capital cities, the bus fares from Heathrow Airport to the centre of London are among the highest in Europe?
Viscount Davidson: My Lords, that is one of the reasons why the Office of Fair Trading is looking into the matter.

Interest Rates: Effect on Home Buyers
3.5 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether, in order to reduce the present hardship being experienced by owner-occupiers, they intend to announce a cut in the Bank Lending Rate; and, if so, when.
Lord Strathclyde: My Lords, the Government never speculate on future movements in interest rates, but everyone has far more to fear from a resurgence of inflation than from a period of high interest rates.
Lord Dean of Beswick: My Lords, is the Minister not aware that there is a substantial increase in the number of mortgage foreclosures and that people are losing their homes because of their inability to meet the heavy interest payments? Is he also aware that the number is escalating dramatically? Are the Government prepared to let the present situation continue and do nothing to help those who are the victims of their policies?
Lord Strathclyde: My Lords, inflation is a far greater problem than high interest rates. My information is that only one-fifth of 1 per cent. of all loans result in repossession. Indeed the number of repossessions between the first half of 1988 and the second half showed a reduction of 34·7 per cent.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that, however hard are the present rates of interest on mortgage borrowers—as all noble Lords will appreciate—it would be harder on them and the rest of us if inflation were allowed to get out of hand?
Lord Strathclyde: My Lords, my noble friend is right. The Government regret any hardship caused to mortgage borrowers. However, as we have said, inflation is a far greater problem.
Lord Tordoff: My Lords, is the noble Lord not aware that not only do we have high interest rates but also increasing inflation?
Lord Strathclyde: My Lords, that is a short-term phenomenon. In the second half of this year inflation will fall back.
Lord Stoddard of Swindon: My Lords, is the noble Lord aware that, according to the credit figures which were announced earlier this week, high interest rates are not working? Does he agree that they merely put up costs to businesses and owner occupiers? Will he now urge his right honourable friend to adopt further measures of credit control including the deposit by the banks of special deposits with the Bank of England?
Lord Strathclyde: My Lords, credit controls do not work. The economy is slowing down. We have seen house prices falling considerably in certain areas. Retail sales have dropped since last summer. MO has slowed down considerably and is coming within the target area.
Lord Bruce-Gardyne: My Lords, does my noble friend agree that noble Lords opposite are being a little ungenerous about the matter? Is it not the case that, because of its differentially severe effect on the areas in the South-East with high mortgages, the present correct policy of high interest rates is doing more to narrow the so-called "north-south divide" than all the regional policies of all the governments since the war? Should not the Opposition be grateful for that?
Lord Strathclyde: My Lords, that is a most interesting argument and I am sure that noble Lords opposite have taken it on board.
Lord Mellish: My Lords, will the Minister understand that while nearly everyone supports the principle of a property-owning democracy, it becomes immoral when a young married couple sign a contract which says that a certain amount of interest will be repaid and are then told—for reasons unknown to them and not understood by them—that the interest rates have gone up and then gone up
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again? I know of one instance where the mortgage repayments have become absolutely appalling.
Lord Strathclyde: My Lords, all mortgage borrowers are aware that interest rates can go up as well as down. Also, building societies offer certain budget plans where increases or falls only take place once a year.
Lord Mason of Barnsley: My Lords, can the Minister tell the House what is one-fifth of 1 per cent. of repossessions? What are the figures?
Lord Strathclyde: My Lords, out of a total of 7·5 million loans, in the period from July to December 1988 there were 6,380 repossessions.
Lord Bruce of Donington: My Lords, further to what my noble friend said, is the noble Lord aware that on an annual basis there were some 20,000 repossessions in 1988, which is nine times the number in 1978–79? Can the noble Lord give the House an assurance that those property owners will not be squeezed by a further increase in interest rates in order to sustain, among other things, the overseas value of the pound?
Lord Strathclyde: My Lords, the noble Lord knows perfectly well that I cannot give him that assurance. However, as regards repossession, according to the Building Societies Assocation the main causes of mortgage problems are matrimonial, unemployment and financial mismanagement difficulties. The Government have been able to help with unemployment and will no doubt turn their efforts to the other two problems in the near future.
Lord Dean of Beswick: My Lords, is the Minister not aware that the figure for the Government's housebuilding programme this year shows a serious downward turn? Is that not because of the high interest rates? Bearing in mind that the Minister sat and listened to yesterday's debate on the homeless, does he not believe that it showed there is little prospect of helping people in that terrible situation?
Lord Strathclyde: My Lords, from what I gathered of the debate yesterday, in most parts of the country there are more houses than there are people to live in them. There are certain areas where there is a substantial problem. My noble friend Lord Caithness said that he was very sympathetic to that and that he was looking further into the problem as a whole.

Hong Kong Ivory Trade
3.12 p.m.
Lord Bethell Lord Bethell asked Her Majesty's Government:
Whether they propose to take steps to stamp out the ivory trade in Hong Kong.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, we are in close touch with the Hong Kong authorities about this matter. They take very seriously their responsibilities

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as a party to the Convention on International Trade in Endangered Species (CITES). In the light of calls for action to stop the global trade in ivory totally, they are now urgently reviewing their position.
Lord Bethell: My Lords, I am grateful to my noble friend for that reply. However, is he aware that last year 264 tonnes of raw ivory were imported into Hong Kong? Does he agree with me that it is extremely likely that a large proportion of that raw ivory was poached through illegal killing in Africa? Does he not agree that it would now be appropriate for the Hong Kong Government to impose a total ban on the import of new ivory into that territory alongside the ban to be imposed by the United Kingdom and other European Community countries? Will the Government encourage the Hong Kong Government to impose such a ban?
Lord Glenarthur: My Lords, I am in no doubt whatever that the Hong Kong Government are fully aware of the strength of feeling upon this issue. It is essentially a matter for them because they enjoy a high degree of autonomy on matters of that sort. However, as party to the convention and by virtue of the extension of the United Kingdom's ratification, Hong Kong is required to implement the same controls as all other parties to the convention.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that the people of this country have been appalled by the reports of this brutal trade? Can he be more specific as to what Her Majesty's Government propose to do, particularly in relation to the Hong Kong trade? Are they proposing to convey an instruction, which they have a power to do under statute, to the Government of Hong Kong on that subject? In view of the statement made by the noble Lord, Lord Bethell, that in any event half of the trade is black market, are the Government proposing any specific action on that?
Lord Glenarthur: My Lords, as I said in my original Answer, that is something which the Hong Kong Government are reviewing with urgency in the light of the concerns which the noble Lord and others throughout the country have expressed about this horrible trade. On the basis of that review, the Hong Kong Government will decide what to do and we shall be very interested in that decision.
Lord Northfield: My Lords, can the noble Lord say whether much of this ivory is reaching Hong Kong and elsewhere through the United Arab Emirates, one of the worst places in the world for the selling of poached ivory? If that is the case are the Government also putting pressure on the government there to stop their trade?
Lord Glenarthur: My Lords, yes. Certainly there is concern about trafficking in ivory through the United Arab Emirates and we have repeatedly urged the government there to tighten controls on the trade. We have also helped international organisations and interest groups to express their concerns to the UAE authorities.
The Viscount of Falkland: My Lords, does the Minister not agree that the enormous reductions of the great elephant herds in Kenya over the past 10 years is a matter of world concern? Since we have strong relations with Kenya, would it not be possible for Her Majesty's Government to put pressure upon the Kenyan Government? There is no doubt that many people in high places in that country have enriched themselves through that shocking trade which is the source of supply for much of the ivory sold in Hong Kong and other places.
Lord Glenarthur: My Lords, I am sure that that is something which we should like to see achieved. However, we are straying somewhat from Hong Kong.
Lord Stanley of Alderley: My Lords, I believe that I am right in saying that during the slave trade Her Majesty's ships could stop slavers to search for slaves. Does my noble friend know whether Her Majesty's ships are allowed to stop ships which they think have illegal ivory on board?
Lord Glenarthur: My Lords, I am bound to say that I do not know the answer to that particular point. Perhaps that is something which I can also look into.
Viscount Massereene and Ferrard: My Lords, regarding elephants, as we in this country started most of the game parks in Africa could we not help by training their gamekeepers—I do not know if that is the right word? Could we not provide money to provide more staff to defeat the poachers?
Lord Glenarthur: My Lords, any idea is worth exploring when one considers that the number of African elephants has fallen from approximately 2·3 million in 1970 to about 700,000 today. What my noble friend Lord Caithness is trying to do in Brussels today is to ensure that African elephants are put on to the Appendix 1 side of the convention of which I spoke. We sincerely hope that that will meet my noble friend's concerns.
The Viscount of Falkland: My Lords, will the Minister agree that the monthly wage of what is in fact a game warden—if I can help the noble Viscount—is around 60 or 70 Kenyan shillings per month and that that kind of wage hardly induces him to resist the approaches of people involved in this terrible trade?
Lord Glenarthur: My Lords, I well understand the force of feeling but we are straying very widely from the Question on the Order Paper. That relates specifically to Hong Kong and the end use of the product which is of concern to us.

Events in China: Implications for Hong Kong
3.20 p.m.
Lord Wyatt of Weeford Lord Wyatt of Weeford asked Her Majesty's Government:
What are their reactions to recent events in China and the possible effect of those events on the handover of Hong Kong to China in 1997.
Lord Glenarthur: My Lords, I made clear our shock and outrage at the recent events in China when I repeated my right honourable and learned friend's Statement to the House on 6th June. Our concern is all the greater because of our responsibility to Hong Kong. Our commitment to a secure, stable and prosperous future for the territory is as strong as ever. We look to China to stand by her obligations under the joint declaration in the same way.
Lord Wyatt of Weeford: My Lords, in view of the announcement of increased flexibility for issuing passports to Hong Kong subjects, will the Government bear in mind that it is not sufficient merely to give them to top civil servants but also to those who are the top of commerce and industry in the territory? If that is not done the whole of Hong Kong will collapse long before 1997.
Will the Minister further take on board the remarks made by the Governor of Hong Kong this morning on the BBC that the number of people who would take up passports if they were freely available has been greatly exaggerated by Her Majesty's Government? There would be very little danger of any large number coming to this country if there was an emergency right of abode, with passports issued for that purpose in good time. Will the Minister also confirm that there is to be full democracy in Hong Kong before it is handed over to China in 1997?
Lord Glenarthur: My Lords, I am acutely aware of the concerns expressed both in Hong Kong and elsewhere about the matters relating to right of abode in the United Kingdom and to which the noble Lord has given voice on many occasions. Recently I expressed our deep understanding and sympathy for the people of Hong Kong at what for them must be a very worrying time indeed. None of the force of that is lost on me or any of my right honourable friends.
The fact is that we are considering carefully, and with the sympathy which the noble Lord would expect of us, what can be done to meet the sort of concerns he expresses and which are voiced by the people of Hong Kong. The Governor of Hong Kong is over here at the moment and talks are taking place. I do not think that the noble Lord would expect me to go further at the moment.
As regards democracy, over the past few months there have been differing views in Hong Kong about the rate of progress towards democracy. In the light of what has happened in the past few days in Peking, those arguments also are not lost on us.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord be a little more specific? The Prime Minister herself has said that the Government intend—and I quote her words—to exercise more flexibility in applying the 1981 Act to Hong Kong residents. Can the noble Lord elaborate on that and say what categories the Government have in mind?
As regards democracy, to which the Minister just referred, is he aware that last month the Hong Kong Legislative Council voted unanimously that one-half of the members of that council should be subject to direct elections by 1997? Can the Minister say whether the Government regard that favourably?
Lord Glenarthur: My Lords, I am afraid I cannot go further on the matter of categories other than to say that all categories will be considered in the light of the concerns expressed and the comments of my right honourable friend the Prime Minister to which the noble Lord referred. It is too early to say what the answer may be because discussions are going on even today.
In regard to representative government, I am of course aware of what was said in LegCO recently and we shall have to keep our eye on the situation which has resulted from the developments in China. Again, it is too early to say precisely what the decision will be but the force of the arguments is not lost on us.
Lord Cledwyn of Penrhos: My Lords, is it not true that the Government regard as having priority those classes with large capital assets?
Lord Glenarthur: My Lords, as I said, all categories—that includes the entire range of people in Hong Kong—will have to be considered in this way. That is what is presently being done and is one of the reasons why the Governor is over here. However, I am not in a position to go further at the moment.
Lord Kennet: My Lords, can the Minister go further on the question of the introduction of democracy to Hong Kong? Do the Government remember that from these Benches for three or four years we have been saying that we believed that the speed decided upon by the Government would not be fast enough? In view of the fact that the noble Lord has said that the Government will not ignore recent evidence and will keep their eye on the situation, may we hope that the noble Lord will be able to come back to this House before the Summer Recess and inform us about an acceleration in the proposed introduction of democracy?
Lord Glenarthur: My Lords, we have always sought to achieve continuity over 1997 and to ensure that what is established before that date will continue to flourish after the transfer of sovereignty; that is why we have worked for a basic law which carries forward the changes we plan to make before 1997. I am sure that the people of Hong Kong fully understand that. However, as I said recently, under the present circumstances we could not ignore a clear call from the community for a faster pace of development than that hitherto envisaged.
Lord MacLehose of Beoch: My Lords, what the Minister said about greater flexibility in administration of the British Nationality Act is extremely welcome. I understand that this will take some time to work out while consideration is going through. However, does the Minister know that many applications for British citizenship under Section 4(5) of the British Nationality Act by Crown servants in Hong Kong have been rejected? I am told that the figure is over 700. As these people are vital for the future of Hong Kong, does not the Minister agree that it would be an extremely good thing if these applications were now reconsidered? Will the Minister speak to his right honourable friend in that sense?
Lord Glenarthur: My Lords, I am well aware of that view and I am grateful to the noble Lord for once more putting it forward. Yes, I am aware of the criticisms from Hong Kong and elsewhere about the very few civil servants who have been granted citizenship under Section 4(5). Again, that is something which falls into the generality of categories, though it has a particular significance of its own which will be considered, as I have described.
Lord Mishcon: My Lords, so that there is no misunderstanding, will the Minister make clear in regard to the words of the noble Lord, Lord Wyatt, in his supplementary question, that it is hoped that the Government will extend flexibility not only to top civil servants but also to top industrialists and commercial people? Will the noble Lord make very clear that flexibility will extend to those who have shown loyalty to this country by their services and who also may have held their British citizenship for a very long time?
Lord Glenarthur: My Lords, with respect to the noble Lord, I think that it is important not to dwell on any particular category of individual at the moment. The fact is that all aspects are being looked at. It is a particularly difficult time to make instant judgments. The matter must be looked at thoroughly for the benefit of all the people whom noble Lords and others are keen to see protected.
The Earl of Bessborough: My Lords, perhaps I may ask a fairly closely related question of which I gave my noble friend notice. Although perhaps not as momentous as the future of Hong Kong, nonetheless it has important Chinese overtones. What is the attitude of the Government towards Chinese students in this country who, in the normal course of events, are shortly due to return to China? In the circumstances, does my noble friend think it might be possible to give them the option of asking for an extension of their stay in this country until the situation in their own part of the People's Republic of China has settled down?
Lord Glenarthur: My Lords, I am grateful to my noble friend for giving me notice of that question. I can assure him that we shall look sympathetically at any application by Chinese nationals to remain here until the situation in China becomes clearer. No Chinese nationals already living here will be required
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to leave the United Kingdom while the situation remains in its present uncertain state.
Lord Bonham-Carter: My Lords, I should like to ask the noble Lord to go a little further in interpreting the word "flexibility", by which the Prime Minister must have meant something. Would it not be fair to ask the Minister to convey to his right honourable friends the feelings in this House that it would be a travesty of justice, humanity and decency if "flexibility" were interpreted to mean only those who could pay, and if it did not include within its terms those who had earned inclusion by public service, intellectual distinction—by saintliness, even—and by industrial skills? Money itself should not be the sole criterion by which humanity can be served.
Lord Glenarthur: My Lords, that is of course a very important consideration. I believe that it points up many of the difficulties in trying to reach a satisfactory answer to this problem. I shall convey the remarks that have been made this afternoon to my right honourable friend's attention.
Viscount St. Davids: My Lords, can the noble Lord tell the House what the Government intend to do as regards the many Portuguese passports which are now being sold in nearby Macau? Is the Minister aware that the Chinese in Hong Kong and Macau are very closely related by family and that these passports will enable them to come here, but will not enable them to move on to Canada and other places?
Lord Glenarthur: My Lords, I am aware of that fact. I am also aware of the fact that the arrangements that have been made in this country and in Portugal as regards their nationals in Macau and ours in Hong Kong varied enormously and differently over the years. That is why we have reached the position that we are in now.
Lord Molloy: My Lords, perhaps I may ask the Minister whether other governments which also have nationals in Hong Kong have because of recent events in China sought discussions with Her Majesty's Government.
Lord Glenarthur: My Lords, as regards other nationals, I am not aware of any discussions, but I shall certainly bear that in mind.

Business
3.31 p.m.
Viscount Davidson: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Water Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Committee stage of the Control of Smoke Pollution Bill will be taken.

Statute Law (Repeals) Bill [H.L.]
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to introduce a Bill to promote the reform of the statute law by the repeal, in accordance with the recommendations of the Law Commission and the Scottish Law Commission, of certain enactments which (except in so far as their effect is preserved) are no longer of practical utility, and to make other provision in connection with the repeal of those enactments. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

International Westminster Bank Bill
Read a second time, and committed to an Unopposed Bill Committee.
Hayle Harbour Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
Brunei (Appeals) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Antarctic Minerals Bill [H.L.]
Lord Glenarthur: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Lord Glenarthur.)
Lord Cledwyn of Penrhos: My Lords, I do not propose to make a speech at this stage, but I wish to raise one important point with the Government before we complete our scrutiny of the Bill. I wish to ask the noble Lord, Lord Glenarthur, what is the Government's response to the news that Australia has decided not to subscribe to the convention? Can the Minister tell me whether this will have a detrimental effect on the Antarctic Treaty system and on international regulations on mineral activities in the region? Can the Minister further tell us whether the Australians are proposing an alternative method of regulation?
Lord Glenarthur: My Lords, I am aware of the concerns that have been expressed about the Australian decision. I can tell the noble Lord that, on 22nd May, the Australian Government announced that they would not sign the convention because they are not satisfied that the convention will adequately protect the Antarctic environment. That was an unexpected turn of events and it leaves the Government to some extent uneasy about the
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future of the Antarctic Treaty system as the means which we prefer for keeping the peace in the Antarctic, which was very much the theme of our discussions at Second Reading.
Our unease arises from the fact that, for as long as the Australians maintain their opposition to the convention, any of the states which participated in the meeting in Wellington in June of last year at which the convention was adopted, can conclude that the convention will not enter into force in a timely manner. Any state which did so would free itself of the commitment reflected in the Final Act at the Wellington meeting to urge its nationals to refrain from Antarctic mineral resource activities. What would follow would be unregulated activity, with all the consequences for the environment and the peace of the Antarctic to which I have referred.
We do not believe that any of the states which took part in the long and difficult negotiation of the convention will necessarily take such a decision soon or indeed lightly. But future events which we obviously cannot foresee—such as a shortage of minerals caused by political problems elsewhere in the world—may change perspectives and national interests. It would be foolhardy not to recognise that the risk of a breakdown in the voluntary moratorium exists. Neither do we believe that the Australian Government do not themselves recognise the increase in this risk that their decision has caused by putting a question mark over the timely entry into force of the convention.
Clearly, we shall want to discuss this in depth during the forthcoming visit of the Australian Prime Minister to this country. Meanwhile, it would be wrong of me to pre-empt those discussions. In answer to the question whether it is still in British interests to continue with this Bill and what we have set out to do, I believe that it is definitely in Britain's interest to enact this legislation and to be in a position to ratify the convention, in which we firmly believe. The primary British interest in Antarctica lies in ensuring that the peace is maintained and that peaceful activity in the Antarctic has the minimum environmental impact. I am sure that such policies will command support from all Members of your Lordships' House. I hope that that answers the noble Lord's concern.
Lord Cledwyn of Penrhos: My Lords, I am very much obliged to the noble Lord for his important and constructive response to my question. I do not believe that we can pursue the matter further at this stage in this House, but we are of course aware that the Bill is going to another place.
On Question, Bill read a third time; an amendment (privilege) made; Bill passed, and sent to the Commons.

Parking Bill
Read a third time, and passed, and returned to the Commons amended.

Water Bill
3.38 p.m.
The Earl of Arran: My Lords, on behalf of my noble friend Lord Caithness, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(The Earl of Arran.)
On Question, Motion agreed to.
Clause 7 [General duties with respect to water supply and sewerage services]:
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh) moved Amendment No. 48:
Page 7, line 19, at end insert—
("( ) to ensure that the interests of every such person are further protected as respects benefits that could be secured for them by the application in a particular manner of any of the proceeds of a disposal (whether before, on or after the transfer date) of any of that company's protected land or of any interest or right in or over any of that land;").
The noble Lord said: My Lords, in moving Amendment No. 48, I propose to speak also to Amendments Nos. 75, 100, 101, 102, 139, 140, 160 and 161. For the purpose of clarification, I propose to move Amendment No. 48 and speak to it. Then the noble Lord, Lord McIntosh of Haringey, will move Amendment No. 48A. The other amendments will follow on from there and, with the leave of the House, I propose to respond to them at the end of the discussion. I shall take a little time in moving Amendment No. 48 and speaking to the other government amendments because they are of an important and substantial nature.
The government amendments grouped with Amendment No. 48 have two main purposes: to ensure that the special environmental quality of water authority land can be indefinitely protected, and to ensure that the customers of the appointed water and sewerage undertakers share the benefits of any disposals of surplus land.
It is a distinctive feature of this privatisation that the water authorities have very extensive landholdings—more than 430,000 acres, of which some 180,000 acres are in national parks and areas of outstanding natural beauty. The amendments are designed to allay various concerns about the future of this land. We have listened carefully to all that has been said, both by noble Lords at Second Reading and in Committee, and by conservation and other bodies outside this House. I should like to give the House a full explanation of this group of amendments, which will I believe provide a full answer to the concerns which have been expressed.
It may be helpful if I first describe the effect of each of the government amendments in the group. Amendment No. 48 would impose an additional duty on the Secretary of State and the Director General of Water Services to ensure that the interests of customers are protected in the application of proceeds from disposals of protected land. Protected land is defined in Amendment No. 161, and includes all the land transferred to WS plcs under Schedule
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2 schemes, and the land held by statutory water companies at any time in the financial year current on the transfer date. It also includes any land which may be held in future by an appointed company for purposes connected with its functions, including any land transferred by Schedule 5 schemes. Amendment No. 160 ensures that the creation of interests or rights over land—for example, leaseholds—is caught by the new provisions, and also the surrender or termination of any interest, as for example where the appointed company has a leasehold and surrenders it.
Amendment No. 75 provides that the management of all land held by appointed companies will be subject to the duties in Clause 8, whether or not the land is being used for functions connected with the carrying out of the functions of a water or sewerage undertaker. Amendments Nos. 100, 101 and 102 will make it possible to entrench certain conditions of appointment relating to disposals of land, so that they cannot be changed except by agreement of the Secretary of State, the director and the company holding the appointment. Amendment No. 139 deletes subsections (7) and (8) in Clause 150, which impose a consent requirement on the disposal of compulsorily acquired land, but these provisions are reintroduced in the new clause which would be inserted by Amendment No. 140.
The new clause is the central piece of machinery of this group of amendments. Companies holding appointments under the Act will be able to dispose of their protected land and interests or rights in that land only with the consent of the Secretary of State or in accordance with a general authorisation given by him. There is a consent requirement for the NRA as well, but this applies only to compulsorily acquired land.
The consent mechanism serves three purposes. First, it will enable the Secretary of State to require that the Crichel Down rules are observed when there are disposals of land which was compulsorily acquired. It is intended that a general authorisation will be issued to each undertaker and to the NRA requiring disposals to be made in accordance with the Crichel Down rules. The rules are designed to protect the interest of the former owners of land. They require that when any land which was acquired by compulsory purchase is to be sold, it should be offered first to the person from whom it was acquired. The rules apply to all agricultural land acquired since 1935, and to other land acquired within 25 years before the date when it becomes available for disposal. Disposals to former owners under these arrangements will be at a price reflecting current market value, as determined by the district valuer.
The second purpose of the consent provisions relates to the new duty concerning the proceeds from land disposals in Amendment No. 48. The intention is to enable customers to benefit from the net receipts from future disposals of land, while preserving incentives for land to be released or developed. It is essential that the arrangements ensure that customers are not prejudiced by two stage disposals via sister companies, with the sister company realising all of the development gains. This is where

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the consent mechanism in Amendment No. 140 plays a part.
My right honourable friend the Secretary of State intends to give the Director General of Water Services a role in disposals, through a consent procedure which will be constructed to allow as much self-policing as possible. There will in effect be three categories of disposal: In the first, directors of appointed companies will be able to provide the director with a certificate that the disposal is an arm's length disposal, with no continuing interest in the land by the appointed company or any related company, and that the best price reasonably obtainable has been obtained.
Where such a certificate cannot be provided but the disposal is below a certain threshold fixed in relation to the value or area of the land concerned, the company will need a certificate from an independent valuer approved by the director that the best price has been obtained. The independent valuer will report in particular on any prospect that the value of the land may be enhanced by a future planning permission.
In the third category involving disposals above the threshold which are not arm's length disposals a specific consent will be needed. As a last resort the director would be able to block inappropriate disposals at less than the best consideration reasonably obtainable, especially where sister companies are involved. In order to avoid unnecessary complications and to ensure the availability of key assets on transfer of appointment, the general consent procedure will require directors to certify that assets are redundant before they are sold.
The consent requirements are designed to make sure that the best price is realised by the appointed company. There will be conditions of appointment determining how that value is to be taken into account in price control, so that customers share the benefit of proceeds. The intention is to set a target amount for disposals when the RPI plus K price control formula is first set. This will be discussed with each authority and company, but it is proposed that it should reflect 100 per cent. of the open market value of identified surplus sites. Where actual receipts vary from the forecast amount—and because of the difficulty of predicting the enhancement of value that may arise on certain sites as a result of new planning permissions it is likely that out-turn will exceed the initial forecast—a further adjustment of K will be made reflecting 50 per cent. of the excess of shortfall.
Before proceeds are divided between customers and shareholders allowance will be made for transaction costs, and for costs which are necessary in order to release the land, in so far as these are not already taken into account in K. In order to pick up and deal with any transitional problems the amendments apply to disposals by water companies during the financial year current on the transfer date. Companies will therefore have an incentive to dispose of their surplus land, and to the extent that they can improve on the value of land by obtaining planning permission or selling with clawback
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conditions that operate in the event of a future planning permission, the improvements of value will be shared fifty-fifty between customer and shareholder.
The third purpose of the consent mechanism is to enable the Secretary of State to impose special requirements when there are disposals of land of particular environmental quality. The essential elements are as follows. Within the national parks, areas of outstanding natural beauty, the Broads, and such other areas as the Secretary of State by order designates, special environmental controls will apply to any disposal of land. For any such disposal the Secretary of State's consent will be required, and in deciding whether to give that consent he is to be bound by the Clause 8 duties to further conservation, have regard for access, and so on.
Within these areas there is to be a range of special conditions which he can impose on any disposal. It is intended that he be able to require that the land be offered in the first instance to a conservation body approved for this purpose by the Countryside Commission. He can also require, as a condition of any disposal, that management agreements can be entered into with the relevant park authority or local authority to the satisfaction of the commission. Finally, he can require covenants for the protection of particular features of the land.
The consent procedures will give the Secretary of State a means of ensuring that the special environmental quality of water authority land can be indefinitely protected. Again, we shall look to a general authorisation procedure, including the Countryside Commission, which will minimise bureaucracy and simply filter out the limited number of cases where special controls on environmental grounds are likely to be necessary.
Those arrangements are an addition to the powerful framework of environmental duties which is already provided in Clauses 8 to 10 of the Bill. These set out statutory requirements on conservation and public amenity which go beyond requirements for any other industry, whether in the public or the private sector. That must be right, for no other industry has land holdings of comparable scale and significance; and no other industry's operations have such a deep and pervasive influence on the environment.
It is a tribute to this framework that so many have asked what is to happen to the land should it pass outside it. There is genuine concern that the companies, perhaps subject to commercial pressures, will sell land of great environmental importance in circumstances which could jeopardise its future conservation and the amenity it affords the public. There is concern also that they might be tempted to pass land to subsidiary companies outside the scope of the Clause 8 duties. The Government have weighed carefully the importance and the reality of these concerns.
It remains the Government's view that in most circumstances the planning system will cope with any risks. But at the end of the day, we have to give due weight to two special considerations. The first is that much water authority land is of quite

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exceptional beauty and environmental quality. In strict logic that is no reason to treat it differently. Extreme cases make bad law. But Thirlmere, High Peak, the Elan Valley and the others are special. And it is right for the Government and this House to require a degree of confidence as to their future security which might not be considered necessary in other areas.
The second is the recognition that, as a consequence of past exercise of their special conservation and amenity duties, water authorities have done more in respect of conservation and amenity than ordinary planning and conservation legislation could secure. Special conservation measures have been undertaken; arrangements entered into with local naturalists trusts and amenity groups; wider public access has been allowed; traditional agricultural and forestry practices have been preserved which are outside the scope of the planning system. These special features, voluntarily entered into, deserve protection.
The risks the amendments guard against may in practice be relatively small. It is the Government's view that, in practice, the great majority of water authority land is likely to have to be retained by the companies for performance of their functions. But while the risks are small, they are risks which in the Government's view should not be run. And it is for this reason that the Government believe that special provisions are appropriate.
We have had no shortage of suggestions as to what those provisions should be. I refer to two in particular. There has first been the proposal, put forward in particular by the noble Lord, Lord Greenway, that disposals should be brought within the scope of the Clause 8 duties, and that no disposal should prejudice the purposes of that clause. We are indebted for the suggestion, and indeed we are adopting features of it. But on its own it may not be sufficient, because the transfer of property rights is a particularly difficult area to leave subject only to duties which are bound to be widely drawn.
There is then the proposal of the noble Lord, Lord Gibson, to rely in particular on a right of first refusal for conservation bodies in the event of sale. We welcomed this proposal also, but it is our view that it could be of limited effectiveness on its own and that it needs to be seen as one of a number of options to address very varying situations.
The merit of the approach adopted in the amendments is its scope and flexibility. Often no controls on disposals, even in national parks and areas of outstanding natural beauty, will be necessary. But sometimes the land will be of such special character that long-term protective ownership by a conservation body may well prove to be the appropriate option. At the other extreme, there may only be one particular feature of a site that requires protection and in these cases a covenant is the appropriate way forward.
Whatever the choice of mechanism, the Secretary of State in making his decision will be bound in deciding which course of action to take in a particular case by the terms of the Clause 8 duties, which are
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applied to disposals in national parks, the Broads or other designated land, by subsection (7) of the new clause.
On this basis we believe that the new provisions are sufficiently widely and tightly drawn to secure that the special environmental importance of much of the water and land which will pass to the successor companies can be fully and securely protected—and protected indefinitely—in the wider public interest. I commend these amendments to the House. I beg to move.
4 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved, as an amendment to Amendment No. 48, Amendment No. 48A:
Line 4, leave out ("application in a particular manner of any") and insert ("distribution to them").
The noble Lord said: My Lords, in moving Amendment No. 48A I should like to pay tribute to the clarity with which the noble Lord, Lord Hesketh, introduced this complex group of amendments. I should also like to follow up his point on procedure by saying that in introducing this amendment I think it would be appropriate for me to do as he has done and speak to all the amendments that I have tabled to the Government's amendments. I shall speak also to the substance of Amendment No. 48, so that we cover the whole range of the debate. As I understand it, the debate will then be open to any noble Lords who wish to speak, including those who have tabled amendments of their own to government amendments which have been grouped together and which have been spoken to by the Minister.
I have no doubt that the Minister will then wish to respond, especially to Amendment No. 48A, and I shall wind up the debate on that amendment by speaking only to that amendment and not to any others. I hope that that procedure will bring as much clarity as possible into the debate, because clearly from the necessary and admirable length of the Minister's speech the issues are complex, as indeed are the issues raised by the various amendments to government amendments which have been tabled.
I shall deal first with the range of amendments which have been tabled to later government amendments and then return to Amendment No. 48A at the end of my speech. I do so because they are somewhat different. Amendment No. 48A is substantially concerned with the financial effect of the Government's proposals and indeed as to whether there is any identifiable financial effect, identifiable provision or identifiable financial benefit to consumers, as they have claimed. The remaining amendments are mainly concerned with environmental matters rather than with the financial protection of consumers. I think it appropriate therefore that I should deal with them first.
Amendments Nos. 48B, 140A and 161A are concerned with the Government's choice of the word "protected" to describe land which is to be covered by these amendments. The trouble with the word "protected" is that such land is not really protected. All that happens is that it is eligible for consideration by the Secretary of State as to whether consent

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should be given and as to what conditions should be imposed upon the disposal.
The Secretary of State may well conclude—or a Secretary of State may well conclude—that such land is eligible for sale rather than for protection. Further, the Secretary of State may well conclude that such land is eligible for sale without protective conditions. In those circumstances it seems that there is an Orwellian touch in using the word "protected" and that it would be preferable, as we do in these three amendments, to use the more accurate word "eligible" to describe the land which is covered.
Amendment No. 140B brings us back to the point referred to by the Minister about conditions on a sale. Unfortunately, Amendment No. 140 (the new clause) provides only that the Secretary of State or the Minister of Agriculture may put conditions on a sale. It does not bind the Secretary of State to include conditions, except to the extent that he considers them appropriate. Amendments Nos. 140C and 140D are consequential. It is not enough to say that the Secretary of State would have to act reasonably if he failed to impose conditions. We cannot conceive of any significant case in which conditions ought not to be imposed upon a sale if the sale is to be allowed to go through at all. Therefore, we prefer that it should be a duty on the Secretary of State and the Minister rather than a power.
Amendment No. 140E seeks to ensure that conditions will be imposed to carry over the Clause 8 obligation on environment and recreation to the new owners of the land. As the Government's amendment stands at the moment, the Secretary of State has a discretion to require covenants of the new owner, but if there are to be conditions protecting the environment—and with the description that the Minister has given of the coverage of national park land, areas of outstanding natural beauty land and Broads land it is clear that in virtually every case there will have to be duties on the new owners and thus the Secretary of State ought not just to have a discretion to require covenants—there should be a requirement to have covenants.
Amendment No. 140F is a significant amendment. It points to a grave omission in the Government's proposals. As the government amendments stand, there is not only no provision for public consultation about land deals which will take place and which the Secretary of State and the Minister will be considering; there is not even a provision for notification to the public. In other words, the whole thing could go through between the Secretary of State, the water supply or sewerage plcs and the new owners without the public ever being told that it is going to happen. We would finish up wih secret land deals, something against which the House has set its face in almost every piece of legislation concerned with land, and especially public land, for many years.
The Government have made an astonishing omission. It is out of keeping with the spirit of much recent legislation and with the Government's own proclaimed support for open government. We believe that it is especially important that Amendment No. 140F, which provides in two new
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subsections for consultation and notification procedures, is a vital protection for the public and a vital complement to the efforts which the Government are proposing to make with a view to protecting the public.
Amendment No. 140H is similar to a point made in Amendment No. 140G, tabled by my noble friend Lady Birk, who will no doubt be speaking to that amendment shortly. There are potential conditions set out in subsection (5) of Amendment No. 140, but our point is that they should be included as a condition of every sale so that there would be no possibility of sales going ahead without the land being made available for purchase by suitable bodies such as the National Trust.
I welcome what the Minister said about proposals made by the noble Lords, Lord Greenway and Lord Gibson. He was right when he said that they would not, of themselves, have gone far enough to protect the public interest. In that respect, his own proposals do not go as far as the original proposals of the noble Lord, Lord Gibson, made on behalf of the National Trust. There should be some degree of further protection, which is what we propose in Amendent No. 140H.
Amendment No. 140J follows closely on that point, because it requires that any land made available to a body such as the National Trust should be made available at a price determined by the district valuer. That, again, is a curious omission from the Government's proposals. I am not suggesting that it is sinister. The price should not be set by the purchaser or any other party. It should be set by the district valuer. That was the provision made in the amendment tabled in Committee by the noble Lord, Lord Gibson. It is one which should not have been omitted from the Government's amendments.
Amendments Nos. 140K and 141A remove the curious condition whereby the undertaker may be required either to consult the Countryside Commission or to enter into management agreements or covenants, or both. Surely, there should be a mandatory consultation procedure with the Countryside Commission, or, as other amendments tabled by my noble friends suggest, with other relevant bodies. There should be no possibility of management agreements or covenants supplanting consultations with the Countryside Commission.
Passing over other amendments tabled by my noble friends, I move now to Amendment No. 143A, which removes a restriction—again, an incomprehensible restriction—on the power of the Secretary of State, in subsection (6) of the new clause, to lay down bindng covenants on issues such as freedom of access to the management of lands. At the moment, the subsection applies only to land which is in a national park, an area of outstanding natural beauty or the Broads. There is a whole class of land which may or may not be designated by the Secretary of State—we have no assurance that it will be—which is attractive land and is of recreational value, and where access should be freely available to the public. The Secretary of State not only has no

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duty to enforce access; he has no power to enforce access. Our amendment would give him that power, which is sadly lacking from the Governemnt's amendment.
Amendment No. 143C follows the same point as Amendment No. 143D because it covers covenants on freedom of access. It reflects the wording which the Government have already accepted and put into Clause 8. Again, it does not seem to make sense to us that concessions on freedom of access which have been made in Clause 8 should not be repeated when land is being sold to new owners rather than kept in the ownership of the water supply and sewerage undertakers. The principle behind all these amendments should be that the protection which is given by ownership by the water and sewerage undertakings should extend indefinitely, as the Minister said in his opening speech, to the new owners of the land which has been disposed of.
Amendment No. 143F extends to a new owner the range of coverage which the Secretary of State can make to include environment and recreation. The government amendment does not go far enough on that point.
The next group of amendments tabled in my name comes after Government Amendment No. 161. We are testing the scope of the definition of protected land which has been put into Amendment No. 161 by the Government. We want an assurance that all land owned by water authorities will be covered by the scope of those provisions. If it is right that the Secretary of State should have power to control the disposal of land assets and to impose covenants and make restrictions, then surely he should do so over any land, because initially those are all public assets and their disposal is presumably because they are surplus to operational requirements.
We return to the fundamental point that we have been making throughout the Bill's consideration: that the Bill should be about water privatisation; it should not be about the privatisation of land which happens to be owned by the water authorities and which is surplus to their requirements.
I apologise for having taken up so much time in explaining these subsequent amendments, but it is clear that when the Government choose to introduce a series of complex amendments at the Report stage of a Bill in the second Chamber there is not very much we can do except to treat the matter seriously, as though it had been in the Bill right from the very beginning and as though we had the opportunity to debate it fully. If I have detained the House for that purpose on Report stage, I can only apologise.
I return to Amendment No. 48A, the specific amendment which I rose to move at the beginning. It seeks to expose the fundamental defect—I am now talking about the financial defect rather than specific environmental defects—in the Government's proposal. Let us agree from the outset that these amendments are a serious attempt to move in the right direction. They are a serious attempt to provide protection for the environment and for customers in the event of disposal of surplus land by water authorities. But they are not as serious an attempt
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as the Government have been claiming. They are certainly by no means as serious an attempt as has been claimed in the press release issued by Mr. Michael Howard, the Minister of State for Water, when the amendments were first tabled. In his press release Mr. Howard indicated that 50 per cent. of the value of the proceeds of the sale would be made available to the customers. That figure of 50 per cent. does not appear anywhere in the amendments; it is left to the Director General of Water Services who is appointed by the Government. That 50 per cent. has no security whatever, either from this or from any other Secretary of State. It could be made 1 per cent. or 99 per cent.
The only fair thing to do is to do what we have done here—that is, to say that all the proceeds of the sale of the surplus land which is public land should be made available to the customers. If the Government are not prepared to agree to that amendment then one must draw the conclusion that they simply do not mean to protect the customers adequately and to avoid windfall profits to the shareholders from the disposal of surplus land.
The second thing missing from the amendments—although the Minister referred to it in his opening speech—is land transferred to subsidiary companies. There has been a lot of debate about security for the environment and for customers in relation to land transferred by the water supply plcs to subsidiary companies. Clearly if the water supply plcs are able to get round any of the other provisions and protections of the Bill simply by transferring to subsidiary companies, then those protections are a sham. But as I understand it, in opening the debate on these amendments the Minister said that the protection would not cover transferred land and that the Government's view was that the planning system would cope with the problems that arose. They cannot have it both ways. Either the planning system will cope anyway, in which case none of these amendments is necessary—it is obvious that we do not believe that for a moment—or the planning system cannot cope as regards land which has not been transferred, in which case there is no reason whatever to assume that it will cope for land which has been transferred.
So on those two vital aspects—the proportion of the money which is to go to customers and the coverage of transferred land—the amendments are silent. The Minister of State says things, the Parliamentary Secretary may say things now from the Government Front Bench in this Chamber, but the Bill and the amendments do not say so. It is not good enough.
I had prepared a complicated analysis of the financial considerations involved here but I listened with care to what the Minister said. Some of what he said about the calculation of the proceeds and how they should be assessed sounded interesting and I think I could cut out some part of that discussion from my speech. As I understand it, in the initial assessment of K before the first figure for K—which noble Lords will recall is the basis on which water prices and sewerage prices have to be set—the Minister said that there would be a target figure for disposals of 100 per cent. of the open market value

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of identified sites. That is helpful because it seems to deal with the problem that there might have been in a conflict between the deemed value and the actual value.
Then the Minister is proposing an adjustment to follow that of 50 per cent. of the surplus or shortfall. Since K is proposed to continue for a period of 10 years, is that adjustment for surplus or shortfall to be introduced immediately, in other words into the next year's K or will it be delayed until the end of the 10-year period? The Minister went on to give some more detail about the consents and conditions. I think that in discussing the other amendments I have made it clear how unsatisfactory those are.
I feel that I should summarise our position on the Government amendments by saying that they have exposed a Catch 22 situation as far as concerns the protection of the consumer and the environment. If the proceeds of the sales are to be included in K—as they appear to be—then the Government are accepting that there is a real risk of a continuing threat to the environment which has to be dealt with by these special measures. If it is not to be included in K, then the shareholders are set to receive a quite unjustified windfall gain, especially when there are sales of unprotected land within the Government's definition.
However, well-meaning the amendments may be, the analysis that I have made (at unfortunate length) means that the protection which the public requires and which the Minister claims from the amendments is not actually achieved by them. It is necessary for us to consider the amendments in detail. If the public is to be protected it will be necessary for very substantial changes to be made to this set of Government amendments. I beg to move.
4.15 p.m.
Baroness Birk: My Lords, the amendments standing in my name to the new Government clause fall into two groups. I shall try to be as brief as I can in dealing with them. I was extremely sorry not to have been present at the Committee stage. I am very grateful to my noble friends Lord McIntosh of Haringey and Lord Graham of Edmonton who moved the amendments on my behalf.
The amendments are all concerned with the heritage, archaeology and conservation. They fall into two groups. Amendments Nos. 140L, 141B and 146A concern the general applicability of the clause to the manmade heritage. Amendment No. 144B concerns the addition of specifically archaeological and historic designations. I think the Minister had so much on his mind and so many papers under his arm that he probably did not register that I am not moving Amendment No. 144C which refers to land sensitivity under an agricultural Act. After consideration, I thought that that was taking it rather wide. Nevertheless I hope that the thought behind the amendment will obtain.
Amendments Nos. 140L, 141B and 146A all seek to ensure that this new clause applies to our manmade heritage as well as to our natural heritage. Subsection (7) of this proposed new clause
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encompasses the provisions of Clause 8 which specify the conservation duties of all the bodies concerned. These duties include the protection and conservation of building sites and other objects of archaeological, architectural or historic interest. Those provisions must be covered therefore by this new clause, and yet there is no mention of them.
In general terms that is rectified by Amendment No. 146A which seeks to insert a new subsection making the provisions apply to buildings and objects of interest, as well as to land. It should be noted that this extension has been carefully restricted to those items of archaeological, architectural or historic interest. Among the assets currently belonging to some water authorities, such as Thames Water, there are major collections of prehistoric and later artefacts, engineering drawings and machinery. These provisions controlling disposal should also apply to all of those things. They will have no other statutory protection unless something is written on to the face of the Bill in that way. Although some provision is made in the code of practice regarding the disposal of objects, it does not provide any control over the process as is envisaged in this new clause, and it does not in any case apply to buildings. Therefore it is essential that protection should be inserted into this new clause.
The inclusion of the Government's statutory adviser on heritage, as dealt with in Amendment No. 140L, the Historic Buildings and Monuments Commission for England, has been provided for in order to ensure that consultations concerning the disposal of items relating to manmade heritage take place with a relevant statutory body. The Countryside Commission may have an overall remit for areas of outstanding natural beauty and national parks, but it does not have a remit for advising on the management of buildings and archaeological sites. These are the specific concern of English Heritage.
Section 17 of the Ancient Monuments and Archaeological Areas Act 1979 provides for management agreements. These are also very relevant to the disposal of archaeological sites. They apply to scheduled ancient monuments and other sites. That is encompassed by Amendment No. 141B.
I shall now turn briefly to Amendments Nos. 144A, 144B and 144C. These amendments seek to extend the range of designated areas to which this new clause applies to those specifically designated as being of archaeological, architectural or historic interest. It is an anomaly that under the new clause as it stands, provisions for obtaining statutory advice and entering into management agreements may apply to land which has general scenic value, but would not necessarily apply to sites of very considerable conservation value outside the general areas of scenic value. That such controls should apply to areas of outstanding natural beauty and national parks is very welcome. However, as the new clause applies to all disposals, it would be wrong to let it go through without consultations with statutory bodies and the provision of management agreements. At the moment, those apply only to landscape designations.

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In practice, much of the detailed practicalities of managing specific areas of land relate to conserving heritage or wildlife, whether or not they happen to be within the areas of outstanding natural beauty or national parks. The provision for the Secretary of State to designate areas by statutory instrument is a welcome one. However, it offers no clear guidance on how the specific interest of manmade heritage might be dealt with. Therefore, my Amendment No. 144B seeks to deal with that. It is not a substitute for including a specific relevant statutory designation, but nevertheless it represents a welcome provision in the hope that it may offer for safeguarding sensitive areas which are not already designated.
Finally, I come to Amendment No. 140G. I must apologise because, in its present form, the amendment contains some slight errors. I do not think that they alter the meaning of the amendment, but they make it defective. I have advised the Minister and the department of the errors. However, the objective of the amendment, which I think is quite clear, is to ensure that the various possible options for conditions to be applied to land, buildings or objects being disposed of, are always considered.
This amendment does not go as far as Amendment No. 140H which stands in the name of my noble friend Lord McIntosh. My noble friend has kindly agreed to withdraw that amendment in favour of the amendment to which I am now speaking. My amendment does not commit the Secretary of State to apply conditions in every case. However, it imposes a duty on the Secretary of State or the Minister to consider the various conditions. As it stands, the proposed new clause does not ensure that each case will be considered in the light of all the possible conservation interests and conditions, as my amendment suggests. I must apologise for the number of amendments I am speaking to and for their length. However, they seek to balance in the new clause our manmade heritage with the natural environment. The natural environment is, in many ways, fairly well covered in the new clause as it stands. I beg to move.
Baroness White: My Lords, I have the greatest sympathy with the amendments to which my noble friend has just spoken. However, did my noble friend Lady Birk or my noble friend Lord McIntosh of Haringey agree to the grouping which is before the House? It seems to me that to group these amendments in this way is a very unsatisfactory method of debating difficult issues. As a modest Back-Bencher, I cannot help thinking that it is very difficult for us to follow the arguments in the way in which the Government apparently wish them to be considered. Unfortunately, the noble Lord the Leader of the House is not in his place. I wish he were, as I should like to address my remarks directly to him. These amendments were only available to us recently. To the best of my belief, the grouping was only publicly available today. I consider that it is an abuse of the procedures of the House to proceed with a debate of this importance in this manner.
Lord Renton: My Lords, with great respect I support——
Lord McIntosh of Haringey: My Lords, the noble Baroness was speaking before my noble friend sat down.
Baroness Birk: My Lords, my noble friend Lady White put a question to me and my noble friend Lord McIntosh. I agree entirely with what my noble friend has said. I hope that my noble friend who is leading on this Bill will also comment on this. The alternative would have been to have received answers to every group of amendments. I do not know whether the Government will comment on that. We, and I imagine my noble friend Lady Nicol, have tried to keep the groups together. I do not know what the answer is to this problem. I think it is more a question for the Government than for us. When we were shown the groupings by the Government, we tried to do our best to give them some logical sense.
Lord Renton: My Lords, I wish, first, to deal with the matter which has been so rightly raised by the noble Baroness, Lady White. We are being asked to consider, I estimate, 39 amendments, or amendments to amendments, covering a very wide field. I think it is for consideration by the Procedure Committee of this House, which I hope will take note of what we have been saying, that there are advantages in the procedure used in another place when a new clause or a new set of provisions is being tabled which had not been considered in Committee. In those circumstances there is a procedure called re-committal which enables virtually a Second Reading debate to take place on the general principles involved in either the new clause or the new group of amendments.
That would have been of immense advantage on this occasion. We could then have taken separately the various amendments and new clauses and the amendments to the amendments as they arise, as is done at Committee stage. However, under our procedure, although we are speaking to 39 amendments, nearly all of us are allowed only one speech. The movers of amendments to the amendments will be allowed to reply and my noble friend Lord Hesketh, not only allowed, but expected to reply at the end of what may be a long debate. I do not envy him the task that lies before him. I am sure that we shall do all that we can to make it simple rather than difficult.
I greatly admired the way in which the noble Lord, Lord McIntosh, approached this matter. He did not complain, as the noble Baroness, Lady White, and I have complained. He took things as they are, made the best of them, made his case of substance and, like my noble friend on the Front Bench, spoke with clarity. But I am not able enough to follow what has been said either by my noble friend or by the noble Lord, Lord McIntosh, and at the same time take a useful note for the purpose of the debate.
I see that the Opposition Chief Whip is present. He has a responsibility to help in these matters; he is a member of the Procedure Committee. I hope

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that as a result of this debate we shall consider whether, for an occasion such as this, the procedure is right. Perhaps I may now move on to the substance of the amendments.
4.30 p.m.
Lord McIntosh of Haringey: My Lords, before the noble Lord proceeds to the substance of the amendments, perhaps I may say a word or two about the procedural aspects, having nothing at all to do with the fact that he has addressed his two kind remarks to me and two unkind remarks to himself.
I appreciate the difficulty to which my noble friend Lady White and the noble Lord, Lord Renton, have drawn attention. I must point out for the purposes of this discussion that the grouping of the Government amendments was proposed by the Government. We do not feel that it is for us to suggest changes to the Government's grouping of their own amendments. We feel free to group our own amendments in the way which best assists debate in the House, but not Government amendments. Therefore, once the Government had taken the decision to take all their amendments together—one can see some argument for that in the sense that they form a coherent, if inadequate, whole—then our amendments had to be grouped together with the government amendments. We had no choice in the matter.
I very much agree with the noble Lord's suggestion about recommittal to Committee. I should have argued for it. However, the trouble with this Bill is that everything is scattered all the way through it. These amendments occur everywhere between Clause 7 and Clause 187. One would have had to recommit the whole Bill in order to deal with this group of amendments. The structural engineering of the Bill is grossly inadequate for the purposes of sensible debate in your Lordships' House. The words of the noble Lord, Lord Renton, have made that clear.
Lord Renton: My Lords, I commend the magnanimous nobility displayed by the noble Lord, Lord McIntosh. I am sure that the Government are grateful to him. Perhaps they will be very grateful on some other occasions, too.
I return to the substance of the amendments. So far as concerns the broad terms and purpose of the amendments I welcome them, as I am sure do my noble friends on this side of the House. They result to a considerable extent—although my noble friend Lord Hesketh did not say so—from representations which we made at Second Reading and Committee stage. I too am grateful, as was the noble Lord, Lord McIntosh, for the valiant attempt by my noble friend Lord Hesketh to explain the meaning, purpose and effect of the amendments. I welcome the broad purpose.
I refer first to the principle one, the new clause at Amendment No. 140. As far as it is expressed it seems to be commendable. However, there was one matter to which my noble friend Lord Hesketh referred which I greatly welcome. That is that land which is to be sold should be offered to the person
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from whom it is to be acquired. That is a commendable principle, first enshrined at Crichel Down. Alas, if I may digress for one moment, the Forestry Commission is not following that principle, and perhaps representations could be made to the commission to do so. This would achieve consistent government policy with regard to water authority land and Forestry Commission land. Having welcomed the statement of my noble friend, I wonder whether, when winding up the debate, he could tell us whereabouts in the new clause in Amendment No. 140, or elsewhere, that principle is to be stated. At the moment I cannot find where it is stated in the new clause.
I refer next to the amendments moved by the noble Lord, Lord McIntosh, to the very first amendment, Amendment No. 48, which is the one we are discussing. He made two points about that amendment. One is a fairly narrow point—that instead of using the word "protected" we should use the word "eligible". Quite frankly, there is not much in that, but there is an argument in favour of saying that "eligible" might be the better word. However, I keep an open mind on that.
The noble Lord raised a point of much greater substance and consequence when he said, with regard to the proceeds, that we should tie the Secretary of State and all those concerned to distributing the proceeds to the consumers. That is as I understand it. My noble friend Lord Hesketh said in his opening speech that it is intended that they should be divided fifty-fifty; that is to say, 50 per cent. of the proceeds of sale would go to the consumers, presumably in reduced water charges, and 50 per cent. would go to the people who are selling the land. I think that the Government are right on that. After all, they are acquiring and will have paid consideration for, in effect, property which is being sold. I think that they should be entitled to at least 50 per cent. of the proceeds of that property. I hope that the Government will not move from that principle. I am sure that it is right.
The noble Baroness, Lady Birk, made an interesting speech about her amendments to the new clause. I believe it is very important that, somehow or other, ancient monuments and listed buildings should be treated specially in this context. I am sure that she is right. However, technically, I think that we may find—and my noble friend Lord Hesketh will no doubt say in reply—that the existing legislation would be enough to achieve that object. If it is not, no doubt my noble friend will say so.
Of course, each of us could make a speech of half an hour or more about this great mass of nearly 40 amendments, but, realising that I must speak now or forever hold my peace in the course of the debate, I think that I had perhaps better sit down.
Lord Ross of Newport: My Lords, as the noble Lord has commented on quite a number of amendments, will he comment on Amendment No. 140F? Surely he agrees that it is desperately important that, where sales are to take place, some notification of the application by the water authorities to the Secretary of State to be given permission to sell should at least be advertised.
Lord Renton: My Lords, I am sorry, but I have not followed the noble Lord because he spoke rather faster than my mind works. I did not catch the number of the amendment to which he referred.
Lord Ross of Newport: My Lords, I was referring to Amendment No. 140F. I apologise; as an auctioneer, I am always selling 150 lots an hour. That amendment relates to the advertising of the intention to apply to the Secretary of State for permission to sell. Surely it should appear somewhere that an application is being made by the water authorities to the Secretary of State. I should have thought that the noble Lord would have agreed with that amendment.
Lord Renton: My Lords, I do not think that we should write into primary legislation every single bit of administrative procedure that will be carried out, but the noble Lord makes a fair point. I doubt whether we need to write that sort of thing into every Act of Parliament.
4.45 p.m.
Baroness Nicol: My Lords, at this stage, I should like to introduce the amendments which appear in my name and those of the noble Lords, Lord Moran, Lord Norrie and Lord Addington. If the debate is to continue, we shall value the comments of noble Lords on those amendments.
I very much sympathise with the point made by my noble friend Lady White and by the noble Lord, Lord Renton. I grumbled rather seriously about the grouping, but I was persuaded that it should go forward. However, if the House takes a decision on Amendment No. 48A or indeed on Amendment No. 48 at the end of the debate, will that decision be considered binding on the rest of these amendments? I had intended to say—I shall say it now—that, depending on the outcome of this afternoon's debate, I reserve the right to come back again when my amendment is finally called, which I understand will be on Tuesday. I shall then raise any points that still need clarification or an answer at that time. I believe that that approach is procedurally acceptable and I give notice that that is my intention.
There are so many different kinds of amendments. It may well be that many of those amendments will find favour with noble Lords this afternoon. Obviously, others will not. We shall have them all lumped together and lose the opportunity to put them individually.
However, I shall proceed with the material as we have it. I want to confine my remarks to the amendments to be inserted after new Clause 150. The new clause goes some way towards meeting the objections that were raised earlier by what I may call the National Trust amendment, but there are still quite a number of questions outstanding and some omissions to be explored. My amendments—Amendments Nos. 141 to 146—seek to repair some of the omissions.
Amendments No. 141 would add the Nature Conservancy Council to the Countryside Commission as a potential consultee if the
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characteristics of the land being proposed for disposal made it appropriate. I agree with my noble friend Lord McIntosh when he said that, in the case of conservation bodies and others, it should not be a case of "either/or". There should always be a view from either the Countryside Commission or the Nature Conservancy Council.
There are many sites of special scientific interest in the lands covered by the Government's new clause. Involvement of the Nature Conservancy Council is therefore very important. It will become even more important if my Amendment No. 144 is accepted.
Perhaps I may point out that the new Government amendment still leaves two-thirds of the water authority land—312,000 acres—unprotected. Amendments Nos. 142 and 143 are consequential on Amendment No. 141 and I shall not give them any time.
Turning now to Amendment No. 144, although the provisions of Amendment No. 140 are welcome—as I said earlier—they do not go far enough. The new clause applies only to water authority land in national parks, the Norfolk and Suffolk Broads and areas of outstanding natural beauty; that is, primarily in the upland areas of England and Wales. It does not apply to lowland areas with the exception of the Broads and some lowland AONBs. In particular, it excludes all sites of special scientific interest currently owned by the water authorities, and there are many of them. Many of them are of national and international importance for nature conservation.
By offering to help to protect the upland areas owned by the new water companies, the Government have in a sense given a green light to the exploitation of lowland areas. Indeed, they have admitted that. A Minister in another place, Mr. Michael Howard, announced the measures and outlined the new provisions on 31st May. In his press release, a copy of which I have here, he said:
"But, outside the national parks and areas of outstanding natural beauty and particularly in urban areas, some of the water industry's surplus land may have valuable development potential".
That seems like an invitation to look at the remaining lowland land for development.
The Government's new proposals clearly acknowledge that much water authority land is of high environmental and landscape value and that there is a need to protect it against inappropriate use or development. On several occasions, the Minister has tried to assure Parliament that additional measures are not required for the protection of areas that have been notified as sites of special scientific interest as they are already protected. The Minister must know that that is not the case. The SSSI provisions of the Wildlife and Countryside Act 1981 do not prohibit damaging operations; rather, they require landowners to consult the Nature Conservancy Council which has no power to prohibit damaging activity.
The same consultation mechanism has recently been introduced in Clause 9 of the Bill to apply to water authority land in national parks and, in that respect, to put them on a par with SSSIs. That being

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the case, why do the additional measures now tabled by the Government apply only to land in national parks and AONBs? Are they more vulnerable or more valuable?
The SSSI network and planning system will not provide adequate safeguards against inappropriate exploitation of water authority land. In its annual report for 1987–88, the Nature Conservancy Council reported 114 cases of damage to SSSIs; 12 of those cases were caused by operations that were granted planning permission.
I do not wish to weary the House with too long a speech this afternoon, so I shall give just two examples. Hyde Heath in Dorset was notified as an SSSI for its range of rare plants and animals, including sand lizards, smooth snakes and club moss. It was partly destroyed 18 months ago by sand and gravel extraction. Approximately two years ago, Warmwell Heath, also a Dorset SSSI, suffered permanent damage following the construction of sewage works commissioned by the Wessex Water Authority. It is therefore quite obvious how important it is that SSSIs should be included in the new provisions.
Much of the land particularly at risk from likely disposal includes areas adjacent to lowland reservoirs. Evidence of commercialisation, using water space as a major investment attraction, can be seen at Rutland in Leicestershire where timeshare flats have been built on private land next to the Anglian Water Authority reservoir. Planning applications around Rutland Water in recent years have included proposals for golf courses and hotels. It is increased development of that kind which causes the greatest dismay to conservation bodies.
I submit that without the inclusion of SSSIs in the Government's proposed new clause, many lowland areas will be vulnerable to damage. Acceptance of the simple measure that I have proposed will fully complement the Government's intentions to help protect land of conservation value. That is why I am so sorry that this particular amendment has had to be included with so many others of a different nature. Amendments Nos. 145 and 146 are consequential upon Amendment No. 144.
The Lord Privy Seal (Lord Belstead): My Lords, the Opposition Front Bench asked me to confirm that we on this side of the House have heard and approve of what the noble Baroness said; namely, that she has a particular amendment which is part of this grouping but that she would very probably put it to a vote later on in the proceedings of the Report stage of this Bill. That is the noble Baroness's right. As the rubric at the top of the piece of paper which most of us have received states:
"Although every effort is made to secure agreement to these groupings, they remain informal and not binding".
Lord Norrie: My Lords, I join with the noble Baroness, Lady Nicol, in very warmly welcoming the Government's amendments on arrangements for the disposal of land in national parks and areas of outstanding natural beauty. I also welcome the Minister's indication that the clause has been drafted
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so that it can and will be applied more widely to land other than national parks and AONBs.
However, there is one category of designated land which it concerns me deeply to see left out of the clause and which has been alluded to by the noble Baroness, Lady Nicol; namely, sites of special scientific interest (SSSIs). SSSIs enjoy similar legislative status to that of the national parks and AONBs and it therefore seems something of an anomaly that they should be omitted. There is no doubt in my mind that SSSIs are likely to be under pressure from water company development and other activites. Indeed many of them lie in lowland areas where development pressures are strongest.
My fear is that my noble friend the Minister will find himself deluged with requests to apply the provisions of this clause to SSSIs each time that one comes under threat. Would it not be better to anticipate those circumstances by including SSSIs in this clause and involving in the process the Nature Conservancy Council, which is the Government's own body responsible for SSSI notification, just as the Minister has already involved the Countryside Commission in the new clause to be inserted by Amendment No. 140?
We know, and have heard numerous examples of it during the debates on the Bill in Committee, that the planning system does not provide adequate protection for SSSIs. The annual report of the Nature Conservancy Council each year cites a number of cases where SSSIs have been damaged by activities for which planning permission has been granted. For the year ending March 1988, for example, such cases amounted to eight sites suffering long-term damage and seven sites suffering partial damage.
The Wildlife and Countryside Act states:
"It is a reasonable excuse in any event for a person to carry out an operation if—

(a) the operation was authorised by a planning permission granted on an application under Part III of the Town and Country Planning Act 1971 or Part III of the Town and Country Planning (Scotland) Act 1972".

In a nutshell this means that as soon as planning permission is granted, SSSI protection falls.
I know from my own experience how serious these losses can be. Not 20 miles from where I live in Berkshire there is an SSSI known as the Blackwater Valley, where the River Blackwater runs north from Blackwater near Camberley towards. Reading. A survey conducted in 1986 by the local county trust revealed that this wet meadow was the largest and richest site for wildlife in the whole of the Blackwater Valley, containing a diversity of uncommon plants, including spotted orchids and heath spotted orchids, and insects such as the rare seed weaver and rove beetle. They were certainly commonplace in that area. Now 50 acres of that 100-acre site have gone straight out of the window because planning permission has been granted for a hypermarket—a joint venture of Tesco and Marks & Spencer—which as I speak, is well on its way to being constructed. Does not that prove that no SSSI is sacrosanct? It is precisely the kind of situation where covenants on the land, as provided in the Government's amendment, could have prevented such inappropriate development.

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If the lowland SSSIs which are currently owned by the water authorities are to be safeguarded against inappropriate commercialisation, it is essential that SSSIs are included in the Government's new clause. The conservationists are not against development of water authority land but they are against uncontrolled development. I have been advised that the Nature Conservancy Council has made formal representations to the Department of the Environment requesting that SSSIs be included.
If I were the Minister responsible for administering the proposed new arrangements I should have sleepless nights worrying about my in-tray being piled high with requests to protect SSSIs as they become threatened. If the Minister cannot accept Amendment No. 144 as it stands, I hope that he will consider bringing forward an acceptable amendment at Third Reading.
The Earl of Onslow: My Lords, I yield to few Members of your Lordships' House in my concern for the environment, and I do not accept that the general protections for SSSIs as enacted in the Wildlife and Countryside Act 1981 (of fond memory in your Lordships' House) are adequate. It strikes me that it is inappropriate to give extra protection to one set of SSSIs just because they have devolved from Thames Water or the Scunthorpe and Middlewich Canal Company or whatever as opposed to the general run of the mill of SSSIs. I believe that such action will involve us in legislative trouble.
My noble friend Lord Norrie recounted the sad story of Tesco ruining an SSSI around Blackwater on the Surrey Hampshire borders. That is a fault in the general legislation which I suggest cannot be rectified by applying in one particular case one particular set of criteria. That will get us into the most unholy muddle. SSSI protection throughout the country is not adequate. In my view that is one completely valid point. However, to single out certain small parcels of land which through historical accident have belonged to one set of owners will lead to even greater muddle than we have at the moment.
Lord Moran: My Lords, I welcome very much the Government's Amendment No. 140 which is in line with what I ventured to suggest when I spoke at Second Reading. I put my name to the group of amendments moved so capably by the noble Baroness, Lady Nicol, primarily because I believe that SSSIs should be included with the other two categories that the Government have designated: national parks and areas of outstanding natural beauty.
I think in particular of areas in Wales. In introducing the government amendments the Minister himself mentioned the Elan Valley. My understanding is that the Elan Valley is made up of several very important SSSIs but it is not in a national park and is not, I believe, an area of outstanding natural beauty. It is owned by Welsh Water, with common grazing rights, and it contains four important reservoirs. It is of national importance on account of a number of very rare breeding birds that it harbours such as the red kite and the merlin. It is very important that such an area
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should receive the protection which the Government have quite rightly given to special areas under this group of amendments.
Another example in Wales is the Llandegfedd Reservoir near Pontypool. That can hold 2,000 widgeon or mallards in winter. Welsh Water has acknowledged the importance of the reservoir for birds and does not allow sailing and fishing from November to February because of the birds. It has set up a special committee, which includes the RSPB, to manage the fine balance that is required to maintain the nature conservation interest of the site while still allowing recreational use.
That balance has been maintained so far while Welsh Water is a public body. However, one must ask oneself whether it will continue when there is a plc whose overriding duty is to make profits for shareholders. That is the kind of area—and there are a number of others in Wales in that category—about which one must be concerned.
I should like to commend the arrangements made by Welsh Water. It has made an agreement with the National Parks Authority to protect 7,000 acres in the forest Fawr region for the next 25 years. I hope that such arrangements can be extended to other parts of Wales. I feel it is important that SSSIs should be included in the protection arrangements provided by the Government. I hope that they will agree to this.
5 p.m.
Lord Addington: My Lords, I too should like to speak to Amendment No. 141. The evidence that we have already heard indicates that many areas of the land currently owned by water authorities could be vulnerable to commercial exploitation, which may well result in damage to the environment.
The Government's new clause recognises that surplus water authority land is worthy of additional protective measures. This is to be welcomed. However, the Government's new proposals are something of a sop to conservationists and Parliament alike. The amendment promoted by the noble Baroness, Lady Nicol, and supported very strongly by these Benches, would require only a minor addition to the Government's new measures. This would present a considerable improvement to the Bill.
By adding sites of special scientific interest to the protective mechanism now being proposed by the Government, the land most likely to come under threat of increased commercialisation will enjoy the additional safeguards that it rightly deserves and judging from the evidence from all sides of the House urgently requires.
The Minister knows that the land most likely to be developed to benefit shareholders will be land that is close to or even within urban areas. A number of redundant reservoirs have already become the focus of property speculators, in London in particular. This is primarily as a result of the main London link reservoir coming on stream, which means that many of the old reservoirs are no longer required for water production. Sites at risk include Walthamstow and Chingford reservoirs, both of

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which are SSSIs. Walthamstow reservoir contains one of the top five heronries in Britain and supports nationally important numbers of wild birds, including a winter cormorant roost. It is also worthy of note that not only are these birds under threat but also the ecosystem that supports them would undoubtedly be under threat. Considerations about the environment go further than what we can see in the water and around it. Water quality is involved in the nature of conservation. As these sites are becoming surplus to requirements it is certainly no good to rely on the existing SSSI procedures.
The Government are naturally anxious that blanket prohibitions on the future use of surplus water authority land does not effectively block development potential and thus damage any future flotation by putting off investors. I submit that adding SSSIs to the new measures will not have any untoward effect on flotation since the new measures merely provide a new mechanism that will remain within the total control of the Secretary of State.
Subsection (5) of the new clause states:
"The conditions of a consent or authorisation for the purposes of this section may"—
and I emphasise that—
"include"—
and it lists measures including covenants and management agreements. In other words, the Secretary of State will be given permissive powers to apply various conditions on land disposals. Including SSSIs in this new clause will not prohibit comercialisation. Rather, their inclusion will permit controlled disposals and development with the ability to protect land of conservation value in perpetuity.
Baroness Lockwood: My Lords, this is a very difficult debate. It seems now to have concentrated on Amendment No. 141 in the name of my noble friend Lady Nicol and others. I should like to support what has been said on this amendment. It seems that there is an omission from government Amendment No. 140. However, I wish to support two of the amendments put forward by my noble friend Lord McIntosh of Haringey.
Amendment No. 140B places a positive duty on the Secretary of State in this whole area. It makes the provision compulsory for the Secretary of State by inserting "shall" instead of "may". In the context of this Bill it is important to have that clearly laid down.
I wish also to support Amendment No. 140F. It lays upon the Secretary of State a duty to give notice where an application for consent or authorisation for transference of land takes place. Many of the voluntary organisations—in this context in particular the Ramblers' Association—are very concerned about access to footpaths. In certain areas they are in the process of negotiating with the water authorities for such access. For example, in Nidderdale negotiations are taking place with the Yorkshire Water Authority. Access has not yet been determined but other interest is being expressed about use of the land surrounding the reservoirs
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there. Organisations such as the Ramblers' Association may be completely unaware of the fact that transference of land is taking place unless there is publication of the fact and it is in a position to make representation to the Secretary of State. I am sure that other voluntary bodies which will have similar interests will want to ensure that they have the opportunity, first, to be aware that the transfer of an area of land is under consideration; and, secondly, to put forward their point of view so that it can be included in the terms on which the land is being sold. I therefore support these amendments very strongly.
Lord Chorley: My Lords, I should like to speak principally to Amendment No. 140 which is, one might say, the centrepiece of this raft of amendments. As one of those who strongly supported the amendment of the noble Lord, Lord Gibson—or perhaps one might say the National Trust's amendment—on the sale of surplus land at the Committee stage, I think it right to acknowledge that the noble Earl the Minister has done what he said he would do. He has listened to the argument and has come back with a new clause which, coupled with other amendments, especially that dealing with the definitions of functional and non-functional land, deals in very large measure with the problems we raised in Committee. Certainly both the National Trust, and, I think I can say also, the CPRE, welcome these amendments. Indeed one could go further for, in many respects, the amendments we are now discussing are wider, more comprehensive and more flexible than our original proposals. That is good.
Let me be quite clear. I am not welcoming the Government's amendments on the basis that half a loaf is better than no loaf at all; the loaf that we are now discussing is a better loaf. Nevertheless, even a better loaf is capable of improvement and I should like to make three points, which I shall do quite briefly. Some have already been touched upon.
First, the Secretary of State will now have wide discretionary powers. That is good. I do not object to that at all. But we need some public understanding of the criteria that he will adopt in exercising them. For my part, I believe that this is best done outside the legislation. One area concerns land lying outside the national parks or areas of outstanding natural beauty status—what I might loosely call Elan Valley-type situations of which there are a number. We need some public clarity on what the Secretary of State's criteria will be.
The second point has already been touched upon to some extent. Areas of special scientific interest are not included in the same way as national parks. This seems to be a weakness. I should have thought that it made administrative sense, creating less future hassle, to have included them. Before taking a final view I should like to hear what the Government have to say. At the moment. I am bound to say that I am minded to support the amendment of the noble Baroness, Lady Nicol.
Thirdly, as regards the sale of surplus; lands, so far as I can see the clause does not really deal with the valuation principles and the question of development benefit. I am bound to say that I have

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become somewhat confused. Much of what is said does not appear in the legislation; I do not know where we are. I suspect that we shall have to come back to it later on.
Finally, the effectiveness of the proposed arrangements will depend on the attitude of future Secretaries of State. We need to recognise that. I do not particularly object. I have a good deal of sympathy for most of the amendments of the noble Lord, Lord McIntosh—in particular, for the clear and reasonable way in which he proposed them. I shall be minded to support quite a number of them.
Baroness White: My Lords, I wish briefly to add my support to the expressions of concern and interest dealt with by my noble friend Lady Nicol in her amendment and its consequentials. It seems only right and proper to anyone concerned with conservation that SSSIs should be brought within the overview of the Secretary of State, and that this should be regarded as an obligation whatever his ultimate decision may prove to be. But at the moment there is nothing in the Bill, so far as I understand it, to cover the situation whereby, in the circumstances we are dealing with in this grouping, such sites, including national nature reserves—not just local sites of scientific interest—might be disposed of without being adequately considered.
One of my main concerns is Amendment No. 140F proposed by my noble friend Lord McIntosh. It seems essential that there should be public indication that these transactions are taking place and that the Secretary of State should not come to final conclusions as to what conditions he proposes without having given an opportunity for representations by various public bodies and even individual citizens in certain situations, I cannot think that it is good public policy not to make provision, within a reasonable time limit, for representations to be considered. After all, planning applications have to be considered. It seems that decisions taken under the discretions given in the Bill to the Secretary of State are, in certain circumstances, every bit as important.
There should be provision on the face of the Bill for some method of public notificiation that these transactions are proposed and for the Secretary of State to consider what conditions, if any, he wishes to put forward. I hope very much that we shall have a satisfactory reply from the Minister.
5.15 p.m.
Lord Ross of Newport: My Lords, as I intervened earlier, I should also like to say a few words on Amendment No. 140F and the requirement, which I consider absolutely essential, that water authorities should make public their intention to seek permission to sell land. I do not necessarily support the actual wording of Amendment No. 140F, because the obligation should be put on the companies themselves. When they are seeking permission, they should be obliged to place a suitable advertisement in the London Gazette or in local newspapers in locations where the land lies. I see no reasonn why that should not be done. It would be disastrous if
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not done; there would be accusations of deals behind closed doors. It is essential that bodies like the National Trust, the Ramblers' Association and so on should at least know about an application for land to be disposed of. To learn of it after the decision has been made seems totally wrong.
I tried to get the noble Lord, Lord Renton, on the board, because he is listened to with much respect on both sides of this House. I hope that he agrees with me. As a lawyer—I am not—he will know that charities have to advertise when they are selling and ask for extra bids. That seems appalling. Having agreed a price they advertise that they have agreed to sell at x thousand pounds, unless someone comes forward in the next 21 days. That seems to be gazumping; but it has to be done.
I congratulate the Government very much on their new clause in Amendment No. 140 which is an enormous step forward. But it would be totally wrong not to include this necessity to make known publicly before decisions are made that it is the intention of the boards of plcs to sell some of this highly regarded land. I hope very much, if we cannot get a concession out of the Government, Members on the other side will agree that we should divide the House on that issue.
Viscount Bridgeman: My Lords, may I speak to Amendment No. 140F, and the remarks of the noble Lord, Lord Chorley, about the sale of surplus land? I understand that the intention at present is that this will be at district valuation reflecting market values. I am concerned that the purpose of the element of this scheme will be defeated if it proves too costly to acquire the lands. Will my noble friend the Minister give an indication of any financial assistance which may be forthcoming to help mitigate this problem?
Lord Hesketh: My Lords, by leave of the House, it may assist if I now respond to the substantial and many points that have been made during the debate, and in particular to the amendments which have been tabled to this group of Government amendments. Amendment No. 48A proposed by the noble Lord, Lord McIntosh, requires that 100 per cent. of the proceeds of disposals goes to the customers. The effect of the Government's amendments is to ensure that a fair share of the proceeds from the disposals of land goes to customers, while leaving the companies with an incentive to make efficient use of land, to make every effort to dispose of land which is surplus, and to secure that the customer benefits from the best obtainable price.
Amendment No.48A, in the name of the noble Lord, Lord McIntosh, would require 100 per cent. of the proceeds to go to the customers. I invite the House to recall and consider an observation made by my noble friend Lord Nugent on the second day of the Committee stage. He said that the statutory water company model would give the best safeguard against the development of water authority land holdings because the method of regulation gives no incentive to develop land and in practice it means that statutory water companies seldom have developed land.

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I suggest that there are two lessons to be drawn from that observation: first, that the system of regulation, which leaves none of the proceeds from the disposal with the company, will not in practice succeed in maximising benefits to the customer because, as my noble friend rightly said, there will be no incentive. Secondly, it would be a pity and a waste to rely on economic disincentives to produce necessary environmental protections. That would throw the baby out with the bath water.
There is no reason why water companies should sit on idle land of no particular environmental merit because they have no incentive to dispose of it. These amendments are designed to give them an incentive to get the maximum benefit for their customers from their surplus land, subject to appropriate and necessary protections for land of special environmental quality.
Under the arrangements that I have described, somewhat more than 50 per cent. of the value of proceeds will go to the customer, because K will be set in a way which assumes a certain flow of income from disposals, and takes account of 100 per cent. of the open market value of sites which are likely to become surplus. When companies realise more than the forecast flow of receipts—for example, by securing planning permissions which increase the value of land—it is proposed that the net surplus be shared equally between customers and shareholders. Similarly, it is envisaged that 50 per cent. of any material shortfall would be reflected in an increase in K. The details will be finalised after discussion with the industry, but the essential point to be made in response to the noble Lord's amendment is that it is not in the customer's interest for their share of the benefit of proceeds to be 100 per cent. because that would destroy the incentive for the company to maximise receipts and benefit both shareholders and customers.
The noble Lord expressed specific worries about which I hope I can offer some reassurance. The arrangements which deal with disposals to sister companies will be covered by the consent procedures which I have described. They are designed to deal with the potential loopholes which concern him. The reflection of a forecast of expected receipts in K will start from the first year of price control. Essential details, such as the fifty-fifty division of any excess or shortfall of actual receipts in relation to shortfall, will be set out in the initial appointment issued by the Secretary of State. There is provision as I have described to entrench such points in the appointment so that they can be changed only by agreement. I appreciate that this is a complicated issue but I hope that the noble Lord will be reassured when he reads what I have said. I hope that I have covered at least some of his concern.
It may be for the convenience of the House if I deal next with Amendments Nos. 48B and 161A and D, tabled by the noble Lord, Lord McIntosh. These change the term "protected land" to "eligible land", which is I think entirely a matter of nomenclature. I have to say that I much prefer the word "protected", which gives a much more accurate description of
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the purpose of these amendments than the word "eligible".
All the land transferred to the successor companies by the schemes of transfer is included in the definition. The provisions as to treatment of receipts for the disposal of that land apply to all disposals. The environmental powers apply more selectively in the manner that I have described. The definition of "protected land" is comprehensive. The only significant exception is land which may be acquired in future by appointed companies which is not used for their water and sewerage functions.
Amendments Nos. 16IB and C apply the new provisions to predecessors of appointed companies, and have the effect of making the provisions reach back in time. We believe this to be unnecessary. The water authorities have no incentive to evade the provisions by selling off land in the short interval before the transfer date while they remain in the public sector. They cannot benefit their future shareholders by so doing. Any receipts from disposals before the transfer date would be subject to Treasury requirements and would normally be applied to the reduction of NLF debt, which is in any case to be extinguished before flotation. The government amendments therefore apply to land held by successor companies from the transfer date.
My noble friend Lord Renton asked where the Crichel Down rules were to be found on the face of the Bill. The current expression of the Crichel Down rules is not in primary legislation but in a government circular, No. 1884, issued by the Department of the Environment. The means of applying the rules of the circular to relevant disposals, which is precedented—for example, under the Gas Act—is to issue a general authorisation to disposals under the general consent requirement introduced in this case by Amendment No. 140 requiring companies to follow the rules. I hope my noble friend will agree that that is a sensible way of applying the rules without cluttering the statute.
I turn to amendments tabled by various noble Lords to Amendment No. 140. They amount to the following. All proposed disposals shall be advertised in the London Gazette (Amendment No. 140F). Where a first refusal offer is to be made to a conservation body it shall be a district valuer's valuation (Amendment No. 140J). The environmental aspects of the amendment shall be extended to sites of special scientific interest and lowland areas, historic buildings, ancient monuments, environmentally sensitive areas, and so on. Those would be the effects of Amendments Nos. HOG and 141B, 141 to 146 and 144A and B, but no longer Amendment No. 144C, as the noble Baroness, Lady Birk, pointed out; also, that the Clause 8 duties shall govern disposals generally (Amendment No. 140E). Generally, they remove the Secretary of State's discretion so that he shall be required to apply the protective consultation which we propose he may apply; that is Amendments Nos. HOB, C, D, H, 143C and E. I hope that I shall be able to cover all the points raised in relation to those amendments in this important and lengthy debate.
Amendment No. 140F would require the Secretary of State, wherever he receives an application for

975
disposal consent—however small, even if of little or no environmental significance—to advertise it in the London Gazette. This is surely a recipe for bureaucratic inertia which would serve little purpose. It must be for the Secretary of State, advised as necessary by the Countryside Commission, to satisfy himself as to whether any special environmental or amenity considerations are served by a particular sale. The Countryside Commission will no doubt consult if necessary. Performance of the Secretary of State's Clause 8 duties will in any case require him to take whatever soundings or advice are appropriate to satisfy himself on this question.
Advertisement in the Gazette or local papers may be appropriate for major development proposals, but it will surely be a quite unreasonable extension of those arrangements to impose them in cases where what is at stake is simply a change in ownership. I refer to the point made by my noble friend Lord Renton, who supported the Government on this matter.
The first refusal sales are to be at the district valuer's valuation. Amendment No. 140J, tabled by the noble Lord, Lord McIntosh, proposes that in the case of land first offered to a conservation body the price should be a district valuer's valuation, and I take it at current use rather than a market value. This may be unsound. Anything less than market value raises the possibility of the privileged purchaser changing the use or disposing of some parts of land he acquired and securing a windfall gain. But in any case, in a high proportion of cases, particularly open moorland and countryside, market value and current use value are likely to be effectively the same.
Lord McIntosh of Haringey: My Lords, will the Minister permit me to intervene? Surely, where there is a difference between market value and existing use value the Secretary of State has powers to impose adequate covenant to secure a windfall profit.
Lord Hesketh: My Lords, that is correct up to a point. However, in a way the noble Lord's comments negate his amendment to some extent because of the powers that he has described the Secretary of State as having.
5.30 p.m.
Lord McIntosh of Haringey: My Lords, on the contrary; we have amendments down which force the Secretary of State to impose covenants. At the moment the Minister's covenant provision is not adequate. If he will agree to my amendment which enforces covenants, I will agree to his argument about existing use value.
Lord Hesketh: My Lords, I am just coming to that. Any market valuation will be constrained not only by the conservation and amenity duties of the vendor but by the restrictive covenants or any other conditions of the sale which may be required by the Secretary of State. We are going into familiar country regarding the words "may" or "shall", but the noble
976
Lord, Lord McIntosh, will understand why we on this side prefer the word "may".
On Amendments Nos. 144 to 146, the noble Baroness, Lady Nicol, argued most forcefully for her amendments and said that the government amendments will not protect lowland areas or SSSIs.
The basic consent requirement applies to all land transferred to the WS plcs from water authorities under Schedule 2 schemes of transfers, and to other land they may acquire in future. So too does the power to require that land is offered at market value to a conservation body. Moreover, there is power by order to extend the protection application in national parks and areas of outstanding natural beauty to other areas of countryside of exceptional environmental importance, to the extent that the same considerations arose as in those designated areas. This could include lowland areas of exceptional importance.
I recognise that we have not clarified on the face of the amendment the circumstances to which that order-making power might be relevant, and that it is a point to which we may have to ask the House to return at Third Reading. But in principle relevant lowland areas of exceptional importance could be covered. We believe it will be only very rarely that the current powers will be needed, for environmental protection purposes, outside national parks and areas of outstanding natural beauty, but they are there in reserve if necessary.
As regards the SSSI's, it is not appropriate to apply all the provisions of the clause automatically to them. I pray in aid in support of the Government the very cogent point made by my noble friend Lord Onslow on creating two classes of SSSI. The fact is that there are already in SSSI legislation arrangements addressed to a comparable protective purpose which it would be wholly inappropriate to cut across. But that does not rule out areas of land which are SSSIs being designated for the purposes of this clause in the light of the exceptional and particular circumstances. But, again, we find it difficult to envisage circumstances arising not already covered by existing planning or conservation legislation. On that basis, we do not believe Amendments Nos. 144 to 146 are necessary.
The related Amendments Nos. 141 to 143, would bring the Nature Conservancy Council into the automatic consultation process. This proposal is of course linked with the proposal for automatic coverage of SSSIs, to which I have just responded. I should add that we expect the Countryside Commission to consult with the NCC wherever that is necessary because there are specific interests within the NCC's sphere of responsibility. The reason for making the Countryside Commission primarily responsible is because of its statutory duties in relation to the national parks and AONBs covered by the environmental elements of this new clause.
Perhaps I may not turn to Amendments Nos. 140G, 14IB, 144A, 144B and 146A, standing in the name of the noble Baroness, Lady Birk. Their effect is to extend to ancient monuments and listed buildings the same special provisions which the new

977
clause would make generally within national parks and areas of outstanding natural beauty. We do not believe that that is appropriate. The special legislation protecting ancient monuments is very detailed and specific and applicable to small local sites. It is in no way compatible with the broad national park and AONB designations which tend to raise a wide range of special issues not covered by special protective legilsation. The fact is that the water authorities, in respect of ancient monuments or historic buildings, have not undertaken protective measures which could be at risk in the event of sale. The ordinary legislation is here. We believe that that is fully sufficient and that there is no case for the special elaboration of disposal controls in the way proposed. With that assurance, I hope that the noble Baroness may feel that it is not necessary to press her amendment.
Amendment No. 140E would appear to us to have the effect of requiring that the Clause 8 conservation and amenity duties should apply to all disposals. It is fair and reasonable that they should do so in the case of the special environmental areas—the national parks and AONBs. But to apply the Clause 8 duties elsewhere, in particular in disposals in urban areas, would have the effect of prejudicing unduly the reasonable development of surplus urban land for housing, employment and other needs. Of course conservation considerations will be relevant in these cases, and the planning system and conservation legislation will ensure they are duly taken into account. But to impose the extra obligations of Clause 8 would in our view seriously unbalance the particularly complex decisions which have to be made in such cases.
Perhaps I may turn finally to the Amendments Nos. 140B, 140C, HOD, 140H, 143C and 143E of the noble Lord, Lord McIntosh of Haringey. The essence of those amendments is to take away the discretion built into the Government's proposals and require the Secretary of State to impose the relevant conditions rather than leave him the discretion to do so. The amendments are wholly unacceptable to the Government. The fact is that the regulatory powers in the new clause are very wide indeed, and because of that we feel that their use should be discretionary. If the House wishes to make this application in any circumstances obligatory, the Government would feel it inescapable that the scope of the powers would have to be very greatly restricted. We believe that more would be lost than gained by that.
However, underlying these amendments there may be the inevitable doubt as to how future Secretaries of State can be trusted to exercise their consent power reasonably and on the intended basis. However, no Secretary of State is above the law, and if the government amendments are accepted it will be the legal obligation of the Secretary of State to exercise his discretion in relevant cases so as to further conservation, to put land to the best use for recreation and to achieve the purposes of Clause 8.
Therefore, I commend the government amendments to the House in the fullest confidence that they may provide a means to secure indefinitely the protection and public enjoyment of land of very
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special value to this nation and to the cause of nature conservation which the authorities have themselves over the year done so much to protect and conserve for the nation. They also provide an appropriate and effective means for ensuring that the proceeds from the sale of the land will be fairly divided between the customers and the shareholders. I apologise if I have taken a considerable period of time in attempting to answer the points raised in the amendments which have been so graciously put forward this afternoon.
Baroness White: My Lords, before the Minister concludes his most lucid speech, for which we are all very grateful—he could have gone on longer for some of us to explain other matters which have been raised—will he comment on his remarks on the very wide discretion which the Government plainly wish to reserve to successive Secretaries of State? Does he not recognise that with such a wide area of discretion in the hands of the Secretary of State there is all the more need to inform the public of the situations over which the Secretary of State is exercising that discretion before he comes to a final decision?
If the Minister does not care for the proposal in Amendment No. 140F, to which some of us spoke, that there should be a notice in the London Gazette because he says that de minimis that is quite unnecessary and absurd, does he not agree that there should be some arrangement for public notice before a final decision is taken at the discretion of the Secretary of State?
Lord Hesketh: My Lords, with the leave of the House, I am grateful to the noble Baroness for her intervention. I apologise for not having made clear the Government's view. The obligations on the Secretary of State and the duties imposed on him will, we believe, result in the discretion being applied in an entirely successful and suitable manner.
Lord McIntosh of Haringey: My Lords, I said at the outset that when I replied on Amendment No. 48A I would not go over the whole ground of the other amendments. I am confirmed in that by the helpful statement from the Leader of the House, who reminded us that these groupings are not binding and that I, my noble friends and other noble Lords who have tabled amendments to later clauses—other than Clause 48—will have an opportunity to have them further debated and even decided upon at a later stage, though I am sure noble Lords will use that power with discretion and with concern for the proper procedures of the House.
Clearly it has been helpful for the Minister to reply to all the amendments but, as the noble Lord, Lord Renton, said earlier, if we had been able to recommit them so that comments could be made after the Minister's observations, clearly it is right that we should be able to return to the matter at a later stage.
Lord Renton: Due to a slip of the tongue the noble Lord referred to Clause 48 when he meant Amendment No. 48.
Lord McIntosh of Haringey: Iapologise to the House; I did indeed mean Amendment No. 48. Perhaps I may then restrict my remarks to Amendment No. 48.
We have what might be called the Government's last-ditch defence of their proposals. When their back is truly against the wall they fall back on the argument that, however unreasonable the legislation may be, the Secretary of State cannot behave unreasonably because he is subject to the common law and subject to judicial review. That simply is not good enough. What we are looking at is the legislation before the House, not at the ultimate control that the courts may have over unreasonable Secretaries of State.
It is not good enough for the Minister to say, "Trust me", as he did in effect in response to my amendment. We do not trust him. We do not trust him and we do not trust any Minister, because we do not trust any government. We are here to enact legislation and not to engage in trust either with individuals or groups of individuals.
The Minister told the House, for example, that the regulatory powers in these clauses are very wide indeed. He can say that again; they certainly are. Any responsible House ought to be resisting legislation in which the regulatory powers are so wide that they cannot be defined properly or cannot be enforced because they would have to be restricted if they were. The Minister says that details will be finalised after discussion with the industry. That is saying "Trust me" as well, is it not? He is, in effect, saying that Parliament is not good enough to know; that it is only the industry which is worthy of the ability to negotiate with the Government and that we in Parliament do not have the right to lay down what that negotiation will be.
No, these clauses are not good enough. They require Parliament at a late stage in the consideration of the Bill to take matters on trust. They require us to take on trust the idea not stated anywhere in legislation, not stated anywhere in these clauses, that 50 per cent. of the proceeds of certain sales under certain circumstances will be for the benefit of consumers. I have no good reason to trust this Minister, this Secretary of State, and still less good reason to trust any future Minister or future Secretary of State of whatever party. On that basis I think it is proper that I should take the opinion of the House on Amendment No. 48A.
5.44 p.m.
On Question, Whether the said amendment (No. 48A) to Amendment No. 48 shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 110.

DIVISION NO. 1

CONTENTS

Addington, L. [Teller.]

Birk, B.

Airedale, L.

Blackstone, B.

Amherst, E.

Bonham-Carter, L.

Ampthill, L.

Boston of Faversham, L.

Attlee, E.

Bottomley, L.

Aylestone, L.

Briginshaw, L.

980

Bruce of Donington, L.

Longford, E.

CaUaghan of Cardiff, L.

Lovell-Davis, L.

Carmichael of Kelvingrove, L.

McIntosh of Haringey, L.

McNair, L.

Cledwyn of Penrhos, L.

Monson, L.

Cocks of Hartcliffe, L.

Mountevans, L.

David, B.

Mulley, L.

Dean of Beswick, L.

Nicol, B.

Donaldson of Kingsbridge, L.

Northfield, L.

Dormand of Easington, L.

O'Neill of the Maine, L.

Elwyn-Jones, L.

Peston, L.

Ewart-Biggs, B.

Phillips, B.

Ezra, L.

Pitt of Hampstead, L.

Fisher of Rednal, B.

Ponsonby of Shulbrede, L. [Teller.]

Gallacher, L.

Galpern, L.

Rea, L.

Gladwyn, L.

Rochester, L.

Graham of Edmonton, L.

Ross of Newport, L.

Gregson, L.

Scanlon, L.

Hampton, L.

Seear, B.

Hanworth, V.

Sefton of Garston, L.

Harris of Greenwich, L.

Serota, B.

Hatch of Lusby, L.

Shepherd, L.

Hayter, L.

Stallard, L.

Houghton of Sowerby, L.

Stedman, B.

Hunt, L.

Stoddart of Swindon, L.

Irvine of Lairg, L.

Taylor of Gryfe, L.

Irving of Dartford, L.

Tordoff, L.

Jacques, L.

Underhill, L.

Jeger, B.

Wallace of Coslany, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Williams of Elvel, L.

Kilmarnock, L.

Winchilsea and Nottingham, E.

Lloyd of Kilgerran, L.

Lockwood, B.

NOT-CONTENTS

Aldington, L.

Hesketh, L.

Arran, E.

Hives, L.

Balfour, E.

Hooper, B.

Belstead, L.

Hylton-Foster, B.

Bessborough, E.

Joseph, L.

Birdwood, L.

Killearn, L.

Blatch, B.

Kimball, L.

Boyd-Carpenter, L.

Kitchener, E.

Braye, B.

Knutsford, V.

Bridgeman, V.

Lauderdale,E.

Brookes, L.

Layton, L.

Brougham and Vaux, L.

Long, V. [Teller.]

Buccleuch and Queensberry, D.

Mackay of Clashfern, L.

Macleod of Borve, B.

Caldecote, V.

Manton, L.

Carnock, L.

Margadale, L.

Carr of Hadley, L.

Marley, L.

Clitheroe, L.

Masham of Ilton, B.

Colnbrook, L.

Massereene and Ferrard, V.

Constantine of Stanmore, L.

Maude of Stratford-upon-Avon, L.

Cork and Orrery, E.

Cottesloe, L.

Merrivale, L.

Craigavon, V.

Mersey, V.

Craigmyle, L.

Milverton, L.

Crickhowell, L.

Montgomery of Alamein, V.

Cullen of Ashbourne, L.

Morris, L.

Dacre of Glanton, L.

Munster, E.

Davidson, V. [Teller.]

Murton of Lindisfarne, L.

Dilhorne, V.

Norfolk, D.

Dundee, E.

Norrie, L.

Eden of Winton, L.

Nugent of Guildford, L.

Erroll, E.

Onslow, E.

Faithfull, B.

Orkney, E.

Fortescue, E.

Orr-Ewing, L.

Fraser of Carmyllie, L.

Oxfuird, V.

Gardner of Parkes, B.

Pender, L.

Geddes, L.

Portsmouth, E.

Gisborough, L.

Prior, L.

Glenarthur, L.

Rankeillour, L.

Greenway, L.

Reay, L.

Hailsham of Saint Marylebone, L.

Rees, L.

Renton, L.

Halsbury, E.

Rochdale, V.

Henley, L.

Rodney, L.

981

Romney, E.

Swinfen, L.

St. John of Fawsley, L.

Thomas of Gwydir, L.

Saltoun of Abernethy, Ly.

Thomas of Swynnerton, L.

Sanderson of Bowden, L.

Torrington, V.

Skelmersdale, L.

Trafford, L.

Slim, V.

Trefgarne, L.

Somers, L.

Trumpington, B.

Strathclyde, L.

Tryon, L.

Strathcona and Mount Royal, L.

Ullswater, V.

Vaux of Harrowden, L.

Strathspey, L.

Whitelaw, V.

Sudeley, L.

Windlesham, L.

Swansea, L.

Wynford, L.

Resolved in the negative, and amendment to the amendment disgreed to accordingly.
5.52 p.m.
[Amendment No. 48B not moved.]
On Question, Amendment No. 48 agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 48C:
Page 7, line 19, at end insert—
("( ) to ensure that the interests of every such person are protected in respect of substantial increased charges which could be passed on to them by the application in a particular manner of provisions in any appointment for adjustments in such charges by reason of new statutory obligations or other unforeseen factors.").
The noble Lord said: My Lords, I hope that the House will not be confused by the numbering. This amendment is not an amendment to Amendment No. 48. It is a separate amendment to Clause 7. Perhaps I may first apologise to the House for having four and-a-half lines of text without a single comma. I have two defences. The first is that the Government have six-and-a-half lines of text without a single comma in Amendment No. 50. Secondly, the alternative that I seriously considered and which caused some white faces in the Public Bill Office, was the entire model appointment as an extra schedule to the Bill which would have meant 65 pages of text. That would have required substantial amendment in order to debate it properly.
The reason why it is necessary to deal with the matter in this way is that a vital part of the financial basis of privatisation is, like so many other matters, not being put before Parliament. Negotiations are taking place behind closed doors as regards the way in which water charges to customers will be determined. Noble Lords who have taken part, or who have been present during consideration of the Bill, will know that the formula appears to be one of RPI plus K in which there are specific circumstances when water companies may increase their prices by more than the retail prices index. Very properly, that has been the subject of considerable debate.
What has not been the subject of effective debate because it is not on the face of the Bill is what is far too politely called cost pass through. That means in effect that the water supply and the sewerage plcs may be allowed to pass on to consumers virtually any unexpected additional costs whether they arise from a change in purity and quality standards, from natural disasters, from their own incompetence and inefficiency or from any other factor. However plausible the RPI plus K formula has been made—it has not been made plausible at all to the House
982
because it has not been explained here—any veneer of plausibility is taken away by the provision that is not being put to your Lordships concerning cost pass through.
Cost pass through means, "If anything goes wrong the customer pays: the shareholders never pay under any circumstances". I apologise for having such a long amendment without commas. Amendment No. 50 is helpful for reasons other than the elegance, or the incomparable inelegance, of its language. The amendment provides that the Secretary of State has the power,
"to ensure that the interests of the customers and potential customers of any company are protected … in particular, the interests of those who are disabled or of pensionable age".
When we come to deal with the matter I shall be welcoming that amendment, as I know my noble friend Lord Carter would if he were able to be here. Once the position has been established and it is possible, and recognised to be so, for the Secretary of State to take into account the interests of a particular group of customers, there is no logical reason why the same protection could not be applied to all customers. That is what our Amendment No. 48C provides.
As the Bill stands it is simply not the case that the interests of customers are treated with equal seriousness to the interests of the undertakers. When the matter was debated at Committee stage the Government specifically said that they could not do it. They said that it would be unworkable if the duty to secure profitability and the proper provision of services were downgraded to equal effect with the interest of the customers. So we have not repeated that. We have not tried to say that they should be treated equally. We have said that where an undertaker requests an upward revision in the value of K—in other words when he requests to take advantage of the cost pass through provisions—he should not have an automatic right to do so.
I can think of three cases where it would be patently wrong for an undertaker to be able to pass on the costs of unexpected additional expenditure to its customers. The first is where the undertaker, through his own negligence or for whatever reason, has failed to provide a satisfactory water supply or sewerage service and has also failed to remedy the defects in his own service. He should not be able to pass on the costs of remedying the defects to the customer. The shareholders who have been responsible for the defective service should at the very least share in the cost of putting things right. Cost pass through means that they do not have to share because the customers pay it all.
The second example concerns the fault of a third party where there has been spillage into the water system which causes a defect that has to be put right at considerable expense. The Camelford and Southern Water Authority case is a very good, recent and expensive example. Cost pass through means that the customers pay all the cost. I thought that under capitalism this should not be the case because risks of a capitalist enterprise should not be passed on automatically to the customer. If a water company has a complaint against a third party it should sue that third party in the courts in order to recover the

983
cost. Otherwise it is not automatically the case that the customer should pay for everything that goes wrong.
My third example concerns short-term costs. All kinds of additional and unexpected costs which water suppliers may well incur ought not to be passed on to the customer. They ought to be taken into account in the normal to and fro of business profitability and business financing. Yet the cost pass through works only in one direction. It works to the benefit of the shareholder and to the detriment of the water and sewerage customer.
If we take the cost pass through procedure at face value—we have no basis other than the model instrument of appointment for examining it; there is nothing on the face of the Bill—the Government are in effect proposing that the water and sewerage undertakers shall have all risk elements taken away from their operations. They are to be protected from any risk by, in the first place, a combination of a distorted calculation of K and, in the second place, a cost pass through fall-back position. Yet they will be able to make monopoly profits as natural monopolists at the expense of the customer and at the expense originally of the taxpayer who owned the assets. They will not have the risk element, which under capitalist theory ought to apply, for justifying profits.
We do not know where the negotiations are on the model instrument of appointment. We have not been told. Parliament will never be consulted formally on the model instrument of appointment and it will certainly not be consulted before the Bill becomes law. Therefore we must make some effort to see to it that the interests of customers, if not given equal weight with the interests of the water and sewerage undertakers, are at least given better weight than they are given at the moment. The cards are heavily stacked against the consumer and in favour of the shareholders. This amendment does not go as far as the amendments we put forward in Committee. It represents a modest but real attempt to redress the balance in favour of the water and sewerage customers. I commend it to the House. I beg to move.
6 p.m.
Lord Trafford: My Lords, I seem to have a sense of déjà vu in that we went through a good deal of this matter in Committee. In the three examples and in the argument put forward by the noble Lord, Lord McIntosh, he appears to have overlooked subsection (2) and subsection (3)(a), which seem to cover all his points. He referred to a water supplier or undertaker who failed to carry out his duties as a result of his own negligence. It is not the purpose of pass through that it should be recoverable from the customer in third party failure. If there were a third party failure it would be the duty of the water undertaker to sue that third party and not recover it from the customer. This would be the natural practice in any other business. The water undertaker would not be carrying out his duty according to Clause 7(2)(a),
"as respects every area".
984
That would not be happening. Therefore this cannot be the purpose.
It is also true of certain of the short-term costs that he mentioned. To a large extent, therefore, this amendment is based on a considerable misunderstanding of the provision that the duties of the water or sewerage undertaker should be properly carried out. The duties described in the example given by the noble Lord would be duties not properly carried out. It is a considerable protection to suggest that that is how they should function. It is not true to say that this is a system by which all risks are removed. This is not the purpose of the pass through. All risks would not be removed.
I cannot support the amendment, first, because the customer question is covered; secondly, because the duties are defined as having to be carried out properly; and, thirdly, all the examples and arguments given against it would be covered under those terms.
Lord Renton: My Lords, when starting to move the amendment the noble Lord, Lord McIntosh, graciously conceded that in his opinion it was not very well drafted. I think that it is, strange as it may seem. Short sentences and full stops are well regarded in legal drafting, including statutory drafting. Long sentences and commas are not well regarded. This is inevitably and unavoidably a longish sentence. However, I do not see how it could be made much shorter or that there would be any advantage in having a full stop and turning it into two sentences. From the purely drafting point of view I should have thought that the noble Lord was criticising his drafting unnecessarily.
What about the substance? I agree with my noble friend Lord Trafford, but I would go further. This is a clever clause because, as my noble friend has already pointed out, under subsection (2) there is a duty to finance the proper carrying out of the functions of the undertakers but at the same time the interests of the consumers are quite well protected. Subsection (3)(a) starts with the words:
"to ensure that the interests of every person who is a customer or potential customer … are protected as respects the fixing and recovery",
of charges. There is no undue preference and no undue discrimination. That is a useful quotation. Subsection (3)(b) states:
"to ensure that the interests of every such person are also protected as respects the other terms on which any services are provided by that company in the course of the carrying out of the functions of a water undertaker or sewerage undertaker and as respects the quality of those services".
It mentions quality as well. With that protection already in the Bill, the noble Lord's amendment does not carry the protection any further. But unlike the protection that is already there it is inconsistent with the duty to finance the proper carrying out of the functions. On both of those grounds I am sorry to say that I find myself in disagreement with the noble Lord.
Lord Hesketh: My Lords, I am sure that Mark Twain would have approved of the way in which the amendment of the noble Lord, Lord McIntosh, was

985
put down in terms of whether or not it had commas or full stops. He said to his publisher that he had left those on a separate sheet of paper.
The amendment would add an additional duty to the general duties of the Secretary of State and the Director General of Water Services under Clause 7 as to the manner in which they are to exercise their regulatory powers, in particular under Chapter I of Part II of the Bill. The new duty would require those powers to be used in the manner best calculated to ensure that the interests of customers of the water and sewerage undertakers are protected in respect of substantial increased charges which could be passed on to them, as a result of new statutory obligations or other unforeseen factors, under the terms of conditions of appointment.
The amendment is here clearly intended to refer to the provisions in Condition B of the model instrument of appointment which would provide for the undertaker to apply to the director general for a change to the adjustment factor K in the formula which limits increases in charges to no more than the change in the retail prices index plus K. The adjustment factor K is a number which will be inserted initially in the conditions of appointment of individual undertakers by the Secretary of State. It will be subject to periodic review by the director general after 10 years, or after five years if he or the undertaker so wish. It will also be subject to interim adjustment between periodic reviews under the so-called "cost pass through" arrangements which I have referred to and to which the amendment relates.
We believe that the amendment is rather misleading in referring to substantial increased charges being passed on to customers. The intention is to provide for the material additional costs of complying with new legal requirements to be reflected in K; and to allow the director general to consider what change should be made to K where undertakers are subject to external changes in circumstance, for which they are not responsible, which have a substantial adverse effect on the appointed business.
The amendment once again reflects the noble Lord's different and mistaken view of the primary duty, set out in subsection (2) of the clause, to secure that the functions of an undertaker are properly carried out. As he well knows by this stage of discussion of the Bill, we see securing the ability of the undertakers to finance the proper carrying out of their functions, also covered by subsection (2), as part and parcel of a single primary duty. As one of the secondary duties, subject only to this requirement to ensure that services are properly provided, customers' interest in the level of charges is also to be protected.
We believe that the model instrument of appointment gives correct expression to those duties in the cost pass through provisions, and it is entirely right that it should do so. If new provisions could be loaded onto the undertakers without compensating adjustment in the level of charges, they could find it significantly more expensive to raise finance. It would be counter-productive to try to provide
986
otherwise. Similarly, if circumstances beyond the undertakers' control had always to be financed by shareholders, the cost of finance would again be higher. That is not to say that shareholders should face a risk-free environment, nor does the model condition provide for one. It provides for the director general to consider what change should be made to the charges limit.
We believe that the amendment is not necessary to provide protection as to the level of charges. That duty already exists, as my noble friend Lord Renton pointed out, in Clause 7(3)(a). The amendment falsely relies upon the view that the functions can be properly discharged without protecting the ability to raise finance. As I have already described, that approach can only lead to higher charges, or more seriously, an undermining of the ability to provide adequate services.
The noble Lord, Lord McIntosh, is once again suggesting that there is a duty under Clause 7 to secure profitability of companies. There is no such duty. As my noble friend Lord Caithness made patently clear on Tuesday evening, only efficient companies will be profitable. The duty in Clause 7 is concerned with the true return on capital employed, and not with dividends.
If standards are to be improved, we have repeatedly acknowledged that there will have to be increases in prices. We believe that the noble Lord wishes that fact to go away. I urge the House to reject the amendment.
Lord McIntosh of Haringey: My Lords, what always amazes me is the extent to which lawyers in particular are happy to rely upon words like "properly" and "reasonably" to carry with them not just clauses but virtually whole Bills. This is the most important clause in the Bill. In subsection (2) it says that the duty of the Secretary of State and the director is to secure—as the noble Lords, Lord Renton and Lord Trafford, reminded us—that the functions of the undertakers are properly carried out.
On that aspect the noble Lord, Lord Trafford—and this makes me distrust doctors as well as lawyers now—would have us believe that all is well and that because the undertakers have to carry out such duties properly the interests of consumers are therefore adequately protected. That is very comparable to the argument that a reasonable return on capital does not have to be defined because ultimately it can be defined in the courts. If that were the case, and if the words "properly" and "reasonably" had such overwhelming significance—as appears to be suggested—we might just as well not have a Bill. Let us just say that the Secretary of State shall do reasonably what he thinks proper and have done with it. Let us then not have 200 pages and £20-worth of the Bill in order to debate the issue.
The noble Lord, Lord Trafford, referred to subsection (3), as did the Minister. This deals with the protection of the interests of consumers. However, neither of them reminded the House that subsection (3) is subject to subsection (2). It is in

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subsection (2) that the overriding responsibility to secure,
"the proper carrying out of the functions"—
whatever that may mean—and to secure the reasonable return on capital is contained. Therefore the interests of consumers are without doubt subordinate to the interests of the water undertakers and their shareholders. That is the truth of the matter; it is not helped by placing such reliance upon the words "properly" and "reasonably".
The Minister sought to claim that the amendment was actually misleading in that it used the word "charges" rather than the word "costs". I do not think that customers will be very appreciative of the difference between the two words. So far as they are concerned, charges will be in pounds sterling and costs will be reflected in charges, which are in pounds sterling. Therefore it does not matter very much which of the two stages of the process you put on the face of the Bill: the point is that under all circumstances the customer pays whether or not the undertaker is doing his job properly.
That is the defect of the Bill and that, above all, is the defect of the one-sided cost pass through provision in the model instrument of appointment. Unless we take out the one-sidedness of that provision, and unless we provide some additional protection for customers, we are simply not doing our job, which is to protect water and sewerage customers, who are so deeply and closely affected by the provisions of the Bill. In the circumstances, I think it right to pursue the amendment and to seek the opinion of the House.
6.17 p.m.
On Question, Whether the said amendment (No. 48C) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents. 92.

DIVISION NO. 2

CONTENTS

Addington, L. [Teller.]

Longford, E.

Airedale, L.

Lovell-Davis, L.

Attlee, E.

McIntosh of Haringey, L.

Aylestone, L.

McNair, L.

Barnett, L.

Monson, L.

Birk, B.

Mountevans, L.

Boston of Faversham, L.

Nicol, B.

Cledwyn of Penrhos, L.

Northfield, L.

Cocks of Hartcliffe, L.

O'Neill of the Maine, L.

David, B.

Phillips, B.

Dean of Beswick, L.

Pitt of Hampstead, L.

Donaldson of Kingsbridge, L.

Ponsonby of Shulbrede, L. [Teller.]

Ewart-Biggs, B.

Ezra, L.

Rathcreedan, L.

Falkender, B.

Rochester, L.

Gallacher, L.

Scanlon, L.

Galpern, L.

Serota, B.

Gladwyn, L.

Stedman, B.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Hampton, L.

Taylor of Gryfe, L.

Hatch of Lusby, L.

Tordoff, L.

Hayter, L.

UnderhiU, L.

Irving of Dartford, L.

Wallace of Coslany, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Williams of Elvel, L.

Lloyd of Kilgerran, L.

Winchilsea and Nottingham, E.

Lockwood, B.

988

NOT-CONTENTS

Arran, E.

Macleod of Borve, B.

Balfour, E.

Margadale, L.

Beaverbrook, L.

Marley, L.

Belstead, L.

Marshall of Leeds, L.

Blatch, B.

Massereene and Ferrard, V.

Boyd-Carpenter, L.

Maude of Stratford-upon-Avon, L.

Braye, B.

Bridgeman, V.

Merrivale, L.

Brookes, L.

Mersey, V.

Brougham and Vaux, L.

Montgomery of Alamein, V.

Buccleuch and Queensberry, D.

Morris, L.

Munster, E.

Carnock, L.

Murton of Lindisfarne, L.

Clitheroe, L.

Napier and Ettrick, L.

Colnbrook, L.

Nelson, E.

Colwyn, L.

Norfolk, D.

Constantine of Stanmore, L.

Norrie, L.

Cottesloe, L.

Nugent of Guildford, L.

Craigavon, V.

Onslow, E.

Craigmyle, L.

Orkney, E.

Crickhowell, L.

Oxfuird, V.

Cullen of Ashbourne, L.

Pender, L.

Dacre of Glanton, L.

Portsmouth, E.

Davidson, V. [Teller.]

Rankeillour, L.

Dilhorne, V.

Reay, L.

Dudley, E.

Rees, L.

Dundee, E.

Renton, L.

Eden of Winton, L.

Rochdale, V.

Ferrers, E.

Rodney, L.

Fraser of Carmyllie, L.

St. Aldwyn, E.

Gardner of Parkes, B.

Saltoun of Abernethy, Ly.

Geddes, L.

Sanderson of Bowden, L.

Gisborough, L.

Skelmersdale, L.

Glenarthur, L.

Strathclyde, L.

Greenway, L.

Strathcona and Mount Royal, L.

Hailsham of Saint Marylebone, L.

Sudeley, L.

Halsbury, E.

Swansea, L.

Henley, L.

Teviot, L.

Hesketh, L.

Thomas of Swynnerton, L.

Hives, L.

Torrington, V.

Hooper, B.

Trafford, L.

Hylton-Foster, B.

Trefgarne, L.

Joseph, L.

Trumpington, B.

Killearn, L.

Ullswater, V.

Kitchener, E.

Vaux of Harrowden, L.

Knutsford, V.

Windlesham, L.

Long, V. [Teller.]

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 49 not moved.]
6.25 p.m.
The Earl of Arran The Earl of Arran moved Amendment No. 50:
Page 7, line 25, at end insert—
("( ) In performing his duty under subsection (3) above, so far as it requires him to do anything in the manner which he considers is best calculated to ensure that the interests of the customers and potential customers of any company are protected as respects the quality of any services provided by that company in the course of the carrying out of the functions of a water undertaker or sewerage undertaker, the Secretary of State or, as the case may be, the Director shall take into account, in particular, the interests of those who are disabled or of pensionable age.").
The noble Earl said: My Lords, the amendment would require my right honourable friend the Secretary of State for the Environment and the director general, in the exercise of their duty to protect customers under Clause 7, to take into account the particular interests of those who are disabled or of pensionable age in respect of the quality of any services provided by a company in

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the course of carrying out the functions of a water or sewerage undertaker.
My noble friend Lord Hesketh gave an undertaking to the noble Lord, Lord Carter, in Committee that we would consider an amendment which would protect the interests of the elderly and the disabled in respect of the quality of services provided and consistent with the precedent set in the legislation concerning other utilities. In the light of that earlier undertaking I am now pleased to commend this amendment to your Lordships. I beg to move.
Lord McIntosh of Haringey: My Lords, I am doubly grateful to the noble Earl; first, because the amendment that he has moved gives us a form of words which we could use in Amendment No. 48C, which gained the approval of the noble Lord, Lord Renton; and, secondly, I speak on behalf of my noble friend Lord Carter, and thank the Minister for what I am sure he will consider to be a real improvement gained as a result of the pressure which he exerted in Committee. I know he is sorry that he was unable to collaborate with the Government in the formulation of the amendment and that he is unable to be in the House today to welcome the amendment. I share his gratitude to the Government for the amendment and I am happy to support it.
On Question, amendment agreed to.
Lord Addington Lord Addington moved Amendment No. 51:
Page 7, line 32, leave out ("particular").
The noble Lord said: My Lords, the effect of the amendment is to achieve balance between different interests when considering NRA decisions. The inclusion of the word "particular" in Clause 7(5) weighs the balance in favour of the undertaker. If there is an imbalance, we are effectively countenancing an element of prejudgment of any given issue, thus ruling out a balanced and accurate judgment. On those grounds, the amendment should be considered with all due respect and sincerity. It is designed to give an element of balance to the Bill. I beg to move.
Lord Hesketh: My Lords, Amendment No. 51 would remove from the NRA the duty, in carrying out its functions, to have particular regard to the plcs' own statutory duties as regards water supply and sewage disposal.
I happily acknowledge that that duty does, to some extent, put water and sewerage undertakers in a privileged position in relation to the way that the NRA carries out its functions; but that seems to me absolutely essential. The water supply and sewerage businesses are essential to the health and well-being of every one of us. The ability of the water and sewerage undertakers to fulfil their statutory functions in accordance with the rigorous duties that will be imposed on them by this Bill will be vitally dependent upon the NRA in a number of important areas. For instance, the NRA will issue the abstraction licenses that the utilities will need to abstract water from rivers for water supply purposes.
990
Similarly, the NRA will issue the discharge consents to enable the plc to discharge the effluent from its sewage treatment works.
Given the importance of water supply and sewerage, it is surely right that the NRA should be required to have particular regard to them. In many cases, the safe and uninterrupted supply of drinking water and disposal of sewage will rightly override other considerations, however important. There is nothing new in the provision. Section 103 of the Water Resources Act 1963 imposed a precisely similar duty on river authorities vis-à-vis statutory water undertakers. That did not represent unfair protection of private interests then, any more than Clause 7(5) does now. However, I must stress that the wording of this duty does not prevent the NRA taking the view, in any particular instance, that some other consideration—an environmental issue or the prevention of flooding—is more important than the statutory duties imposed on the water and sewerage undertakers.
In such circumstances, the NRA would need to demonstrate that it had carefully considered the implications for the undertakers before exercising its powers in any particular case. I must therefore ask your Lordships to reject the amendment. To omit the word "particular" would fail to give sufficient weight to the immediate day-to-day importance to all of us of the water supply and sewerage functions.
Lord Addington: My Lords, having heard what the noble Lord has said I am reassured to a certain extent that enough weight will be given to interests other than those of the undertakers. I am nevertheless wary of the fact that greater emphasis is still given to them and that the element of balance is therefore not totally represented. However, at this stage I am not prepared to press the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
6.30 p.m.
Clause 8 [General environmental and recreational duties]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 52:
Page 7, line 46, leave out from ("body") to end of line 48.
The noble Lord said: My Lords, in moving Amendment No. 52 I wish also to speak to Amendments Nos. 53, 54, 58 and 59. My noble friend Lady Birk will speak to Amendment No. 55. The purpose of my amendments is to attempt to get rid of some of the unnecessary and weakening verbiage which exists in the early part of Clause 8. It is a very important clause concerned with environmental and recreational duties. The problem with it and its introduction is that it is restricts the duties of the Secretary of State, the Minister, the director and the water and sewerage undertakings to cases where proposals are before them relating to the functions of the water and sewerage undertakings.
Amendment No. 52 would take out the phrase about,
"formulating or considering any proposals relating to the functions of any relevant body".
Amendment No. 53 would take out a complicated phrase which qualifies the duties of the Secretary of State and the director. Instead of the Bill saying,
"so far as may be consistent with the purposes of any enactment relating to the functions of that body".
we suggest, I believe, much more simply, the wording,
"in accordance with the requirements of this Act and of any enactment".
Amendment No. 54 takes out the phrase:
"with respect to the proposals".
Amendments Nos. 58 and 59 do very much the same thing, the latter being a consequential amendment.
We spent a great deal of time on Clause 8 in Committee and I certainly do not propose to go over all or even many of the arguments which took place. Some improvements were made to the wording of the clause and there is scope for much further improvement. There is however a substantive weakness. The clause relies on the formulation and consideration of proposals relating to the functions of the relevant body. The protection of the environment and of recreational facilities should not depend on proposals. That protection should exist at all times; it should not be qualified.
I am not sure whether it is unnecessary or dangerous (or, as the Government like to say when talking about Opposition amendments, whether it is both unnecessary and dangerous) to retain these phrases. I know that they complicate the Bill and introduce a quite unnecessary concept of a proposal which is never adequately defined. I know that they give rise to what seems to me an entirely justified mistrust of whether the Government are sincere and unequivocal in their commitment to the environment and recreational duties proposed in the clause. It is for those reasons that I beg to move the amendment.
Lord Trafford: My Lords, I have only one quick point to make, especially as I know that the noble Lord, Lord McIntosh, trusts neither doctors nor lawyers. The amendments that he proposes so tighten the activities which can be carried on that we run the risk that the undertakers would only be able to do those things which conserve the environment, flora and fauna and so forth. I understand the point of the amendments. But, surely, there is a risk of the wording being so tight that it becomes self-defeating. For that reason I have some reservations about the amendments.
Lord Hesketh: My Lords, the amendments concern the conservation duties in Clause 8(1). Those duties relate to the functions of the relevant bodies. They are to be exercised consistent with the purposes of any enactment relating to the function of those bodies. Such provisions necessarily appear in the corresponding section of the Water Act 1973. Amendments Nos. 52 to 54 would mean that any powers exercisable by the new companies, no matter where they were, would have to be exercised for the furtherance of conservation. Amendment No. 55 which deals with the historic buildings element of the clause——
Baroness Birk: My Lords, I apologise to the noble Lord, I do not know how to put the situation right. I thought that the Minister was replying to Amendments Nos. 52 to 54, after which I should deal with Amendment No. 55. I realise now that he is dealing with the whole group. Perhaps he would allow me to say a few words now on Amendment No. 55.
Lord Hesketh: My Lords, I am at fault. I leapt to the Dispatch Box with undue vigour. I apologise profusely to the noble Baroness and await her remarks.
Baroness Birk: I thank the noble Lord very much. We appear to be in competition as to who is more wrong. I feel that the fault is mine, but never mind. We return to the desirability of protecting the heritage, a matter which arose at the Committee stage. It was touched on quite considerably this afternoon when we were discussing Amendment No. 140 but I am sorry to say that I felt very little joy from the outcome. The Minister's response as regards the man-made environment, the heritage, was most upsetting and disappointing.
The phrase,
"to have regard to the desirability of protecting",
keeps on coming through not only in this but other legislation. It is not only an inelegant phrase; it is inexact and should find no place in legislation. It does not do what we wish it to do as regards protecting the types of objects, such as structures and buildings, with which we are concerned.
The phrase,
"so to exercise any power conferred on him or it as to further the protection of",
accords, as I am sure the Minister is aware, with what appears in Clause 8. It provides the same protection for the built heritage, the buildings and objects of archaeological, architectural or historic interest, as that given earlier in the clause to the enhancement of the natural beauty and to conservation. I should have thought that the Minister would look kindly on this proposal. It evens out matters out with a greater degree both of interest and approval. We accept that protection cannot always be an overriding and all consuming duty. The Minister pointed that out in Committee. However, he also said in Committee:
"Protection of historic features is an important objective to which we require the water industry always to have regard".—[Official Report, 8/5/89; col. 446.]
I take that to mean that it is accepted by the Government that as far as is humanly possible the water industry should have the same regard to historic features as anybody else. Therefore, I do not see the reason for turning this provision down.
When the Minister spoke to Amendment No. 140 he seemed to give the impression that there were not many archaeological objects, structures or buildings that needed conservation. However, that is not the case. To give just one example, Thames Water is in possession of a great many extremely valuable and unique objects, and also has archives. The water industry is quite a large owner of a great many of

993
the things we are trying to protect. I cannot see why there should be so much resistance to placing a duty on it to protect these things.
At the moment the duty to protect our man-made heritage is less strong than the duty to protect wildlife. However, our man-made heritage is not a dynamic regenerating system but a finite and non-renewable resource. Any damage or destruction that occurs now will remain for all time. Archaeological sites cannot repair themselves in the way that ecosystems, albeit perhaps over a very long time, can. There must therefore be at least as strong an obligation to plan carefully as regards our man-made heritage, and to do as little damage as possible. My noble friend Lady Nicol and the Peers who have put their names down to her amendments have taken great care to ensure that the man-made heritage has the same protection and is subjected to the same careful conservation as wildlife and the landscape.
This amendment does not seem to me in any way to conflict with the objectives that were spelt out by the Minister in Committee. In fact, I think it supports those objectives. I hope that now that this provision has been completely redrafted and inserted in a different place, the Minister will at least give us some encouragement. If the amendment needs any form of redrafting, we would be quite agreeable to that. It is the substance of the matter with which I am concerned.
Baroness Blatch: My Lords, Clause 8 already lays a duty on the undertakers to:
"have regard to the desirability of protecting buildings or other objects of archaeological, architectural or historic interest".
The amendment, as set out, places an absolute duty on the undertaker to protect any object, however insignificant. I think it is absolutely essential that a balance is struck between the undertaker getting on with its proper duties and having regard to the desirability of protecting such objects. I believe the balance as set out in the Bill is right. The duty is there to protect certain objects. However, if, for example, when pipe-laying some objects have to be disturbed and perhaps even damaged but they are totally insignificant in the sense of being of any interest to any historical society, there should not be a duty on the water undertaker to protect them.
6.45 p.m.
Lord Hesketh: My Lords, these amendments concern the conservation duties in Clause 8(1) and the duties related to the functions of the relevant bodies, and provide that those duties are to be exercised consistently with the purposes of any enactment relating to the functions of those bodies. Such provisions necessarily appear in the corresponding section of the Water Act 1973, as I said earlier in my false commencement of replying to these amendments.
Amendments Nos. 52 to 54 would mean that any powers exercisable by the new companies, no matter what they were, would have to be exercised for the furtherance of conservation.
994
Amendment No. 55, which deals with the historic buildings element of the clause, would have the effect of tightening the duties by deleting the words:
"have regard to the desirability of protecting".
It would require the exercise of powers of the relevant bodies directly for furthering the protection of historic buildings. Similarly, Amendments Nos. 55 and 59 achieve the same effect in relation to the duty to take account of the beauty and the amenity of urban and rural areas by requiring that the relevant bodies' powers be used directly for their promotion.
I shall deal first with Amendments Nos. 52 to 54. The formulation proposed is not one that the Government consider desirable. The reference to formulation and consideration of proposals is in our view a helpful one because it gives the duties something specific on which to bite, and will direct attention clearly at decision-making by both the relevant bodies and the Secretary of State and director. Moreover, in eliminating any reference to functions—the most relevant consideration for conservation—the amendment goes too wide. The new companies may from time to time do some things which cannot reasonably be construed as part of their functions and which it would be unreasonable to constrain to the furtherance of conservation.
But, while we cannot adopt the terms, we have already accepted the key substance. We accept that there may be circumstances, although we think they are narrow and unlikely, where the companies could undermine the purposes of the legislation by declaring land surplus to their functional requirements.
Much concern has been expressed that the general effect of the duties could be undermined in this way. That is something we want to avoid. Earlier this afternoon we discussed Amendment No. 75 in the context of the land group. That amendment will secure this provision by extending the duty to cover proposals in respect of the management of land, whether it is functional or non-functional. I hope that the House will accept that it is sensible to do this in relation to the aims of Amendments Nos. 52 to 54.
As regards the tightening of the terms of the historic buildings and landscape duties by Amendments Nos. 55, 58 and 59, we believe that what is proposed is not practical. The amendments would, for instance, require the Secretary of State and the companies to exercise their powers so as to promote natural beauty and amenity and to further the protection of historic buildings. These obligations are to be totally unqualified. They are not to be performed only so far as is consistent with their main water supply and sewerage functions. They are not to be performed only so far as is reasonably practical having regard to cost or other considerations. There are no qualifications of these kinds.
The obligation is simply this: in supplying water and disposing of sewage, the undertakings are to do that—regardless of all other considerations—which furthers protection of landscape and historic buildings. Indeed it is arguable that the duty is so

995
tight that the companies would be able to undertake only those water supply and sewerage functions which actually promoted conservation. We believe this is not reasonable. Its effect is to subvert the whole purpose of the legislation. Instead of, as now, the companies being required to have due regard to historic buildings and landscapes in performing their functions, the protection of those landscapes and buildings could override water supply and sewerage functions. We believe that such subordination is simply not appropriate.
We have to strike difficult balances. We have to reconcile conflicting objectives. We have to recognise that, while historic buildings and landscapes are valuable objectives, they cannot and must not be ones to which all other considerations are subordinated. We believe that the Bill as drafted preserves these essential balances. I suggest to the House that it is important that we ensure that they can continue. It is in those circumstances that I hope the Opposition will not feel it necessary to press these amendments.
Lord McIntosh of Haringey: My Lords, I am grateful to the Minister for that explanation. He will not be surprised to hear that I do not find it particularly reassuring. The problem, as I have said, with the drafting of the Bill is not only that it is exceedingly complex but also that it relies on the concept of proposals. The proposals are brought forward by the undertakers. In other words, nothing can happen except on the initiative of the water or sewerage undertakers. That is what is unsatisfactory. I listened carefully to the noble Lord, Lord Trafford, on this point and he did not convince me either. I remind him that Jack Cade said, "Let's kill all the lawyers first". We might move on to the doctors after that.
To return briefly to Amendment No. 53, that relates to a point where the drafting of the Bill causes me the utmost puzzlement. The Bill reads:
"so far as may be consistent with the purposes of any enactment relating to the functions of that body and, in the case of the Secretary of State and the Director, with their duties under section 7 above".
Why do we have to go such a long way round the houses, particularly as when we talk about the Secretary of State and the director we are talking about this Bill? Why can we not just say, as Amendment No. 53 does:
"in accordance with the requirements of this Act"?
It is not particularly restrictive. It removes unnecessary confusion and what may be, although I have not been convinced that it is, an unnecessary, justifiable source of mistrust about the Government's intentions in regard to Clause 8.
However, as the Minister has said, the issue is complex and the balance to be struck is difficult. It may be that even now we have not got the wording of our amendments right. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 53 to 55 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 56:
Page 8, line 9, leave out ("buildings or other") and insert ("and conserving buildings, sites and").
The noble Lord said: My Lords, in moving Amendment No. 56 I should like to speak also to Amendment No. 60 in my own name and Nos. 57 and 61 in the name of my noble friend Lord Howie of Troon, who is unable to be with us this evening and sends his apologies. The amendments follow very closely debates which took place on the definition of buildings and other places where objects of archaeological, architectural or historic interest might be found. The Minister conceded at Committee stage that the word "building" was not adequate to the intention, which I think we all shared, as to the protection that is required.
I am very glad that it has been possible for the department to come up with the drafting changes which are included in Amendments Nos. 56 and 60 which give effect to that intention. I understand that that wording is acceptable to the Government. I am very happy to move Amendments Nos. 56 and 60 on that basis.
Amendments Nos. 57 and 61 are put forward by my noble friend Lord Howie, who is a civil engineer and who took part in the debates on the Copyright Bill on a comparable issue. In the debates on the Copyright Bill he pointed out that neither buildings nor sites covered some of the major artefacts of the water industry. One could not very well describe an aqueduct, for example, either as a building or as a site. When he pointed out that fact in relation to the Copyright Bill the Minister responsible acknowledged that he had a point and the phrase "fixed structures" was added into the Copyright Bill. He argues—I think that he has a very good point here—that if that is appropriate for the Copyright Bill then it is appropriate here.
I hope that in accepting Amendments Nos. 58 and 60 the Government will give serious consideration to the point made by my noble friend in Amendments Nos. 57 and 61. I beg to move.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, I understand that in line 2 of Amendment No. 56 the word is "conserve" and not "concerning". Is that agreed?
Lord McIntosh of Haringey: My Lords, that should be Amendment No. 57 and not Amendment No. 56. What my noble friend meant was conserving buildings, sites and fixed structures.
The Deputy Speaker: My Lords, I apologise, but my brief gave it as Amendment No. 56.
Lord Hesketh: My Lords, the Government are happy to support the amendments standing in the name of the noble Lord, Lord McIntosh, and which flow from points he put to the House at Committee stage. We regard the insertion of the word "conserving" as helpful in that it goes wider than the reference in existing legislation to "protecting". Equally, the reference to sites makes clear that the

997
scope of the duty extends to ancient monuments and industrial remains.
If the amendments are accepted the formulation "buildings, sites and objects" will cover all matters which the duty in Clause 8(1)(b) should cover. We are able to support the amendment because the language is in suitably simple and embracing terms and avoids technical terms not precedented in legislation elsewhere. Having said that, it appears to us to achieve in full the comprehensive coverage of aspects of archaeological, historical or architectural interests which the House seeks.
Turning to Amendments Nos. 57 and 61, standing in the name of the noble Lord, Lord Howie of Troon, these would import the concept of fixed structures to the duty. It is certainly our intention that dams, pumping engines of historic interest and so forth should be covered by the duty. We are not certain whether the formulation proposed in Amendments Nos. 57 and 61 is necessarily the right one but, if the noble Lord, Lord McIntosh, is content, I shall undertake to consider the point and come back with a suitable form of words at Third Reading if the formulation as amended at Report is not adequate.
We certainly support Amendments Nos. 56 and 60, to which I hope the House will agree.
Lord McIntosh of Haringey: My Lords, I am most grateful on behalf of myself and my noble friend Lord Howie for the consideration which the Minister has undertaken to give to the phrase "fixed structures". In his examples he did not repeat the example of aqueduct which I gave. He might also like to take that into account.
I am also grateful for the support he has given to Amendments Nos. 56 and 60. Indeed, his extravagant support for the wording is only tempered by the knowledge that I had already acknowledged the assistance of the department in producing the wording. What he is doing is praising himself and his own officials. He is perfectly entitled to do so. They are good amendments. I commend them to the House.
On Question, amendment agreed to.
[Amendment No. 57 not moved.]
Baroness Birk Baroness Birk moved Amendment No. 57A;
Page 8, line 10, after ("interest") insert ("including ancient monuments, machinery, portable antiquities and documents").
The noble Baroness said: My Lords, this amendment returns to the same theme and deals with ancient monuments, machinery and other portable antiquities and documents. Again, we are concerned that these should be saved.
The inclusion of the sites of buildings and objects which has been accepted clarifies to some extent the range of items covered. There still remains scope for making the Bill more explicit than it is at present. As I understand it, it is the Government's intention that all those items should be included because they are specified in the code of practice. However, as we are aware, inclusion in a code of practice is not the same as inclusion in the statute. We believe it is essential that the Bill should be as clear as possible
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rather than it being left to a code which is not directly enforceable and has no long-term standing.
The terms used have been carefully chosen. The term "ancient monument" is defined in the National Heritage Act 1983, the Act which gave birth to what we now call English Heritage. "Machinery" is included here as it does not specifically fall within the scope of "ancient monument" but is a very important example of the ancient objects which we are trying to preserve as far as possible in this country. It specifically cannot be included in the listing of a building. "Portable antiquities and documents" represent further categories of "object" of which the present water authorities—as I have mentioned previously—have important collections, many of which relate to the development of the water industry itself and are therefore worthy of being kept and looked after without any extra work or necessary expense for the Government.
The amendment does not seek to alter the Government's intentions. It is designed to make the Bill clearer and more explicit and to incorporate into it primary matters of principle at present not covered in the code of practice. If, as on an earlier amendment, the Government had put forward and accepted "fixed structures" as well as "sites" and everything else, it would be difficult to argue against "portable antiquities", objects and—most importantly—"machinery", which is so often left out and is not included in the definition of an ancient monument. Some people think that it is included, but I can assure the Minister that it is not. That is why it is important to have it on its own. I beg to move.
The Earl of Arran: My Lords, I hope that the noble Baroness will forgive me for asking, but is she moving all the other amendments in the group that starts with Amendment No. 57A?
Baroness Birk: My Lords, I shall speak to Amendment No. 58A. That is a rather different amendment, but I am perfectly happy to speak to it. These are all slightly different amendments. I think that I should prefer to divide them.
The Earl of Arran: My Lords, I thank the noble Baroness for giving way. I understand what she says, but the amendments are all grouped together on the list.
7 p.m.
Baroness Birk: My Lords, I understand that very well, but, after all that we have heard about grouping earlier this afternoon, I should have thought that it would be a great relief and that everyone would be pleased to consider these matters singly instead of their being grouped. I am prepared to go on so long as I can be assured that the amendments will be dealt with separately. In that case, I shall continue.
I originally hesitated because the next amendment—Amendment No. 58A—is entirely different. It is a very important one and does not give rise to the points that we have repeated several times. The objective of the amendment is to make it clear that the duties towards conservation imply

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a positive attempt to restrict damage to vulnerable habitats, heritage features and landscapes and, where damage is unavoidable, to take such remedial action as is appropriate. I think that the Minister will understand why I divided the amendments.
The phrase "to take into account" provides no specific standards of procedure for safeguarding conservation interests. As I am sure the Minister is well aware, the amendment is in line with the objectives of environmental assessment and reflects the wording of paragraph 3(d) of the schedule to the Land Drainage Improvement Works (Assessment of Environmental Effects) Regulations 1988. I do not think that one could do better than copy that all over again. The Government are already committed to the principle that the overall objectives of environmental assessment should be met even where formal environmental assessments are not required. The amendment would help to achieve that aim.
In Committee, the noble Lord, Lord Hesketh, agreed to consider the concepts and terms which may provide a most positive and helpful expression of both historic building and landscape duties which were presented in this and other amendments at the time. I wonder whether we may know the results of his deliberations. If he accepts the amendment, we need not go into any further explanation. That would be perfectly acceptable to us and we should not need him to explain the matter any further. But, as he said that he would look into the matter and as this is a limitation of damage amendment, it is in rather a different position from the others.
The objective of Amendment No. 62C is to ensure that due consideration is given to public access to the man-made heritage. This is again an entirely different subject. That is the problem of the grouping. There is considerable public interest in the heritage and it is important for recreation, education and cultural enrichment. The present water authorities currently own a wide range of cultural assets in terms of ancient monuments, buildings, water supply mechanism, industrial machinery, portable antiquities and documents. Any or all of those may be of interest to the general public.
The issue of access has generally been considered in respect of land for recreation. It is also desirable in that context that there should be access to important collections of historic artefacts and buildings, whether for enjoyment or for serious scholarly study. The heritage deserves equal standing with wildlife and amenity interests in this matter. I remind the Minister that the importance of the whole question of access, whether to museums, galleries or the objects that are of value to the country, is on the increase all the time. More and more people want to see things and visit our museums and their outside archaeological collections. The amendment simply seeks to ensure that consideration is given to the question of public access to the man-made environment.
I am still a little worried because these are all separate subjects, but I am sure that the Minister has carefully noted that fact and has the amendments before him. The objective of Amendment No. 70A is to ensure that the implications for the heritage of
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activities connected with inland waters are covered. The protection of the man-made heritage is a primary duty in Clause 8(1) and yet is not included here despite specific requirements comparable with those relating to landscape amenity and nature conservation.
Four aspects must be highlighted. First, many inland waters and associated buildings and structures, especially on canals, are of considerable historic interest, and a major relic of the industrial revolution—a cultural and economic heritage in which Britain led the world. Secondly, many rivers, especially the Thames, have produced thousands of artefacts, most significantly the majority of prehistoric weapons in Britain. Those were deliberately deposited as sacrificial offerings and are exceptionally well preserved. Thirdly, several archaeological sites are being eroded by rivers. Fourthly, of particular importance are water-logged structures and artefacts whose exceptional preservation relies on a high water table and whose destruction can be triggered within weeks by drainage. Such sites are among Britain's rarest, best preserved and most fragile archaeological remains.
Those aspects represent four specific reasons for the amendments. Inland waters and areas subject to drainage preserve special heritage which, in the case of organic materials, is particularly precious and vulnerable. The functions of the National Rivers Authority impinge on that particularly distinctive and vulnerable heritage. Because of the threats posed by drainage, English Heritage has, to its credit, funded a major programme of surveys over the last few years to identify and record the existence of sites in major wetland areas. These areas have been selected as having the highest priority for survey because of the quality and fragility of the archaeological deposits within them. I think that the current undertaking of English Heritage speaks for itself in pinpointing the value of such sites.
Turning to Amendment No. 78A, the objective is to give equal weight to the man-made heritage which potentially is equally as affected as the natural environment. Subsection (2)(a) refers to:
"land in relation to which . . . section 8 above has effect".
Since that clause includes buildings, sites or other objects of archaeological, architectural or historic interest and these occur on land within national parks and the Broads, they must logically be included where the interest of such land under Clause 8 is specified.
The amendment is simply for clarification. I am sure we all agree that whatever goes into a statute should be as clear as possible and beyond any danger of causing confusion. Although it is hard to tell, given the frequency with which the Government do not include references to it, we believe that it is accepted that the man-made heritage should be given equal, not to mention integrated, consideration with the natural environment and landscape. This is a question of balance. I am not trying in any way to give an edge to the man-made environment over the natural environment but to ensure that there is adequate protection for it. That is the concern of the amendments. I have come to the end of my

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comments on the amendments in that group. I beg to move.
Baroness Blatch: My Lords, it is difficult to argue—indeed, I do not wish to do so—with the need to protect flora, fauna and objects of archaeological and architectural interest. However, taking all these amendments together, it would be difficult to argue other than that the water authority should now shut up shop and go home. They make it nearly impossible for them to carry out their normal duties.
I believe that it is right for the Bill, and the Act when it comes into force, to put upon the water companies a duty to protect all those interests. However, I think it is unreasonable to make an absolute duty to protect absolutely everything, whether it is of significant or insignificant interest. For example, in Amendment No. 70A as it stands the duty laid upon them makes it almost impossible for them to function. Is the noble Baroness asking the water companies to conserve all buildings, sites and other objects of archaeological and architectural interest that rely upon a high water table and that may be affected? If for one reason or another that water table is reduced, either through drought conditions or even perhaps from over-abstraction because the companies have a duty to provide water to domestic and non-domestic users and there happens to be some damage, is the water company not only to be responsible for the restoration of any damage but for all time must conserve those buildings and sites?
I think that that lays an impossible duty on the water companies and I therefore ask my noble friend where possible to produce the strongest possible wording to make sure that a duty is laid upon the water companies to have reasonable regard for all those interests but not an absolute duty to conserve them for all time.
7.15 p.m.
The Earl of Arran: My Lords, I am sure that we are very grateful for the clear and concise explanation of the amendments in this group to which the noble Baroness, Lady Birk, has spoken. I hope to be equally clear and concise in stating the Government's reaction and attitude to them.
With regard to Amendment No. 57A our view is that a reference to "including ancient monuments, machinery, portable antiquities" is an unnecessary elaboration of the provision, as we indicated in our response to Amendments Nos. 56 and 60. We believe that the reference to buildings, sites and objects satisfactorily covers all those without going into the specific detail which can cast doubt on the generality of the provision. Therefore we believe that the formulation proposed, as I have said, is over-elaborate and best avoided.
Turning to Amendment No. 70A, this would add to the NRA's general promotional duties in Clause 8(4) a duty to promote conservation of antiquities and remains dependent upon a high water table. We understand the concern here, but there must be
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limits to the duties and obligations that we place on the new authority. That was a point brought out by my noble friend Lady Blatch. In this case the duty is unnecessary and will add little to the obligations already falling upon the authority by virtue of the duties already given to it. It will have general responsibilities in respect of water resources and abstractions, and hence of the water table, and it will have an obligation to have regard for the conservation of objects of archaeological and historic interest.
Our conclusion is that the combination of those two factors already meets the concerns of the noble Baroness, Lady Birk, so far as it is reasonable and practicable to do so and that to add a general promotional duty in this area would be an unnecessary and undesirable over-elaboration of the legislation.
I turn now to Amendment No. 62C, which would extend the duty to have regard to the desirability of preserving public access to cover access to archaeological or historic buildings, sites or other objects. We have been giving careful thought to this proposal. On balance, our conclusion is that this would be a reasonable and sensible extension to the clause. We do not think the wording is quite right, but subject to that we would be willing to bring forward an amendment to the effect desired at Third Reading.
Finally, on historic buildings I turn to Amendment No. 78A which in Clause 9 seeks to insert a notification procedure in respect of historic features into the provision dealing with national parks and sites of special interest. I have to say that insertion of that reference in the provision would be wholly out of place and frankly would complicate and confuse the clause. General legislation dealing with historic buildings is already full and effective, and we can see no sufficient case for seeking to insert special provision for them here. We feel that it would be both unnecessary and incongruous.
Amendment No. 58A takes us into the general duty in Clause 8(1)(c) to take account of the effects of proposals on the urban and rural environment and proposes to amend this specifically to refer to the need to avoid, remedy or reduce any adverse consequences of proposals. We already have in Clause 8(1)(a) and 8(1)(b) explicit duties on the relevant bodies to further conservation of landscapes, flora and fauna and buildings, and in these circumstances the elaboration proposed for subsection (1)(c) would, we believe, be quite redundant.
In the circumstances, we believe that the amendments in this group are not necessary, except for Amendment No. 62C which we believe is sound and we are prepared to consider it in detail with a view to an amendment at Third Reading.
As regards the other amendments, I hope that I have been sufficiently persuasive to enable the noble Baroness to withdraw them.
Baroness Birk: My Lords, I thank the noble Earl and should like to respond first to the good news. I am most grateful to him for accepting Amendment

1003
No. 62C and I am happy that it should be redrafted, if necessary, so long as the phrase "with regard to the desirability of is not used. I should be pleased if the Government could avoid that. I think that this is an important amendment and we appreciate the concession.
I do not think that the Minister would expect me to agree with his objections to the other amendments. On Amendment No. 58A, the main point is that, as the precedent has already been set, there seems to be no need for any objection to including the provisions in the same way as for the environmental assessment, land drainage improvement works and so on. I have quoted the noble Lord, Lord Hesketh. What he said seemed to be very sympathetic to such an amendment. I shall not press it. I believe that the Government are wrong.
On Amendment No. 70A, the noble Baroness, Lady Blatch, thought that to insist on something so inclusive would be too pressurising. However, as I said on Amendment No. 55, we accept that it cannot always be an overriding or consuming duty to protect the man-made heritage. There must be a balance of public interest. We are concerned that that balance is right and does not work against the man-made heritage as it so often does, because there are comparatively few people interested enough in the issue to do anything about it. People are on the whole much more interested in what I call the green issues—the nature parks, the areas of outstanding beauty—as I am also. They are highly important. Nevertheless some of us have continually to speak up for such issues as the preservation of archaeological artefacts, which are irreplaceable. On the other hand, it is not suggested that everything has to be kept exactly as it is, because that is impossible.
Baroness Blatch: My Lords, with the permission of the House, if the noble Baroness will allow me to intervene. I was not arguing against the desire to protect these buildings. However, Amendment No. 70A seems to put a duty on the water companies, whether or not they are working on these sites or buildings, to conserve them. I think that that is unreasonable.
Baroness Birk: My Lords I tabled the amendment because the archaeologists are worried not just about the conservation of the building sites, and so on, but the in situ organic archaeological deposits and artefacts dependent for their survival on a high water table. All these items must be possible to be saved and must be worth saving. There is nothing absolute about this amendment any more than any of the others that I have moved. That is no reason for turning it down. The danger of losing some of these highly valuable organic materials is very great. However, the Minister seemed rather reluctant to accept the amendment. Therefore, for the time being, I shall not move it.
On Amendment No. 78A, the same arguments prevail. It is put forward simply for clarification. We are trying to achieve equality between the man-made heritage and the natural heritage. The same arguments seem to have been given in reply to this
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as to the other amendments. Since I am repeating my arguments in reply, there is a point at which we have to draw the discussion, if temporarily, to a close. I shall therefore not move that amendment either.
The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, does the noble Baroness wish to withdraw Amendment No. 57A?
Baroness Birk: My Lords, yes, and I shall not move the other amendments, including Amendment No. 62C, in the hope that the Government will come back with something on that.
Amendment, by leave, withdrawn.
[Amendments Nos. 58, 58A and 59 not moved.]
The Deputy Speaker: My Lords, does the noble Baroness move Amendment No. 60?
Baroness Birk: My Lords, with great respect, that amendment comes in a different grouping. It is all very confusing.
The Deputy Speaker: My Lords, I must put the amendments in the order that they come.
Baroness Birk Baroness Birk moved Amendment No. 60:
Page 8, line 13, after ("buildings") insert (", sites").
On Question, amendment agreed to.
The Deputy Speaker: My Lords, perhaps I may say that Amendments Nos. 60 and 61 are alternatives. I understood that the Government were prepared to accept Amendment No. 60. Therefore Amendment No. 61 as an alternative should, I suggest, not be moved.
[Amendment No. 61 not moved.]
The Deputy Speaker: My Lords, is Amendment No. 62 moved?
The Earl of Arran: My Lords, your Lordships may agree that this is a suitable moment at which to break for dinner. I suggest that we return to further consideration on Report at 8.30 p.m. In the meantime I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Control of Smoke Pollution Bill
7.29 p.m.
The Earl of Portsmouth: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Portsmouth.)
On Question, Motion agreed to.
House in Committee accordingly.
[THE LORD HAYTER in the Chair.]
Clause 1 agreed to.
Clause 2 [Extension of offence of emitting dark smoke from industrial or trade premises]:
On Question, Whether Clause 2 shall stand part of the Bill?
Lord Tordoff: I should like to speak on the Question of whether Clause 2 shall stand part of the Bill, and I apologise for slightly causing confusion on this issue. I understand it is the intention that I should speak on Clause 2 stand part, and we will come to the noble Earl's amendments to the Long Title at the end of our discussions.
I hesitate to intervene at this stage, partly because I did not speak at Second Reading and partly because it may be that I shall give the noble Earl some worry that I am going to damage his Bill. Let me assure him that it is no intention of mine in any way to hurt this Bill, which we totally support from these Benches. But I want to take the opportunity to deal with some matters that have been brought to my attention on information which was received by me after the Second Reading, and this is the only way that I can raise them.
There are those who are not satisfied that Clause 2 goes far enough in dealing merely with dark smoke. There is a problem relating to chipboard factories which has been drawn to my attention by the good people of Hexham. I regret, incidentally, that I was not able to give the noble Lord, Lord Rippon, notice of the fact that I was going to speak about this, because he might have felt that he had a constituency interest.
As noble Lords will know, Hexham is a small country town in Northumberland and it is claimed that the chipboard factory there produces for 24 hours, every day and night, plumes of what is, on the face of it, steam which hangs over the river valley. It also produces a blue haze and a brown haze. This factory is producing chipboard and there are two or three other chipboard factories in the country also producing this material, using wood chips, as one might imagine, as well as phenolic resins of one sort or another—formaldehyde, pheno-formaldehyde, melamine and other resins for bonding these chipboards. Although these substances are not excessively toxic in the amounts that are beng put into the atmosphere, nevertheless they can be extremely irritating and they do not seem to be caught under the provisions of this very excellent Bill.
As I said, this problem is not confined to Hexham. There are cases reported in Scotland and I quote from the Sunday Post, which I understand is a Scottish newspaper, of 19th February, which states:
"People living in the shadow of two giant chipboard manufacturing plants in Scotland endure polluting fumes and dust 24 hours a day. Their local Environmental Health Department are powerless to act. All because of a loophole in proposed Government legislation".
One must take this with a certain amount of scepticism, coming from the public prints, but there is obvious concern here. The article goes on to say:
"Wood fibre and fine sawdust pour from the plant chimneys daily. When the prevailing wind takes the emission over the village, cars and pavements are covered in a fine powder and a heavier, woolly substance . . . The Sunday Post has received
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identical complaints from residents living near [a plant] in Irvine".
There is also a plant on the Welsh border which is causing similar worries.
I understand that it is possible that there are proposals in the pipeline for local authorities to be given greater powers than they have at the moment to deal with this nuisance, but at the moment, according to information I have received, there is no specific legislation available to control emissions from chipboard factories.
The existence of this excellent Bill has raised people's expectations that something might be done at this stage. I am asking the Government to offer some reassurance to the good people of Hexham and other places either that something can be done very quickly or that thare will be legislation coming forward at an early stage to offset this nuisance.
Lord Hesketh: The noble Lord referred to air pollution from chipboard manufacturing plants. These plants are currently subject to control under the Public Health Acts. Local authorities are responsible for the control of any emission that constitutes a statutory nuisance, although it is also open to the local people to complain of a statutory nuisance direct to a magistates' court.
As the noble Lord quite correctly pointed out, my department issued two consultation papers in 1986 and 1988, both of which are in the Library of the House. They included a proposal that air emissions from certain processes, including some timber processing plant, should be controlled by local authorities under a system akin to that currently operated by Her Majesty's Inspectorate of Pollution. It is proposed to bring forward legislation to give local authorities these new powers during the course of this Parliament, and it is likely that this factory in Hexham will be among the processes scheduled for local authority control under the new system. I hope that those words will give some confidence to the good citizens of Hexham.
Lord Tordoff: I am most grateful to the Minister for that reply. I am sure that it will give great comfort to the people of Hexham and similar places. I am delighted to have such a satisfactory reply and certainly I shall not seek to impede the progress of the Bill for one minute more.
Clause 2 agreed to.
Clause 3 agreed to.
In the Title:
The Earl of Portsmouth The Earl of Portsmouth moved Amendments Nos. 1 and 2:
Line 1, leave out ("repeal") and insert ("amend").
Line 1, leave out ("to amend").
The noble Earl said: I should like the leave of the Committee, if that is necessary, to move both of these amendments on the Marshalled List together. This Bill was introduced in another place on 21st December 1988. The Long Title tabled at that time was:
"Control of Smoke Pollution … a Bill … to repeal section 16(1)(a) of the Clean Air Act 1956 and to amend: section 1 of the Clean Air Act 1968".
After introduction, parliamentary counsel produced a first draft of the Bill. At that stage it was realised that Clause 1 went further than the proposal contained in the Government's December 1986 consultation paper on air pollution control. The consultation paper proposed that non-dark smoke emissions in areas not subject to smoke control should come under the ambit of the statutory nuisance provisions of the Public Health Acts. The effect of repealing Section 16(1)(a) would be to extend statutory nuisance to cover non-dark smoke emissions both outside and within smoke control areas.
So as not to depart from the consultation paper proposal, which was widely welcomed, Clause 1 was drafted so that non-dark smoke emitted from the chimney of a private dwelling within a smoke control area would remain exempted from the statutory nuisance provisions. This was achieved by retaining part of Section 16(1)(a). Thus Section 16(1)(a) required amendment but not repeal. The result of this was that Clause 1 of the Bill provided for amendment, whereas the Long Title given in the First Reading referred to "repeal".
The purpose of the amendments is to align the Long Title with the drafting of Clause 1. Clause 1 provides for the amendment of Section 16(1)(a) of the Clean Air Act 1956. The Long Title refers to the repeal of Section 16(1)(a). It should read:
"amend Section 16(1)(a) of the Clean Air Act 1956 and Section 1 of the Clean Air Act 1968".
The amendments in no way alter the substance of the Bill. I beg to move.
Lord Hesketh: The improvements in air quality achieved as a result of the Clean Air Acts are well known. We tend sometimes to forget these major achievements when concentrating on some of the new air pollution problems that have emerged. This Bill offers two small but important changes to these Acts and has our full support.
Non-dark smoke emitted from the chimneys of private dwellings can be a nuisance. It is right that there should be a statutory mechanism for tackling such nuisances wherever they occur, not just in those parts of the country covered by smoke control orders—albeit that these orders cover two-thirds of all urban premises. In extending the current definition of "statutory nuisance" to include non-dark smoke emissions from private dwellings outside smoke control areas, Clause 1 achieves this extension of control and is to be welcomed.
There are already controls in the Clean Air Acts over dark smoke emitted from industrial premises. The provisions in Clause 2 will strengthen these controls by closing two loopholes which have hindered effective enforcement by local authorities. It will hamper those who deliberately flout the law for quick profit without heed to the often serious loss of amenity suffered by those living nearby.
Turning to the two amendments, my noble friend has explained that no changes of substance are proposed. The purpose is to make two small changes to the Long Title of the Bill so that it accurately
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reflects the provisions in Clause 1. In welcoming Clause 1, it follows that these two uncontroversial amendments also have our full support and I commend them to the Committee.
On Question, amendments agreed to.
Title, as amended, agreed to.
House resumed: Bill reported with amendments.
The Earl of Arran: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.34 to 8.30 p.m.]

Water Bill
Consideration of amendments on Report resumed on Clause 8.
Lord Gallacher Lord Gallacher moved Amendment No. 62:
Page 8, line 16, leave out from ("body") to ("for") in line 19 and insert ("to preserve and make available").
The noble Lord said: My Lords, I shall also speak to Amendments Nos. 62A and 63. However, I am not speaking to Amendment No. 62B. Clause 8 concerns the general environmental and recreational duties of the Secretary of State, the Minister and the director. As such it is a very important part of the Bill. Indeed, considerable stress was placed upon its importance by the Government at Second Reading and in Committee.
Subsection (2) of Clause 8 has the appearance of being positive until one reads in detail paragraphs (a) and (b). One is left in no doubt that in terms of real power or the placing of a real duty on the Secretary of State, the Minister and director, the clause is inescapably weak. The purpose of these amendments is to try to strengthen it in respect of rights of access for the public to land after privatisation.
The question of water undertakers having a firm duty to preserve existing public freedom of access to land is one which we discussed at an earlier stage of the Bill. At that time we were disappointed at the Government's insistence that that duty must remain a duty,
"to have regard to the desirability"
of protecting access. That does not seem to us to be as fair or as positive as it might be. The purpose of the amendment is to firm up the wording if possible and to persuade the Government that that can be done without any great loss or detriment to operational activity by the plcs.
The public has since 1973 enjoyed fairly extensive access to the half million acres which the 10 regional water authorities currently own. Although in one or two instances that access is not as good as it might be, the asset is very valuable from the point of view of the public who have access to recreation which we feel should be preserved and which we are anxious to see preserved even after privatisation.
When one considers that much of this land passed in 1973 to regional water authorities from local

1009
authorities without payment under the Act of that year, the public's desire to maintain access is in our opinion both understandable and justified. Indeed, Section 20 of the 1973 Act obliged regional water authorities to open their land to the public and, as I say, in the main regional water authorities have honoured that undertaking. We are perfectly satisfied that if the right of access can be preserved, it will be to the benefit of the public at large and to the benefit of amenity in general.
We are concerned that if paragraphs (a) and (b) are enacted in their present form, there may be a disposition on the part of the water authority plcs to seek to curtail in some way the right of access and the Minister may not feel under any serious obligation, given the wording,
"to have regard to the desirability"
to maintain access in the way we consider it should be done.
There is also the view of the farming lobby. We are well aware that farmers differ in their attitude towards allowing the public access to land. In the main most farmers are happy enough to see the public there, always provided that they behave responsibly. However, a minority of farmers, if they sense that the protection under this Bill is weaker than it might be, may be less keen on giving access and may seek to restrict it. That, in our view, is a further reason for firming up paragraphs (a) and (b) in the manner suggested in these amendments.
During previous discussion I understand that the Government said that they genuinely intended to protect access but that they were frightened of incorporating words into the Bill which would not allow access restrictions when there were authentic operational reasons for such restrictions. If that is the position, we feel that it would be possible even at this late stage to draft the Bill in such a way as to permit restrictions for legitimate operational purposes. If, however, the Government are not taking the position that it is impossible to recognise the effective maintenance of access with operational requirements, we feel that they should drop their objections and permit the strengthening of the Bill in the manner we suggest in Amendment No. 62 and the consequential amendments. For that reason, I beg to move.
The Deputy Speaker: My Lords, I have to point out that if this amendment is agreed to, I cannot call Amendment No. 62A.
Lord Hesketh: My Lords, Amendments Nos. 62, 62A, and 63 would require the relevant bodies to preserve and make available public access rather than have regard to it. I recognise that there is concern that after privatisation the undertakers may restrict such access. I must reiterate to the House that there is no basis for such fears. Nothing the authorities have said or done indicates they will act in this way. Given the nature of most of the land in question—upland, rural areas—there would surely be little advantage to them in it. Since 1974 they have taken down the fences. As they have indicated, they have no intention of erecting them again.
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So let me summarise what the position will be in respect of public access after privatisation. First, dedicated rights of way will of course be unaffected. Secondly arrangements established under private legislation will also continue. And by an amendment to the Bill in another place the Government have specifically denied themselves any right to vary or amend such legislation in consequence of the enactment of the Bill. Thirdly, in any case where access may form part of a management agreement with a national park authority, such agreements continue under successor owners unless there is express provision otherwise.
So the only area of uncertainty we are left with is concessionary access granted at the discretion of the water authority. But the fact is that Clause 8 provides a sound basis for continuation of policies of the water authorities by their successors. By an amendment in another place we have put beyond doubt that the duties in Clause 8(2) embrace all freedom of access, including concessionary arrangements and the right to roam.
It has, I recognise, been suggested that the terms of the duty are not strong. On the contrary, we believe they will be fully effective. Under this duty, and having regard to what authorities have in the past done in pursuit of it, there will be little scope for the undertakers seriously to alter their predecessors' policies in this area. The code of practice reinforces this. It requires a positive approach from undertakers towards public access. It incorporates a presumption that policies for opening up land of high amenity value for rambling and quiet countryside pursuits will continue. It refers to arrangements, including consultation, for establishing the current pattern of access rights—formal and informal. The duties, interpreted in the light of the code, will of course be enforceable by the Secretary of State.
What by contrast would be the effect of these amendments? The companies are not, as now, to have regard to the desirability of preserving access. They are to preserve it, full stop. At a stroke long-established discretionary arrangements are made mandatory. Yet in most cases they will have been established on a discretionary basis for good reason: because operational considerations may require them to be withdrawn; because for a few years, now and then, authorities may need to restrict access to conserve vegetation; perhaps, indeed, because—on reservoir banks for instance—there may be safety considerations and the company does not necessarily want to accept the risks involved. Whereas they purport simply to preserve public access by freezing existing discretionary arrangements, they would extend it in a arbitrary and unrealistic way.
What we have in the Bill and code now is the better course. It will be effective in securing that the general public access policies of the water authorities are maintained without setting in concrete particular discretionary arrangements which were always intended, for good reason, to have a necessary measure of flexibility. Much as the Government are committed to conservation and public access, we

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really could not accept these amendments; nor, I believe, should this House.
Lord Gallacher: My Lords, the Minister will not be surprised to learn that we on this side of the House are somewhat disappointed with the case he has stated. The Minister has perhaps great complacency—if that is not too strong a word—about how matters will shake down once the water companies become plcs. We have never been able to reconcile ourselves to the fact that a plc, whatever trade or industry in which it is engaged, has a primary duty to its shareholders.
Although we recognise that in this Bill the Government, in consideration of the fact that they are conveying a statutory monopoly of one of our most precious commodities to private enterprise, have endeavoured seriously to write protection for consumers into the Bill, we are not entirely satisfied that that protection as it stands in Clause 8(2)(a) and (b) is as strong as it could or should be. While we do not wish to set protection in concrete, as the Minister suggests, we feel that there is nothing in the Bill as it stands to prevent water plcs from attempting to restrict access. Above all, in the wording of the subsection there is no duty on the Secretary of State, the Minister of Agriculture and the director, to act positively in the way that we feel they should be obliged to do if our worst fears are in any way realised.
As regards restriction of access for temporary periods for operational reasons about which the Minister has spoken, I feel that I dealt fairly with that in my submission. There would be no objection, on our part or, indeed, on the part of those people who wish to use the facilities they currently enjoy, to restrictions on access of that kind. It is well understood in all walks of life and therefore suitable amendments could be made to the Bill to provide for such contingencies.
Nevertheless, it is obvious from the spirited nature of the noble Lord's reply that there is no joy to be had on this issue this evening. I interpret "spirited" more by the speed with which the reply to the amendment was read rather than the conviction underlying the reply. However, in view of that spirited reply we can see that there is at present no way of persuading the Minister even to look at this matter before Third Reading. We are not as assured as he is that all will be well in the future. Nevertheless, the firm words that the Minister did use, which we acknowledge, are on the record. Although we would rather have them in the Bill, nevertheless they are there. They may give comfort and succour to those people who, we hope, will not be denied access in the years ahead. With those remarks, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 62A to 62C and 63 not moved.]
8.45 p.m.
Baroness Blatch Baroness Blatch moved Amendment No. 64:
Page 8, line 33, leave out ("land associated with water") and insert ("the water environment").
The noble Baroness said: My Lords, I move this amendment on behalf of my noble friend Lord Cranbrook who apologises for not being present as he is engaged elsewhere.
Your Lordships may be relieved to hear that I do not intend to rehearse all the detailed points made by my noble friend in Committee. However, it would seem not only from my noble friend but also from my noble friend the Minister, the noble Lord, Lord Norrie, and the noble Baroness, Lady David, that there is concern about a definition of this clause. Therefore, I ask my noble friend to give some consideration to the words set out in Amendment No. 76 which attempt to define land associated with such waters. I hope that my noble friend is able to say that Amendment No. 76 goes a long way towards making this definition more specific. I beg to move.
Lord Norrie: My Lords, I speak to Amendment No. 70. The purpose of the amendment is to maintain continuity of drafting in subsection (4). The amendment will ensure that the NRA has the conservation duties that the Government described in Committee. I refer particularly to the debate in Committee on 23rd May on what were then Clauses 121 and 122 and amendments moved by my noble friend Lord Renton.
The continuation of the conservation duties held by the water authorities under the Wildlife and Countryside Act 1981 is essential and this amendment ensures that there will be no weakening of those duties upon privatisation. Clause 8(4) describes the duties of the NRA with respect to the promotion of conservation and recreation. Subsection (4)(a) refers to conservation of natural beauty and amenities. Subsection (4)(b) refers to conservation of flora and fauna. However, the conservation of flora and fauna is confined to that which is dependent on an aquatic environment whereas subsection (4)(a) refers to water and associated land. Subsection (4)(c), relating to recreation, also refers to such waters and land.
The amendment would ensure that subsection (4)(b) is brought into line with the rest of this subsection. There is no reason for flora and fauna to be given less protection than landscape or recreation.
Baroness White: My Lords, in the absence of my noble friend Lady David perhaps I may be permitted to say a few words on this amendment. It is a matter of considerable concern that we should have a more satisfactory definition of the protection being offered for flora and fauna. The noble Baroness, Lady Blatch, indicated that the noble Earl, Lord Cranbrook, has done his best to provide a definition although whether the Government can accept it in precisely that form remains to be seen. Nevertheless it is important that flora and fauna should not be restricted to absolute dependence upon water.
In recent years there has been a great deal of work done on research into river corridors; that is, the land adjacent to inland waters. The attention of the House should be drawn to that. In England and Wales we have about 40,000 kilometres of river which is registered for classification for water

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quality. In addition, of course, there are a number of smaller tributaries which are not so registered. They provide, in particular, very important habitats for bird life.
One cannot say of birds that they are absolutely dependent on the water, because they are not aquatic creatures. But they are very dependent for their habitat on the river corridors. In Wales we have carried out a very interesting study of the River Teifi. It is one of the most important areas of research undertaken in this field. There was a co-operative study undertaken by the University of Wales's Institute of Science and Technology; the Welsh Water Authority; the Royal Society for the Protection of Birds; the Otter Haven Project and the Nature Conservance Council, with administrative assistance from Powys County Council. In other words it was a major co-operative effort.
It proved without doubt the importance for wildlife, for both flora and fauna, of protecting the adjacent land. It is not simply a matter of concerning oneself with the water. It is quite clear that the definition that the noble Earl, Lord Cranbrook, has suggested is intended to meet the very strong feeling among biologists and zoologists who are concerned with flora and fauna. One should not differentiate in the way that the Bill as now drafted does between the other uses of the riparian areas and the protection in such areas of the flora and fauna. These factors are covered by the amendments of my noble friend Lady David and the noble Lord, Lord Norrie.
I hope very much that the Government will address their mind to this particular problem, whether or not they accept the wording of this amendment, and make certain that they do not unduly restrict the reference in the Bill to the protection of flora and fauna.
Lord Hesketh: My Lords, this group of amendments applies to the recreation duty of the NRA, the undertakers and the drainage boards under Clause 8(3) and to the NRA's duty under Clause 8(4) generally to promote recreation and conservation. I wish to address first Amendments Nos. 64,65,69,72 and 76 tabled by my noble friend Lord Cranbrook. Clause 8(3) and (4) are drafted to apply the recreation and conservation duties they contain to water and land associated with water. These amendments will substitute "land associated with water" for the term "water environment". This term has been defined by Amendment No. 76.
The phrase "land associated with water" is taken directly from the Water Act 1973. It may seem somewhat vague but it has proved in practice to cover all the lands in respect of which it would be appropriate for the duties in Clause 8(3) and (4) to apply. I do not recall any complaints about it, but the term "water environment" as defined in Amendment No. 76 is not only untested in practice, but may be defective in theory. To take an abvious example, it would catch underground mines from which water was pumped into a river. I doubt whether such mines have much potential for recreation or conservation. For these reasons I suggest that these amendments be rejected.
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I turn now to Amendment No. 70, tabled by my noble friend Lord Norrie and the noble Baroness, Lady David. This amendment applies only to Clause 8(4) and the NRA's general duty contained therein to promote the conservation of flora and fauna which are dependent on the acquatic environment. This amendment will substitute "such waters and land" for the expression "an aquatic environment". The key point is that in accepting this amendment it could take the NRA's responsibilities into the protection of fauna—badgers might be an example—which are living on land associated with water though not dependent on it. It is possible that it would lead to an unreasonable extension of the NRA's role into matters on which it will have no particular expertise. That is why we recommend that the amendment should be resisted.
I now come to Amendment No. 68, standing in the name of my noble friend Lord Caithness, which extends the NRA's duty in Clause 8(4) generally to promote the conservation and enhancement of natural beauty and the amenity of inland waters so that it covers coastal waters as well. Having just recommended your Lordships to turn down the amendments regarding the water environment tabled by my noble friend Lord Cranbrook, I am pleased to point out that Amendment No. 68, which I recommend to the House, is based on the comments that he made in Committee when he pointed out that the duty in respect of promoting the conservation and enhancement of natural beauty and amenity applied only in respect of inland waters and thus gave the NRA no adequate powers as regards water around the coast.
By contrast, the duty in respect of conservation of flora and fauna refers more generally to the aquatic environment. We accept that there is inconsistency here. More importantly, the Bill should not preclude the NRA from taking action, if it considers it to be necessary, for the conservation and the enhancement of waters around the coast as much as those inland. That is the purpose of Amendment No. 68. I should add that we believe it is unlikely, for the foreseeable future at least, that the NRA will seek occasion to make much use of these powers in respect of waters around the coast. It will of course have to exercise diligent control of discharges to such waters and to monitor as necessary in relation to them. But its wider promotional power should be there for use if it is required. On that basis I hope that the House will be able to support Amendment No. 68.
Baroness Blatch: My Lords, I thank the Minister for that reply. Amendment No. 68 certainly does expand and make a little clearer the definition of associated waters. I cannot speak for my noble friend Lord Cranbrook. I suspect that he will wish to read what the Minister said. I also accept the technical defect that one is not speaking of underground mines. I believe that there is scope for some thought between now and Third Reading for us all to think about a form of words that will catch and encompass all the interests of this group of amendments. I shall not press the amendment and therefore I beg leave to withdraw it.
Baroness White: My Lords, can the noble Lord say where he places the kingfisher, for example? To some extent it is dependent on an aquatic environment, but it does not live underwater.
Lord Hesketh: My Lords, by leave of the House, the noble Baroness certainly has the advantage over me as regards the kingfisher except that I know it chooses a very steep bank in order to avoid a rat getting into its nest.
Amendment, by leave, withdrawn.
[Amendment No. 65 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 66:
Page 8, line 36, at end insert—
("(3A) The Secretary of State, the Minister, and the Director shall have the duty so to exercise their powers under this Part as may best secure the fulfilment by any relevant body of its duties under subsection (3) above.").
The noble Lord said: My Lords, this amendment perforce accepts the definition of "land associated with water" but this is still with reference to Clause 8(3), where we are not satisfied that the restriction of the environmental duty to the Secretary of State is going to achieve the objectives. We feel that the Secretary of State should have a duty to ensure that the water undertakings have the recreational obligations themselves rather than the Secretary of State having the direct duty. Ministers will recall that this was raised in Committee and that there was an agreement that the suggestion would be looked at. It went no further than that and I will not claim that there was any commitment.
We looked at the possibility of ensuring that the plcs are not exempt from recreation and amenity duties by including reference to their duties in the code of practice. The problem with the code of practice is that, unless it is mandatory, we need a new subsection of the kind that we propose in Amendment No. 66. It is clearly important that the creation of the plcs should not be seen as a way of getting around leisure, recreation and amenity obligations. We are aware that the Government, for reasons that have been set out at length, are not going to make the code of practice mandatory. Failing that, it seems that an amendment of this kind is necessary. I remind the Government that they said that they would consider adding the duty to the code even though it is not to be mandatory. If they will indicate that that is to be done it might be helpful in enabling us to consider whether we need to press the amendment. I beg to move.
9 p.m.
Lord Hesketh: My Lords, Clause 8(3) provides that relevant bodies—the NRA, the undertakers and the internal drainage boards—shall be under a duty to put the water and associated land to the best use for recreation. The purpose of this amendment is to place upon the Secretary of State, the Minister and the director an obligation to exercise their own powers under Part I of the Bill in the way that best secures fulfilment by the relevant bodies of their duties.
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We are satisfied that this amendment is not appropriate. The relevant powers in Part I will be the appointment of the NRA, of the director general and of the customer services committees, the general duties in Clause 7 and the environmental duties. It would surely be inappropriate that such powers should be exercised so as to best secure recreational objectives. The option which was best in recreational terms could well be wholly inappropriate in terms of all the other obligations and considerations which the Secretary of State and director general must weigh. Further, to have the Secretary of State exercise his general environmental and conservation duties elsewhere in Clause 8 in the manner which best served recreation would surely be wrong and would completely unbalance this part of the legislation to the severe detriment of conservation.
Even if powers were more widely construed to include these elsewhere in the Bill the same argument would hold. We cannot require the Secretary of State and director to do what is best for recreation when this may be at the expense of all the other obligations and duties upon them. I believe I can nevertheless offer the noble Lord some reassurance on his underlying concern. The most relevant powers of the Secretary of State are his enforcement powers in Part II of the Bill. And he will have to use them in a way which secures that the statutory obligations of the companies—including the recreation duties—are properly secured. In this way recreational duties are placed upon the Secretary of State to the extent that is appropriate.
I hope that the noble Lord will to some extent be reassured by these comments and will feel that he does not have to press the amendment to a Division.
Lord McIntosh of Haringey: My Lords, I find that reply curious in one respect and incomplete in another. I find it curious in the sense that it would never have occurred to me that the words "best secure" to which the Minister paid such attention should weaken other aspects of the obligations of the Secretary of State. Best securing the fulfilment of the duties under subsection (3) does not mean that it comes before any other obligation. We have a difference in the meaning of words. Under those circumstances it is probably best, if I may use that word, if I take the matter away, think about it and see whether the Government would wish to think about it as well.
I asked a specific question about the codes of practice. I wonder whether the Minister can help me on that point before finally I make up my mind. When we were considering this matter in Committee the Government said at col. 481 of the Official Report of 8th May that they would consider adding this duty to the codes of practice. I wonder whether that has been done in the draft codes of practice or whether it is being actively proposed that it should be done.
Lord Hesketh: My Lords, with the leave of the House, I can partially answer that question. We are endeavouring to do so in the codes of practice.
Lord McIntosh of Haringey: My Lords, let us hope that they are "best" endeavours. Without best endeavours I am not convinced that we shall get the result that we all desire. Perhaps the Minister would be good enough to let me know in good time before Third Reading whether his endeavours are likely to reach fruition. I can then decide whether I need to return to this matter at that stage. I am sure that with his usual courtesy he will do so. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 67:
Page 8, line 38, leave out ("to such extent as it considers desirable").
The noble Lord said: My Lords, this amendment removes from the duties of the NRA under Clause 8(4) another example of what we consider are weasel words. Under that subsection the authority has duties generally to promote the conservation of areas of natural beauty, and of flora and fauna, and the use of waters and land for recreational purposes. The problem is that all these duties are to be undertaken,
"to such extent as it considers desirable".
The wording of the subsection suggests that in practice the activity will be little more than a power for the authority to undertake these activities. The qualification "generally" already imports a reservation as to whether or not the duties would actually be enforceable and the inclusion of the wording as to desirability would effectively remove the subsection from any element of judicial review. The creation of quangos, which are effectively beyond the reach of the administrative law in respect of their duties, is surely an undesirable development.
The amendment reflects earlier attempts to tighten up the duty. As Amendment No. 117, it was tabled for the Committee stage by my noble friend Lord McIntosh, the noble Lords, Lord Ross and Lord Norrie, and my noble friend Lady Birk. The debate was overshadowed by the promise of the noble Earl, Lord Caithness, to bring forward the amendment which has been debated today. However, the Minister replied at cols. 435–6 to the effect that the NRA would be playing a supporting role to riparian owners, navigation authorities, voluntary bodies and so on. In his view those words reflected the secondary nature of the NRA's role.
In the first place, this interpretation may be contested. If it is intended that the NRA should have a secondary role it might be better if Clause 8(4) actually said so. There is nothing in the words,
"to such extent as it considers desirable",
to suggest that its activities will necessarily fill the gap left by other organisations' activities. On the contrary, it would seem better for the NRA to have a generalised duty which clearly can take up any areas left undone by other organisations. For that reason the removal of the words would somewhat strengthen the duty.
The Minister's reply suggested that removal of the words would make the duty too strong. The operative word in the subsection is "promote". The authority is not being given a duty to undertake these functions
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but to promote them. In other words, to the extent that it can encourage other bodies to do the work it will do so; but where it cannot do so, it has a duty to try to secure that improvements are achieved, if necessary by undertaking the work itself.
It is suggested that the re-writing of Clause 8(4) to reflect that back-up and promotional function would be an improvement on the present wording. If the Government are prepared to accept that principle, no doubt they may wish to take the wording away to see whether they can produce something which fits in with that general approach. I beg to move.
The Earl of Arran: My Lords, I wonder whether I may try to put over the Government's view on this amendment. Clause 8(4) is an important new provision, and I should remind the House of the Government's intentions. It removes in respect of the NRA two significant constraints on the present water authorities in relation to conservation works and recreation provision.
In the first place, water authorities can at present only undertake works for the improvement or enhancement of rivers to the extent that such works form part of, or are ancillary to, the performance of one of their main functions. As we emphasised in Committee, we believe this is an unreasonable restraint. It is important that there should be a body able to take steps to conserve and enhance the river environment. Often of course such activities will fall to riparian owners or local planning authorities, but the NRA should not be inhibited by lack of powers from playing its part. We would not expect use of the powers to be substantial in the next few years: necessarily most environmental work by the NRA will be part of its drainage, water resources or pollution control functions. Nonetheless, the power is an important one.
With recreation the position is similar. There are already a number of co-ordinating or promotional bodies, such as regional councils for sport and recreation and local authorities. The NRA will not want to usurp their contributions. At the same time it must not be limited in its recreation provision to putting its own rights over water to recreational use. It should, for example, be able to help manage effective recreational uses of rivers where there is no navigation authority or give support to local voluntary bodies to do this. And there must be a body which, irrespective of its other regulatory functions, is able to take a clear overall view of the development of recreation on rivers where this is needed. Again it should not be expected that the NRA will make dramatic use of these powers in the short term. But it is important that from the start it should have the powers to promote recreational uses when it sees clear need and there is no other body well placed to assist.
Against this background, it follows that we do not believe that the qualification,
"to such extent as it considers desirable",
should be deleted. Recreation opportunities on rivers will continue to be provided primarily by riparian owners; and there are other promotional and co-ordinating bodies the role of which should

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not be usurped. The NRA's task should be supportive: when things need to be done to facilitate recreational uses of rivers, and there is no other body better placed to do them, it is right that some obligation should fall upon the NRA. But it is the NRA which is itself in the best position to judge this.
I suggest that,
"to such extent as it considers desirable",
precisely expresses this position and should be retained. An unqualified duty is not necessary and would be beyond what the NRA could discharge. The NRA is enabled by this clause to act in relevant circumstances, and, as we have consistently argued, we believe that it would be wrong to go beyond this. It is in the light of those considerations that I hope that the noble Lord will agree to withdraw the amendment.
Lord Graham of Edmonton: My Lords, it is my intention to withdraw the amendment, but listening to the Minister I must say that it all sounds grand, clear and precise: a body is required to be able to "take a clear overall view". In this amendment, as in many others, we are not doubting the Government's intentions or integrity with words but the interpretation which could be placed upon them. However, the amendment has provided the Minister with a further opportunity to defend his corner in respect of the intentions of the Bill and the limited powers that this subsection which we were seeking to remove provides.
I am grateful to the Minister because it is quite clear that he has taken the point most seriously. Moreover, it may be that on reading what he has said those in this House and others outside will accept that we have received the best response that we can get. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hesketh Lord Hesketh moved Amendment No. 68:
Page 8, line 41, after ("inland") insert ("and coastal").
On Question, amendment agreed to.
[Amendment No. 69 not moved.]
Lord Norrie Lord Norrie moved Amendment No. 70:
Page 8, line 43, leave out ("an aquatic environment") and insert ("such waters and land").
The noble Lord said: My Lords, my noble friend the Minister has already replied to the amendment. The amendment ensures that Clause 8(4)(b) is brought into line with the rest of the subsection. There can surely be no reason for flora and fauna to be given less protection than the landscape or recreation. I was not happy with my noble friend's reply. It is surely essential that the NRA should be able to deal with those issues. It is the obvious body to do so. My noble friend Lord Caithness said so in Committee in response to a debate on Clauses Nos. 121 and 122, as they then were. He said:
"that duty is placed on the NRA by Clause 8(4). I draw that clause to the attention of the Committee. It makes it very clear that it is a duty on the NRA to promote conservation with respect to both inland waters, and to the land associated with them".—[Official Report, 23/5/89; col. 277.]
On close examination of Clause 8(4) it is clear that while conservation of natural beauty and amenity with respect to water and land is dealt with, in respect of flora and fauna the aquatic environment only is mentioned. There is no mention of associated land with respect to the conservation of flora and fauna. I therefore ask my noble friend the Minister to reconsider the wording of Clause 8(4)(b). I beg to move.
9.15 p.m.
Baroness David: My Lords, I support the amendment. It would fit in with what has been accepted in the rest of the clause. I hope that the Minister will look upon it favourably. I do not know what the noble Lord, Lord Norrie, will do. It seems to me a sensible amendment which will fit in with what has already been accepted.
Lord Hesketh: My Lords, with the leave of the House, I have already replied to the amendment. There is nothing I can usefully add to what I have already said.
Lord Norrie: My Lords, I shall have to consider what my noble friend has said. I shall read Hansard and I may find that I shall have to return to the subject. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 70A to 72 not moved.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 73:
Page 8, line 45, at end insert—
("(4A) Any proposals by, or in relation to, a body or person to which subsection (1) above refers shall, where they relate to a land management plan, be made subject to the requirement that the person concerned shall undertake consultation with each local authority in the area to which the plan relates and shall have regard to the results of such consultation in relation to recreational or environmental matters.").
The noble Lord said: My Lords, the purpose of the amendment is to ensure that local authorities have an opportunity to protect the interests of the local community before land is disposed of. The amendment is a response to comments made by the Minister in Committee on Amendment No.103A. That amendment sought consultation with local authorities in the case of the disposal of or change of use of water land where that would have environmental or recreational implications.
The Minister considered the amendment to be too wide and pointed to existing planning procedures. It is in that spirit that the amendment is a narrower proposal which is of interest to those authorities that have been working with water authorities to improve recreational and environmental provision. Where there is an existing land management plan covering such activities there should be a consultation requirement.
The land holdings of many water authorities offer both local inhabitants and those living further afield unique opportunities to enjoy leisure facilities. The most obvious opportunities relate to the use of water for the full range of water sports, while the land in the catchment areas is an important recreational

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resource for those who wish to get away from it all. Consequently, when planning for the needs of a local community the local authority recognises that certain land owned by water undertakings forms part of the leisure resources of an area. That being so, the need for other land to be brought into recreational use is sometimes seen as unnecessary. Therefore—this is the gravamen of our argument—to remove land from recreational use without consultation could mean a sudden and unacceptable loss of a publicly used resource which might not be compensated for in the locality. The local authority should consider whether the loss of that resource is acceptable and, if not, what action it might take.
The same argument applies where land is of value as a habitat for wildlife. In the case of a disposal it would be helpful if the Government could undertake to insert a consultative provision in the new land sales agreement with the specific purpose of creating a conservation duty with local authorities in the case of sales of land covered by such management plans. I beg to move.
The Earl of Arran: My Lords, Clauses 8 and 9 already impose formidable duties on the new companies in respect of the conservation and recreational use of their land. The question is whether it is sensible to extend those obligations still further with a consultation duty which goes beyond what attaches to any other bodies.
We do not believe that it would be. We suggest that the Bill and associated code already provide all that is necessary. In the first place, in those areas where special environmental considerations arise—in the national parks and SSSIs—the Bill in Clause 9 already provides a special consultation procedure.
Secondly, within the code of practice we make clear the need elsewhere to consult widely on environmental and recreational matters, and we have already included some references to consultation with local authorities. We recognise, in the light of what the noble Lord, Lord Graham has said, that we may not have said enough in the code. Be that as it may; the code is the place to say it.
We do not think it is necessary or appropriate to load this additional statutory consultation duty on the companies. But we recognise that, at least when they have large land holdings of environmental and amenity significance, they should take local authority views into account in their land use management planning. While a good deal of flexibility should be left in the way this is achieved, we shall undertake to pursue this thought in the code and elaborate the guidelines there, taking full account of the points which the noble Lord, Lord Graham, has made. On that basis I hope he will feel that his purpose is substantially achieved and that he need not press this amendment.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister for saying that he will be able to elaborate on the thoughts that I have expressed when he examines what should be laid
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down in the code of practice. He placed very heavy stress upon the existing provisions, particularly those for land with special environmental protection needs.
I think that the Minister understands that we are concerned with land which is the subject of a management agreement and plan. I hope that when the Minister has had further thoughts he will accept that there are recreational land uses which form part of a total local authority scheme. They may very well not fall within the need to be protected or specially looked at, but if the land were to be disposed of without consultation, it could be distressing to local people and the local council. Its overall recreational plan could be disturbed. We are not saying that the council should have power to stop it. But if our amendment were carried it would have to be consulted, and if it objected to the proposal it would have the opportunity of further discussions.
However, I feel that the Minister's remarks are along the lines of what I wanted, which is that further thought will be given to the matter. It may be that something will appear in the code of practice which will cover the point. I am grateful to the Minister and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker (Lord Airedale): My Lords, in calling Amendment No. 73A I have to say that if it were to be agreed to I could not call Amendment No. 74.
Lord McIntosh of Haringeymoved Amendment No. 73A:
Page 9, line 1, leave out subsection (6).
The noble Lord said: My Lords, in moving Amendment No. 73A, I wish also to speak to Amendment No. 74. In view of what the Deputy Speaker has said, clearly I shall have to think of these as being alternatives. I moved Amendment No. 73 out of the kindness of my heart because the Government got themselves into an impossible position in considering this amendment. Amendment No. 74 reflects, I hope directly, a point made by the noble Lord, Lord Renton, in Committee.
First, I shall deal with Amendment No. 73A. Clause 8(6) states:
"Nothing in this section or the following provisions of this Act shall require recreational facilities made available by a relevant body to be made available free of charge".
In proposing the deletion of this subsection, we asked ourselves what it could possibly mean, and what force it could possibly have. The noble Earl, Lord Caithness, said on an earlier occasion that the subsection was of a "purely declaratory nature". What is a subsection of a purely declaratory nature doing in a Bill of this kind? Either it means something, in which case it should be argued properly rather than the Government telling us it is purely declaratory, or it means nothing, in which case it should be taken out of the Bill.
We have given the Government an opportunity to put matters right by tabling this amendment again.

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I hope that they can now acknowledge that to have a subsection which is of a purely declaratory nature is nonsense in legislation and that the subsection should not be there. On the assumption that they will be sticky about this and will try to get round the pure logic of my argument, I have brought forward an alternative in Amendment No. 74. That amendment takes up the point made by the noble Lord, Lord Renton, in Committee. I paraphrase the argument that he presented at col. 493 of Hansard. The noble Lord said that there was something to be said for an amendment which safeguarded existing facilities where they were free of charge. Amendment No. 74 qualifies subsection (6) by stating:
"except where such facilities were available free of charge at midnight on 8th June 1989".
In other words, this is not retrospective legislation. There is still time in the next two-and-a-half hours for the water authorities to impose charges, if they are quick off the mark.
I am being totally serious about this matter. If they do not impose charges in that two-and-a-half hours, where there is free access for recreational purposes, that access should remain free of charge. I think everyone is agreed on that. I hope that the Government will recognise the absurdity of a purely declaratory subsection and will accept Amendment No. 73A. Failing that, I hope they will agree with the point made in Committee which was supported, as I understand it, by the noble Lord, Lord Renton. I further hope that the Government will agree, at the very least, that Amendment No. 74 should be agreed to. I beg to move.
Lord Renton: My Lords, in view of what the noble Lord has said in reminding me of what I said in Committee, I must say that I feel bound to regret the leaving out of subsection (6). But I think that something on the lines of Amendment No. 74 is highly desirable. I suggested an alternative at the Committee stage, and I very much hope that we shall obtain from my noble friend a sympathetic reply indicating either that the Government accept Amendment No. 74 or that they will deal with the matter in some other agreeable way on Third Reading.
Lord McIntosh of Haringey: My Lords, before the noble Lord sits down, I must say that I much respect his views on the framing of legislation. Will he be willing to share his views on a subsection which is of a purely declaratory nature, which is what we were told subsection (6) was?
Lord Renton: My Lords, normally I would agree that purely declaratory legislation should not clutter up the statute book. There is a bit of it here and there in this Bill.
On the other hand, we have a new situation which we have never had before of companies with the dual purpose of providing a public service and doing so by means of making profits. I think that it might not be a bad thing to make it abundantly plain that it is better to keep subsection (6) but to add something to it, either on the lines of Amendment No. 74 or of what I suggested at Committee stage,
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which will ensure that there is no back peddling; in other words, that facilities which the public had enjoyed previously for recreation on the waterways shall be enjoyed in future.
9.30 p.m.
Lord Trafford: My Lords, I share many of the sentiments expressed by my noble friend Lord Renton, with two reservations. The first is a purely practical one, namely that facilities change. What may be appropriate at the present time may not fall into a development which takes place subsequently, after the water companies have taken over. It would concern me if the proposal was put on the face of the Bill in this way or if the subsection was left out; in other words if either of the alternatives in Amendments Nos. 73A or 74 was adopted. It could restrict plans or operations which might be introduced for recreational purposes—I am not talking about profit or the delivery of the service but simply about recreational and other facilities.
The second point is that anything that is inhibiting worries me. The deletion of subsection (6) could be inhibiting. However, I do not disagree totally and I understand the spirit in which the amendment is moved. I am not sure that the wording is right, but I understand the reason for putting in a restriction on imposing a charge where none was made previously. However, it worries me both on the practical grounds of being restrictive of further development and because it might interfere with any other recreational plans, whether made in conjunction with the local authority as suggested in relation to the previous amendment or from the point of view of the plcs themselves.
Lord Hesketh: My Lords, the effect of Amendment No. 73A would be to delete subsection (6) of Clause 8 which makes clear that nothing in the Bill requires recreational facilities to be made available free of charge.
Amendment No. 74 would set in statute a prohibition on the new companies charging for any recreational provision which is free at midnight tonight. As explained in the House in Committee, Clause 8(6), which Amendment No. 73A seeks to delete, is no more than a technical provision which is necessary for the sake of clarification. It holds no hidden threats, no matter how much the noble Lord, Lord McIntosh, may chortle in my direction when I tell him that. It in no way encourages further charging for recreational provision. Its concerns are reflected in the next amendment.
Turning now to Amendment No. 74, this addresses in undesirably rigid form concerns which we believe do not have foundation. Many things in life are not wholly free, and that includes access to water authority land and receational facilities in the sense that there are costs in terms of supervision, management, maintenance and, we believe, in the future in the most important way of all, as my noble friend Lord Trafford pointed out, development of facilities.
At some point someone is going to have to pay for those costs, particularly in the latter example, either

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those who directly enjoy the facilities or the public at large through water charges. The balance which is at present struck is that, where specialised facilities are provided, the water authority normally charges the going rate for the use of them. Elsewhere, where it is simply a matter of access for informal recreation, no charge is made. That is the position which can be expected to obtain after privatisation. As we have said many times before, it is impracticable to levy charges for access to the open countryside, mountains and moorland, and the companies have said that they have no intention or wish to try. So far as reasonable, it will still be open to the companies to recover the general costs of performing their recreational duties from their general charges.
So why is there such alarm and the demand for freedom at midnight, even if there are three and a half hours left, to establish further charges?
Noble Lords: Two and a half hours!
Lord Hesketh: My Lords, I beg to the forgiveness of the House; there are indeed two and a half hours left. We suggest that there is no good purpose. Authorities are already charging the market rate for their specialised facilities and the market would in future stop them going further, for informal recreation charges would be impractical and, as will be clear from what I have said, there is no need for them to be imposed anyway.
But what would be the effect of this amendment? It would merely impose unreasonable limitations on the circumstances in which a company can recover its costs directly from those who benefit. What happens where a company invests to improve a facility at present provided free? What happens if maintenance costs substantially increase? Are the companies to be prevented from concluding that the time has come to attribute costs more closely to those who receive the benefits rather than to their customers at large? I say "those who receive the benefits" because, as we live in an ever more specialised leisured age, facilities will be custom designed for many greater numbers of groups but fewer numbers of people who wish to have specialised facilities.
This amendment takes a sledge-hammer to the proverbial nut. The prospect of companies seeking to charge for access to the open countryside is remote. Seeking to block off even that remote possibility by this amendment will introduce distortion and disadvantages out of proportion to the benefit—if any at all—that it would secure. For those reasons I hope that the proposer, the noble Lord, Lord McIntosh, will not want to press the amendment.
Lord McIntosh of Haringey: My Lords, that is nonsense, and the Minister must know that it is nonsense. So far as concerns Amendment No. 73A, the noble Earl, Lord Caithness, said that the subsection was of a purely declaratory nature which did not alter the effect of the Bill. Those were his words. There should not be in legislation subsections which do not alter the effect of the Bill. Otherwise, one might go around putting in the words "for the
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avoidance of doubt" in every other line. It is patently nonsense to have a whole subsection which does not alter the effect of the Bill. I am astonished that the Government should not take the opportunity to put right something that was revealed to be nonsense at the Committee stage.
I believe that there has been some distortion about what Amendment No. 74 says. Of coarse, the noble Lord, Lord Trafford, is correct to say that there can be change, but where there is change such facilities will not have been available at midnight on 8th June 1989. They will be created after 8th June. No one denies that one has to make charges for the use of car parks, landing stages, sometimes for access roads and for all sorts of other facilities, whether on land or water, which are made available for recreational purposes. But, if those charges are not made now, they are presumably not made for a good reason. If they do not exist now, nothing in Amendment No. 74 will stop them being charged for in the future because they will be new facilities which are not covered by the amendment and will not therefore be covered by the Bill.
I am sorry to say that in my opinion the Minister's confidence in the altruism of the water authorities and water companies is sadly misplaced. If a water company has as an objective to maximise its profitability and its rate of return on capital and it finds that it is spending money for recreational purposes and that it has land on which it could charge for recreational use, whether or not such a charge has been made in the past, it will do so. If they think that they are on to a good thing, nothing will stop them from introducing charges for the first time.
Of course, as the Minister says, they cannot in fact charge for access to great tracts of moorland which have never been charged for before because the cost of fencing would be more than the return from the admission charge. But there are many other cases of land or water where they could charge for access but where water authorities have not done so because they have been in the public sector and have had some sense of public service. That sense of public service will no longer be present because the companies will not be in the public sector and the temptation to introduce totally new charges for access to land for recreational and amenity purposes will be not only great but consistent with the objective set out in their own articles of association.
I firmly believe that the Minister ought certainly to think again about Amendment No. 74 even if he is not willing to reconsider Amendment No. 73A. I gladly give way to the noble Lord.
Lord Trafford: My Lords, I am most obliged to the noble Lord. I think he did not quite answer the point that I for one have raised in pointing out that there is a grey area around these matters. Off the top of my head I can give one example. Let us suppose that there is a rather low-grade car park in a field for which no charge is made. It is sited alongside a reservoir where swimming, or whatever, is allowed to develop. If that car park is upgraded and a facility is put alongside, it may be difficult to say whether a charge should be made. It is indeed the same car

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park that it was previously but now the area has been covered with tarmac and is no longer a field.
One moves into a grey area in deciding whether or not a charge should be made even with the amendment to which the noble Lord has just spoken. This is the kind of problem which gives me some concern about such a provision.
Lord McIntosh of Haringey: My Lords, I am certainly not influenced by that example. If money is spent to improve a facility, one is in effect providing a new facility which did not exist, and the amendment would not cover that provision. I cannot believe that there is any difficulty. If we are going into textual analysis at such a level we shall find ourselves spending 40 days rather than four days on Report.
I firmly believe that the Minister ought to come up with something better than he has done so far. After all, at Committee stage the noble Earl, Lord Caithness, said that he would go away and brood upon this issue. I am not quite sure what he meant by "brood" but he must have meant that he saw something there which deserved further consideration. Before I finally make up my mind on this amendment, perhaps I may just ask whether there is any possible response which could lead to an agreed solution rather than to confrontation on this matter.
Lord Hesketh: My Lords, with the leave of the House, I should like to extend the point made by my noble friend Lord Trafford and give an example of more expense which lies in the grey area which I know that the noble Lord, Lord McIntosh, is convinced does not exist. Suppose that a water ski ramp, which cost a considerable sum of money, was erected. It was used by a very small number of people, but the usage increased and it now has to be replaced. At the time that it was built, say 15 years ago, there were very few people using the lake on which it was used but now there is a far greater level of demand. Is it unreasonable that a very small group of individuals should particularly benefit under the proposals made by the noble Lord, Lord McIntosh? I accept the point that he has put to me. I feel that something would be gained if he would understand the point that not only I but also my noble friend Lord Trafford have made that the position is not quite so clear cut as he seems to think.
Lord McIntosh of Haringey: My Lords, I think that the Minister could go an inch or two further than that. First of all, his example does not affect the case at all. A new water ski ramp is a new facility and could be charged for. But if the Minister is saying that the wording of the amendment is defective but that its purpose—namely, to avoid new charges for existing facilities without change—does command further consideration, then I shall very happily withdraw the amendment.
However, I did not hear him say that. In criticising the wording he appeared to be criticising the purpose of the amendment. Is he in fact saying that it is the
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wording of the amendment which is causing him concern?
Lord Hesketh: My Lords, the Government's position is this. The situation is not so black and white as the noble Lord, Lord McIntosh, feels in justifying his amendment. That is why we are resisting it.
Lord McIntosh of Haringey: My Lords, I am disappointed. I thought that it was not a matter for confrontation. I should have thought that we could find a way to achieve what so many of us want. I believe that the wording is sound and that the argument about the grey area has no validity. I am confirmed in that view by the fact that the Minister has failed to criticise the wording. He has simply criticised the objective, which I feel as strongly as ever is important. I shall therefore seek the opinion of the House on the amendment.
9.46 p.m.
On Question, Whether the said amendment (No. 73A) shall be agreed to?
Their Lordships divided: Contents, 12; Not-Contents, 25.

DIVISION NO. 3

CONTENTS

Addington, L. [Teller.]

Hampton, L.

Airedale, L.

McIntosh of Haringey, L.

Birk, B.

Pitt of Hampstead, L.

Cocks of Hartcliffe, L.

Renton, L.

Dean of Beswick, L.

Ross of Newport, L.

Graham of Edmonton, L. [Teller.]

White, B.

NOT-CONTENTS

Ailesbury, M.

Hesketh, L.

Arran, E.

Hooper, B.

Balfour, E.

Knutsford, V.

Belstead, L.

Norrie, L.

Blatch, B.

Portsmouth, E.

Brougham and Vaux, L.

Rochdale, V.

Carnock, L.

Sanderson of Bowden, L.

Craigmyle, L.

Skelmersdale, L.

Davidson, V. [Teller.]

Trafford, L.

Faithfull, B.

Trefgarne, L.

Fraser of Carmyllie, L.

Trumpington, B.

Gardner of Parkes, B.

Wynford, L.

Henley, L. [Teller.]

Resolved in the negative, and amendment disagreed to accordingly.
9.54 p.m.
[Amendment No. 74 not moved.]
Lord Hesketh Lord Hesketh moved Amendment No. 75:
Page 9, line 5, at end insert ("; and references in this section to a water undertaker or sewerage undertaker or to the functions of such an undertaker shall be construed as if those functions included the management, by the company holding an appointment as such an undertaker, of any land for the time being held by that company for any purpose whatever (whether connected with the carrying out of the functions of a water undertaker or sewerage undertaker or not).").
On Question, amendment agreed to.
[Amendment No. 76 not moved.]
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 77:
After Clause 8, insert the following new clause:
("Rights of access and recreation.
.—(1) The public shall be entitled at all times to enjoy free of charge a right of access and recreation on any land held by the Authority or a water undertaker or a sewerage undertaker that does not form part of their operational land or is within the curtilage of a dwelling house, subject to any byelaws that may be made to regulate the exercise of that right.
(2) Nothing in subsection (1) above shall prevent the Authority or a water undertaker or sewerage undertaker from making a reasonable charge for the use of landing stages, jetties or car parking facilities that they have provided or for the maintenance of which they are responsible.

(3) For the purposes of this section—

(a) 'operational land' shall have the same meaning as that provided in section 222 of the Town and Country Planning Act 1971;

(b) where land or an interest in land subject to the rights conferred by this section is transferred to another person that person shall be treated as the Authority or a water undertaker or sewerage undertaker.").

The noble Lord said: My Lords, I return to the subject upon which the House has just voted: namely, the question of public rights of access. We do not apologise to the Minister for the fact that this is the same new clause we tabled in Committee. We had a slight barney with him about the reply given on that occasion regarding the definition of "operational land".
I believe that Clause 8(6) invites future plcs to make charges and I ask the Minister to reconsider whether the subsection should stay in the Bill. The amendment is an attempt to ensure that free right of access across moorland and so forth remains and is written into the Bill because it comes within the definition of "operational land".
In Committee the Minister gave a truncated reply in which he quoted the definition of "operational land" that appears in Section 222 of the Town and Country Planning Act 1971. However, he gave only half of the definition and that is why we have raised the matter again tonight. On 8th May, the Minister said:
"The definition includes within operational land not only land being used for carrying on the undertaking but also land in which an interest is held for that purpose".—[Official Report, 8/5/89; col. 495.]
The Minister went on to justify that as meaning that catchment lands would be excluded from the scope of the provision. Catchment lands are the moorland and heathlands around the area set aside for catching the water. However, he gave the Committee only half the definition contained in Section 222. The section continues—I shall say this as carefully as I can—that such land must not be land,
"which, in respect of its nature and situation, is comparable rather with land in general than with land which is used, or in which interests are held, for the purpose of the carrying on of the statutory undertakings".
That is a bit of a mouthful. I have read it hundreds of times. I am told that it has been interpreted by the courts. They have said that whether land is comparable with land in general or land on which an undertaking is carried out is a question of fact but that catchment lands are far more likely to be considered to be comparable with land in general,
1030
such as rough pasture, woodland, etc., than land used for the purpose of carrying on the undertaking of sewage treatment plants, pumping stations, etc. That is the argument.
I return to the argument which has taken place over the past few minutes. We are trying to find a way in which we can ensure that access to open land now available to the general public is not suddenly fenced and charged for. Everyone accepts that recreational facilities, the provision of jetties, water skiing and so forth should be charged for. However, many ramblers and others are concerned that a water plc owning land running along a major footpath will suddenly put up fences and start to charge because of the cost of maintaining a footpath. It would be a backward step if that were to happen. I live along Offa's Dyke which is widely used and we know that other footpaths are being over-used and that damage is being caused.
In Committee we tried to say that the situation could be covered under the definition of "operational land". We believe that the answer which the Minister gave on that occasion was truncated and not correct and we ask him to think again. I beg to move.
Lord Renton: My Lords, I do not see how my noble friend can accept the amendment. Its purposes are fairly laudable but it would cause a tremendous breach of the law of trespass of England and Wales. It is sweeping. It goes much too far. Even the Ramblers' Association, with its desire to have a great deal of access to land for the purpose of following footpaths and so on, does not say that the law of trespass should be completely ignored where there is no right of way at all. Quite frankly, I do not believe that this is acceptable.
10 p.m.
The Earl of Balfour: My Lords, I totally disapprove of this amendment because on my reading of it it would place a farmer who is renting land in an almost impossible position. I must draw your Lordships' attention to the third last line, which slates:
"transferred to another person".
So far as I can see in reading this wording very carefully, that would allow people to have a football match in the middle of a wheatfield if they felt like it. I could not disagree more with this amendment.
Lord Hesketh: My Lords, we have already today considered public access to water industry land and the House may feel that there is little more now that needs to be said. However, my noble friends Lord Renton and Lord Balfour pointed out that there is quite a lot more which can be said on this amendment. For my part, I will not rehearse arguments which we have already extensively pursued but will concentrate on only one critical feature to which, in relation to this amendment, we have already referred.

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This amendment would provide for the public access, free of charge, to all the undertaker's land which is neither operational nor a house or garden. The essential feature is the qualification that the rights are to apply only in respect of non-operational land, as defined by Section 222 of the Town and Country Planning Act 1971. I must reiterate to the House that in our view the use of that definition has the effect of narrowing the scope of the right provided by this amendment so greatly as to render it of almost no effect.
The definition includes within operational land not only land being used for carrying on the undertaking but also land in which an interest is held for that purpose. The effect of this is that probably all the catchment lands, the most relevant land from the point of view of public access, would fall outside the scope of the provision. Indeed, it is arguable that the right would apply no more widely than to the small amount of surplus land on the Land Register.
No doubt that is not what the proposers intended, but it is the reality. That precisely illustrates one of the reasons why the Government prefer to rely on flexible and discretionary arrangements, backed by general duties, than to draw tight legal boundaries in circumstances where this is fraught with difficulty.
However, further to that, my noble friend Lord Renton pointed out very clearly that this goes to the heart of the law of trespass and that is a matter which cannot be discounted lightly. My noble friend Lord Balfour gave the illuminating example of a game of football being played in the middle of a field of standing wheat. We cannot accept this amendment and I hope that the noble Lord, Lord Ross of Newport, will feel fit to withdraw it.
Lord Ross of Newport: My Lords, I am certainly not suggesting that we start playing football in a field of wheat. I used to farm myself and I should not have been very happy with that situation. I did not read that into this amendment, but other people have done so. The noble Lord, Lord Renton, shot me down on this amendment but he supported my last amendment. I noted that with pleasure and delight. I think that there is something which the Government should consider. Although I accept immediately that my amendment is defective, there is something to be looked at again and something should be done before we complete Third Reading. I hope the Government will do that. There have been pleas from both sides of the House on that point. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 [Environmental duties with respect to sites of special interest]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 78:
Page 9, line 32, after ("body") insert ("or to the National Park Authority or Broads Authority").
The noble Lord said: My Lords, I should like to speak also to Amendment No. 79. We are now on
1032
Clause 9, which deals with environmental duties with regard to sites of special interest. These amendments are concerned particularly with the issue of damage to sites of special interest. Noble Lords will be aware that many of these sites, and many of the sites in the ownership of the water authorities, are extremely vulnerable to damage. Some of it may be perfectly well-meaning damage arising because too many people want to have access to the sites, and some of it may be less well-meaning damage by the owners of the sites who put in inappropriate development, cause damage by neglect or in various ways damage the special interest of the sites.
In Committee the Government moved an amendment to produce a notification procedure by the national park authority or the Broads authority for sites of special beauty. The amendment stated that the undertaker would be required to consult them before undertaking works. We welcomed that amendment. It was an improvement. However, it is still defective in one particular respect. The undertaker—that is, the owner of the site—has the decision on what work is damaging, and that decision is final. Therefore, we propose in these amendments that the national park authority or the Broads authority should have the right to trigger the consultation by saying that the works proposed or carried out are damaging. In order that we do not produce deadlock by these amendments, if there is no agreement about what is damaging then the matter can be referred to the Secretary of State for adjudication.
As I have said, these are sites where the habitats of flora and fauna may be at risk; archaeological remains may be at risk, and some of the damage may be caused, even if unwittingly, by the undertakers. It is only right that, if that damage is identified by the national park authority or the Broads authority and there is no agreement, there should be a mechanism whereby the consultation procedure and the correction procedure is put in hand and it should not be dependent simply on the undertakers. I hope that the Government feel that this continues the worthy line of thought that they had in their Amendment No. 130 in Committee, that it complements that amendment, that it makes the amendment more effective and that it will be acceptable to them and to the House. I beg to move.
Lord Hesketh: My Lords, Clause 9 as presently drafted requires "relevant bodies"—that is the National Rivers Authority, water and sewerage undertakers, and internal drainage boards—to consult the Nature Conservancy Council, or the national park or Broads authorities, before doing anything which the relevant bodies think might cause damage to sites notified to them by the council or the authorities as being of environmental importance.
Amendment No. 78 would require the relevant bodies to consult the authorities before doing anything which they consider might cause damage to environmentally sensitive sites. The effect of this amendment would be to require the relevant bodies to inform the park and Broads authorities before doing anything at all in, or near, a sensitive site, so

1033
that the authorities could then decide for themselves whether they should be consulted. Clearly this amendment could result in the authorities being deluged with information about the activities of the relevant bodies; and equally clearly much of this information would probably be of no interest to the authorities.
However, this amendment should be rejected not only because it would result in the time and resources of the relevant bodies and the authorities being wasted, but also because experience has shown that the provisions in Clause 9 as drafted will work effectively and efficiently. Under Section 22 of the Water Act 1973 the water authorities only have to consult the Nature Conservancy Council about works and operations which the water authorities consider might damage environmentally important sites. This system has proved successful in practice. I may perhaps remind the House here that the 1973 Act has nothing in it about consulting the park and Broads authorities. This is of course something provided for the first time by this clause.
Amendment No. 79 is designed to allow the park and Broads authorities to request the Secretary of State to prohibit the relevant bodies from doing things which the authorities feel might damage environmentally sensitive areas and sites. Clearly this amendment, if accepted, would need to be supplemented by other amendments specifying time-limits within which the authorities must refer matters to the Secretary of State and within which he must reach a decision etc. But there is no reason to accept this amendment.
In carrying out their functions relevant bodies are governed by the conservation duty in Clause 8. They therefore cannot ride roughshod over conservation interests. They will be fettered by their conservation duty in exactly the same way as the water authorities are fettered by their conservation duty under the 1973 Act, and just as there has never been any need for something along the lines of this amendment to regulate the water authorities, so too there is no need for it in respect of the relevant bodies. That is why we resist these amendments.
Lord McIntosh of Haringey: My Lords, I find it curious that the Minister should be so confident of his arguments in support that he feels it possible to give such an uncompromising response. I did not move the amendment in that way but in the spirit of the Government's own amendment at Committee stage. If the Minister had been right and the conservation duties under Clause 8 had been of sufficient power to make these provisions in Clause 9 unnecessary, Amendment No. 130 itself would have been unnecessary. The fact that the Government brought forward the amendment and provided for this notification procedure is clear evidence that they recognise that the procedure is not sufficient. They have provided for a notification procedure which is an improvement on the previous provisions of the Bill.
It is irrational for the Government to provide this notification procedure and then to deny the power to the national park authority or Broads authority, which are, after all, the bodies most expert in
1034
assessing the potential damage to sites of special interest, and to leave the ultimate decision to the undertaker. I accept that if Amendment No. 79 is carried there may well be further amendments requiring time limits and for the Secretary of State to give his decision in one way or another. On that basis and that basis alone, I shall not press this amendment.
I feel that the Minister, on reflection and having read the debate, may feel that the amendment moved at Report stage was inadequate and that the matter deserves further consideration. Perhaps he may also reflect and consider that the point made is not a trivial one. I am certainly not impressed with the argument that either the authorities or the Secretary of State are likely to be deluged with unnecessary and time-wasting complaints. Nothing in these amendments would require the national park authority or Broads authority to pursue complaints that they did not feel were worth while. The amendments provide that the experts—namely, the national park authority and the Broads authority—should have the power to trigger the notification procedure. For the life of me I cannot see why the Government are being so obstinate in this matter. Because of the technical defects in the amendment, but only for that reason, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 78A and 79 not moved.]
Lord Addington Lord Addington moved Amendment No. 80:
Page 9, line 38, at end insert—
("(3A) Where the Nature Conservancy Council objects to any works, operations or activities of which they are notified pursuant to subsection (3) above, the relevant body shall be deemed to be the owner or occupier of the land for the purposes of section 28(5) of the Wildlife and Countryside Act 1981 and paragraph (a) of subsection (8) of that section (exemption for operations authorised by planning permission) shall not apply in such a case.").
The noble Lord said: My Lords, the reason for this amendment is to take out exemption for works authorised by planning permission. Many operations by undertakers or other bodies will be authorised by the general development order, given the potential damage caused by these works to SSSIs.
The amendment seeks to ensure that SSSIs are not damaged by planning permission work. Some damage is caused by works carried out by water authorities. If the Government are really committed to the green approach they will approve the amendment. The original amendment moved in Committee was objected to on the grounds that it did not fit into the Wildlife and Countryside Act 1981. This amendment is recast to take account of that system. It would ensure that works by the relevant bodies in an SSSI would have to follow the same approval system as that of any owner or occupier of the land. I beg to move.
10.15 p.m.
Lord Renton: My Lords, this is an extraordinarily unusual amendment. It would introduce a legal fiction that the relevant bodies—the water or sewerage undertakers—shall be deemed to be the owner or the occupier of land simply by the Nature

1035
Conservancy Council lodging an objection to works of which it has been notified, whether or not the land was owned by the water or sewerage undertaker. We should be very careful at all times about legal fictions. They are not good things. They can have misleading results and interfere unfairly with people's rights. I hope that my noble friends on the Front Bench will resist the amendment.
Lord Hesketh: My Lords, the effect of the amendment would be that if the Nature Conservancy Council objected to an operation which a relevant body—the NRA, an undertaker or a drainage board—planned to carry out and if the reason for the council's objection was that the operation would harm a site of special scientific interest, the relevant body, if it carried out that operation, would be guilty of an offence under Section 28 of the Wildlife and Countryside Act 1981 unless it had given the council four months' notice of its intention to go ahead with the operation and the notice had expired, or unless some other condition had been fulfilled; for example, the council had given its written consent to the operation or the operation had been executed immediately because of an emergency.
This amendment would lay a relevant body open to a £1,000 fine if it failed to give the NCC four months' notice before carrying out operations to which the council had objected because of their effect on an SSSI. If the relevant body owned or occupied the site concerned this amendment would do nothing at all because the offence provision in Section 48 of the Wildlife and Countryside Act automatically applies to all owners and occupiers.
The requirement contained in this clause to consult the council is modelled on that in Section 22 of the Water Act 1973, and just as Section 22 is not supplemented by any offence provision so too there is no need for an offence provision here. This is because the relevant bodies will, like the water authorities, have a statutory duty to further conservation. This duty will ensure that their consultations with the council are not meaningless. If the council objects to an operation, and the relevant body concerned goes ahead regardless, the body may well be in breach of its conservation duty. If that happens the Secretary of State will be entitled to take action against the body and his powers go far beyond the threat of a £1,000 fine and extend to the full enforcement powers of the Bill.
I am grateful for the intervention of my noble friend Lord Renton, who is unhappy about authorities being deemed on someone else's property. For the reasons I have given and for the reason given by my noble friend Lord Renton I hope that the noble Lord, Lord Addington, will consider it possible to withdraw his amendment.
Lord Addington: My Lords, having listened to what the Minister and the noble Lord, Lord Renton, have said, I have come to the conclusion that the amendment is not as effective as it should have been and I am therefore prepared to withdraw it. However, the issue behind it of giving greater protection to SSSIs is one that the Government
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should consider very seriously. I hope that all the good intentions will be carried through. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Codes of practice with respect to environmental and recreational duties]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 81:
Page 10, line 4, leave out from beginning to ("approve") in line 5 and insert ("The relevant Minister may by order").
The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 82, 83, 85, 87, 88, 91 and 93. However, I must say that the issue is nothing like as complex or laborious as it may seem from the number of amendments concerned. This amendment has been tabled following exchanges in Committee on Amendment No. 136 when noble Lords on all sides of the Chamber expressed support for the idea that codes of practice, which are the subject of Clause 10 with which we are now concerned, should apply to the National Rivers Authority as well as to the undertakers.
The idea received support in Committee from the noble Viscount, Lord Caldecote, and also—I hope I have the correct column number for him—from the noble Lord, Lord Renton, at col. 525 on 8th May. I am sorry to keep on forcing the noble Lord to refer to his copy of Hansard, but quite often he says helpful things and I cannot resist using them when he does so.
The amendments all have the same effect. They would all make the code of practice with respect to environmental and recreational duties apply to the National Rivers Authority as well as to the undertakers. It is a simple issue. It is not one on which I believe there ought to be a great deal of political controversy. I think that the Government in the many moves which they have made as regards Part I of the Bill have indicated their sympathy with the extension of codes of practice. I hope therefore that they will feel that this extension is not one with which they could quarrel and that they may therefore be able to support the amendments. I beg to move.
The Earl of Arran: My Lords, we accept the logic of the noble Lord's amendment. The functions of the bodies are closely related and many of the practices relevant to one body will be relevant to the others.
In Committee we took the view, however, that amendment was not necessary because the code could be applied to the NRA by directions. We now consider this to be a less satisfactory approach than bringing the NRA within Clause 10 in the way the noble Lord proposes. In the circumstances, therefore, we are ready to give his proposal our full support.
Lord McIntosh of Haringey: My Lords, I am most grateful to the noble Earl. I am, however, a little startled to find my wording and my intentions approved. Perhaps I may ask him before I finally proceed on the matter whether he will support the other amendments to which I spoke.
The Earl of Arran: The answer is yes.
Lord McIntosh of Haringey: I am most grateful. On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 82:
Page 10, line 5, leave out ("Secretary of State") and insert ("relevant Minister").
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 83:
Page 10, line 7, after ("guidance") insert ("to the Authority or").
On Question, amendment agreed to.
Lord Norrie Lord Norrie moved Amendment No. 84:
Page 10, line 7, leave out ("water undertakers and sewerage undertakers") and insert ("the relevant bodies").
The noble Lord said: My Lords, the purpose of Amendments Nos. 84 and 86 is to clarify the scope of the code or codes of practice. While the Secretary of State has power under Clause 145 to give directions to the NRA, including codes of practice, it is odd that this provision is not mentioned in the clause specifically dealing with codes of practice.
Clause 10 clearly lays down the powers to provide codes of practice for the private water companies. It would also help if the NRA was included in that provision since the Government have repeatedly stated that it is their intention to provide a code of practice for the NRA.
The amendments are purely for clarification and emphasise a point upon which there was considerable agreement on all sides of the Committee. I understand the Government's reasons for saying that the powers already exist, but a clause that deals specifically with codes of practice should mention relevant bodies and not just water and sewerage undertakers; otherwise it is misleading as to whether the codes of practice are intended for all the relevant bodies. While there may be such an intention, it is important that in a long and complex Bill the detail is clearly identifiable. That is what the amendments seek to achieve. I beg to move.
Lord Renton: My Lords, I wish to support the amendment moved by my noble friend Lord Norrie. This is a Bill in which there is a great deal of overlapping between different parts. If we are going to overlap, it is best that we overlap consistently. My noble friend's amendments would enable that to happen.
The Earl of Arran: My Lords, in response to the previous amendment I made it clear that the Government fully accepted the arguments for extending the scope of the code to the NRA. This further amendment would seek to extend it a little further to cover all relevant bodies; that is, taking in the internal drainage boards.
I am bound to accept that the argument that we have accepted in the case of the NRA—that the code
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should apply in a simple direct manner subject to the duties—has weight here also. We can see some merit in the amendment on that basis, but we regret that we are unable to accept the amendment for one fundamental reason. IDBs are self-governing statutory bodies, but the nature of Clause 10 and the relevance of the code of practice relies upon the existence of powers of regulation by relevant Ministers over the bodies in question. Those are available in the case of the companies and the NRA, but they are not similarly available in the case of IDBs.
We cannot therefore accommodate the amendment within Clause 10, but, having said that, IDBs are subject to the Clause 8 duties and must perform them. They also support and voluntarily apply the current conservation guidelines for drainage authorities which are substantially embodied in the drainage section of the code. In those circumstances, nothing is in practice lost by not bringing them directly within the terms of Clause 10—a course which, for the reasons that I have explained, we do not believe is open. In the circumstances, I hope that the proposers will not feel it necessary to press the amendment.
Lord Norrie: My Lords, I thank my noble friend for his reply. He has said a great deal which needs to be digested. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 85:
Page 10, line 10, after ("by") insert ("the Authority or").
On Question, amendment agreed to.
[Amendment No. 86 not moved.]
Baroness Birk Baroness Birk moved Amendment No. 86A:
Page 10, line 13, at end insert—
("( ) The relevant bodies shall—

(a) draw up and publish policies and procedures for fulfilling their duties under sections 8 and 9 above and for implementing any Code of Practice as for the time being approved under sections 8, 9 and 10 of this Act.

(b) publish a description of the measures taken during the previous year to fulfil their duties under sections 8, 9 and 10 of this Act.

( ) It shall be the duty of the Secretary of State to review the performance of the relevant bodies in fulfilling their duties under sections 8, 9 and 10 of this Act at intervals not greater than five years.").
The noble Baroness said: My Lords, the object of the amendment is to ensure that all relevant bodies are publicly accountable when fulfilling their duties under Clause 8, and to help ensure that those duties are enforced. We have considered the points which were raised in Committee in relation to the amendment that we then moved and the points made in reply by the noble Lord, Lord Hesketh. Its wording has therefore been altered. The noble Lord acknowledged that that was an important consideration (Official Report, 8th May 1989, cols. 528 and 529) and that it was important that the

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body should report publicly on its performance. However, in his view there were two objections to the amendment. The first was that,
"While it may be appropriate to require reporting on performance of the duties, it is not similarly appropriate in relation to the practices recommended in the code".
I think that this objection rather misunderstood the amendment. It requires publication of policies and procedures in relation to the code, but not reporting of performance in relation to it. As the noble Lord, Lord Hesketh, said, the code is wide ranging; hence it is desirable that the bodies explain how they are to implement it. The reporting of performance is, as it was in the original amendment, entirely related to the primary duties set out in Clause 8.
The second objection was that it was inappropriate to require a special annual report concerning performance of these duties when any number of other such reports might be equally desirable on other subjects. We accept much of what was said in this regard and have therefore reworded the amendment to require the bodies to describe their performance in an annual publication. This, we believe, gives the flexibility of choice in the vehicle of publication which the Minister wanted, while still requiring a public statement.
I believe that the amendment overcomes the Government's objections to the earlier one. The Government have sought to incorporate in the code of practice, not in the Bill, an important matter of principle relating to the mechanics of public accountability of the new bodies. This principle should be enshrined in statute and not just in the code.
Policies and procedures for fulfilling environmental duties and implementing the code of practice will therefore be published. The performance of those duties will be published annually so that it can be measured against the published intentions of the bodies. Their performance should be regularly reviewed by the Secretary of State, who is answerable to Parliament for enforcing the duties. By this means, Parliament and the public are assured of a clear mechanism by which the performance of these duties can be scrutinised. I beg to move.
10.30 p.m.
The Earl of Arran: My Lords, as we acknowledged in Committee, this amendment raises an important issue and draws to our attention an important consideration. As we say in the code of practice, it is important that the bodies should report regularly and publicly on their performance in these areas. The question is whether the particular statutory arrangements proposed here are appropriate. We do not believe that they are.
We have, first of all, one specific reservation. While it may be appropriate to require reporting on performance of the duties, it is not similarly appropriate in relation to the practices recommended in the code. The code gives a wide range of detailed advice and guidance and it is
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inherently difficult to report on performance of advice and guidance because of its essential character. This therefore is one element on which we dissent from the proposal.
More generally, I doubt whether statutory reporting, prescribed in legislation, is appropriate. The duties in Clauses 8 and 9 inform and condition every aspect of the performance of the undertakers' functions, and it is inherently difficult to report on these features independently of any annual report on the performance of the functions themselves. The conclusion to which we are therefore drawn is that a statutory requirement in these terms could prove unduly rigid and inappropriate.
Furthermore, the amendments raise the question why, if there is to be a separate statutory reporting requirement in respect of these duties, there is not one also in respect of all the other statutory duties imposed on the companies in the Bill. But while for these reasons we doubt that the amendment is the right course to follow, we recognise that this is a matter which is at present inadequately covered in the draft code. We are looking again at that, and we shall want to consider whether there are features of this amendment which we could suitably incorporate in the revision of the code.
To that extent, we will be happy to take on board the underlying point of this amendment. But I am bound to say that we believe that guidance in the code is the right mechanism to employ. We believe the bodies concerned should be allowed flexibility as to the form, scope and timing of any reporting. So we recognise the importance of the points which the noble Baroness, Lady Birk, makes, and we will endeavour so far as is reasonably practicable, through the code, to meet them. But for the reasons I have given, we do not believe that adopting the amendment as it stands would be the right way to proceed.
I hope therefore that, in view of what I have said, the noble Baroness will accept that her concerns are already suitably covered and that she will agree to withdraw this amendment.
Baroness Birk: My Lords, I thank the Minister for that reply. However, I am a little perplexed because when his noble friend replied to a somewhat similar amendment in Committee—I explained how it differed from this amendment, and how I felt this amendment was better—the words used on that occasion were exactly the same as those used today. The words used were:
"To that extent we will be happy to take on board the underlying point of this amendment. But I am bound to say that we believe that guidance in the code is the right mechanism to employ. We believe the bodies concerned should be allowed greater flexibility … We recognise that this is a fine balance of judgment, and I hope that on reflection".—[Official Report, 8/5/89; col. 529.]
In other words, we do not seem to have moved an inch since the Committee stage. We have not been told that, following the amendment moved in Committee, the Government have now decided that they will incorporate A, B, C or D in the code. We have not been given anything harder on which to deliberate. We are still given words that are paved

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with good intentions. However, those good intentions seem to be stuck in a rut too, because even the wording is still the same. The Government have not even replied to us in a slightly different way. At least my amendment is a different amendment from the one which my noble friend Lord Graham of Edmonton moved on 8th May. It is becoming rather boring to discuss this if we are always to receive the same answer.
The point is that we want to ensure that adequate monitoring will take place. We believe it should be incorporated, or certainly mentioned, in the statute. We also want to see a substantial provision in the code of practice. At the moment there is nothing at all. I shall be interested to hear the Minister explain how the Government are going to proceed next; or is the record going to go on and on and round and round?
The Earl of Arran: My Lords, we may have used the same words. However, that shows that we have not changed our thinking on this. The point is that the code at the present moment is still being re-examined and revised.
Lord Tordoff: My Lords, will the noble Earl beg the leave of the House?
The Earl of Arran: My Lords, I apologise to the noble Lord, Lord Tordoff. I should indeed have sought the leave of the House, and I now do so. I shall just repeat that the code of practice is being re-examined and revised. As I said when responding to the amendment, the worries and concerns that the noble Baroness has expressed are being taken on board.
Baroness Birk: My Lords, the provision has now been taken on board twice, so perhaps at a later stage of the Bill we will hear what is being done about this matter, or hear what the Government propose to put in the code. Once the Bill is passed and becomes law, it will be very difficult to do anything at all about this. We must obtain something more than a vague promise.
The Earl of Arran: My Lords, with the leave of the House, I am not in a position to give the precise date by which the revision of the code will be completed. However, I am in a position to say that the code is currently being re-examined and revised, and many of the points that have been made this evening have been taken on board.
Baroness Birk: My Lords, in that case I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 87:
Page 10, line 17, leave out ("shall") and insert ("and the Minister shall each be under a duty to").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 88:
Page 10, line 19, leave out ("under the following provisions of this Act in relation to") and insert ("by virtue of this Act in relation to the Authority or").
On Question, amendment agreed to.
Lord Greenway Lord Greenway moved Amendment No. 89:
Page 10, line 21, at end insert—
("( ) The power of the Secretary of State to make an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: My Lords, in Committee I moved an amendment designed to strengthen the important environmental code of practice by making it subject to parliamentary scrutiny by means of the negative resolution procedure. At the time I received support from all sides of the House although some noble Lords, including the noble Lord, Lord Ross of Newport, favoured the affirmative resolution. Reading between the lines, I believe that the noble Earl, Lord Caithness, indicated that that would have been too time-consuming.
The noble Earl said, however, that he would look at the matter again since when he has been good enough to write to me. I now bring forward this new amendment designed to secure the same end, albeit with slightly different wording. I hope that it finds favour with the Government. I beg to move.
The Earl of Arran: My Lords, if it is indeed the feeling of your Lordships that negative resolution would, as the noble Lord, Lord Greenway, suggests, be appropriate it will receive our full support.
Lord Greenway: My Lords, I am most grateful for this concession, which I know will be very much welcomed by the boating interests. I believe that it will help to give the code greater authority, and I commend the amendment to the House.
On Question, amendment agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 90:
Page 10, line 21, at end insert—
("(2A) Any code of practice made or approved under this section shall make provision for such procedures relating to consultation between relevant bodies, as referred to in section 8(7) above, and such bodies including conservation and recreation organisations and local authorities as the Secretary of State considers appropriate, and the code shall specify the circumstances in relation to which such procedures are to be undertaken.").
The noble Lord said: My Lords, the purpose of the amendment is to give responsible groups and local authorities an acknowledged statutory right to be consulted on matters which affect the local environment and recreational issues. As the House is aware, the code of practice acknowledges that in the development of a management plan and in the identification of good practice consultation is essential. However, it is less than specific in identifying the organisations with which consultations should take place. Because of the

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planning role of local authorities and since they need to consider how the lives of local residents will be affected by land use changes, the local authorities should be included in the list of consultees.
I simply remind the Minister that the Government agreed, at col. 491 of Hansard for 8th May, to look at whether the drafting of the code of practice could be amended to reflect a duty to consult on the carrying out of Clause 8 duties by undertakers. This amendment is tabled in order that we can hear from the Minister what has happened since the previous stage. I beg to move.
The Earl of Arran: My Lords, we recognise that consultation is an essential element of the full discharge of the relevant bodies' environmental duties. The draft code already makes this clear and states that regular liaison and consultation should be established. The code already meets the concern of the first part of the amendment. As for the circumstances in which the consultation should take place, this is precisely what the main body of the code establishes.
The code continually makes reference to the undertakers and the NRA consulting with appropriate conservation and recreation bodies in the performance of their various functions and operations which are considered by the code. Clearly, then, this amendment is unnecessary.
However, there is possibly room for strengthening the wording of this aspect of the code and detailing in full the organisations which the relevant bodies should consult. We are at present considering this as we begin to finalise the text following our own consultation with the many conservation and recreation bodies on the text of the draft code. I can offer the noble Lord our assurance that his concerns expressed in this amendment will be fully met in the code. I trust that on that basis he will not wish to press the amendment.
10.45 p.m.
Lord Graham of Edmonton: My Lords, that is the best offer that I shall get tonight. I realise that the hour is late. I am grateful for small mercies and for the Minister's words. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 91:
Page 10, line 23, leave out ("Secretary of State") and insert ("relevant Minister").
On Question, amendment agreed to.
The Earl of Arran The Earl of Arran moved Amendment No. 92:
Page 10, line 26, after ("Council") insert (", the Sports Council for Wales").
The noble Earl said: My Lords, I move this amendment on behalf of my noble friend Lord Caithness. Its purpose is to add the Sports Council for Wales to the list of consultees which the Secretary of State must consult before making an order under Clause 10.
At the Committee stage of the Bill the Sports Council was added to the list of consultees because of its key role in sporting matters. The Sports Council for Wales is an independent corporate body which has powers similar to the powers of the Sports Council but in relation to Wales. One of its functions is to advise government departments on matters relating to its powers. The codes that may be approved under Clause 10 will be relevant to those powers. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 93:
Page 10, line 28, at end insert—

("( ) In this section "the relevant Minister" means—

(a) in relation to the Authority, the Secretary of State or the Minister; and

(b) in relation to a water undertaker or sewerage undertaker, the Secretary of State.").

On Question, amendment agreed to.
Clause 11 [Appointment of Undertakers]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 93A:
Page 10, line 36, after ("may") insert ("in the first instance").
The noble Lord said: My Lords, in moving this amendment, I shall also speak to Amendment No. 93B. With this amendment we move to Part II of the Bill, after nearly two days of Report stage dealing with fewer than 10 pages, although including a certain amount of schedule material.
This, like a number of other amendments that I have proposed this evening, follows discussion at the Committee stage in which the noble Lord, Lord Renton, participated. I am sorry to see that he is no longer with us. I have no doubt that the Government will be sorry to see that. However, at the Committee stage on Amendment No. 148ZA, he was active in pointing out that there was confusion in the drafting of Clause 11(1). I remind the House that it is concerned with the appointment of undertakers.
It was not sufficiently clear from the drafting of Clause 11(1) that the Secretary of State should make the initial appointment and that the director should make subsequent appointments and variations in line with a general authorisation given by the Secretary of State. In other words, what is still defective in Clause 11(1) is the fact that it does not square with the provisions of Clause 11(4). In drafting the two amendments we have taken the words of the noble Lord, Lord Renton, at col. 565 of Hansard. I hope that the Government will feel that this is a helpful drafting amendment and that they will be able to recommend that the House should agree to it. I beg to move.
Lord Hesketh: My Lords, Clause 11 provides for the appointment of undertakers to be made by the Secretary of State, or with his consent, or in accordance with a general authorisation given by the Secretary of State to the director. The intention of these amendments is to set out in subsection (1) that

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the Secretary of State is to be responsible for making the initial appointments of water and sewerage undertakers and that subsequent appointments must be made by the director.
The wording of the proposed amendment draws closely upon the wording suggested by my noble friend Lord Renton which my noble friend Lord Caithness undertook to take away and draw to the attention of our advisers.
The wording of the clause as it stands has been carefully reconsidered and I can assure your Lordships that it allows the Government to achieve their objective; namely, that the Secretary of State will make the first appointments and will then authorise the director to make subsequent appointments.
I think it may be helpful to your Lordships to mention that the clause distinguishes between power and duty. Subsection (1) provides the power for the Secretary of State to make appointments or to consent to the director making appointments and is subject to the provisions which follow it in that clause. Subsection (4) provides that it is the duty of the Secretary of State to make the initial appointments of the statutory water companies as water undertakers for their areas and of the successor companies as water and sewerage undertakers.
Subsection (4) also makes it the Secretary of State's duty to secure that there are companies holding appointments at all times for all of England and Wales. The amendment would have the effect of precluding the Secretary of State from making further appointments. Our intention is that future appointments will be made by the director because in our view and, if I remember correctly, that of my noble friend Lord Renton we consider that he will be the best qualified person. But it would be inappropriate to confine the Secretary of State's power completely in that way. There will always be a Secretary of State able to make appointments but there may be circumstances when there is no director general.
I hope this explanation will persuade the noble Lord to withdraw his amendment.
Lord McIntosh of Haringey: My Lords, I thank the Minister for that reply. Certainly I should not wish to do anything which created a new conflict between subsections (1) and (4). I shall have to consider carefully the effect of the distinction that he makes (which is not new to us) between the duty on the Secretary of State and the power of the Secretary of State, and think about its effect on the drafting of the amendment. In anticipation of that I think it best that I should ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 93B and 93C not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 93D:
Page 11, line 51, at end insert—
("(5A) Any Code of Practice relating to an undertaker appointed under this section shall be included as a condition in the instrument of appointment of that undertaker, and the
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inclusion of such a code in any instrument of appointment shall be by Order of the Secretary of State subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: With this amendment we are pushing at a door which to some extent was opened by the Government at Committee stage. It will be recalled that we argued that so far as possible all the codes of practice incumbent on the undertakers should be given statutory force, and in response to that the Government agreed that the: disconnections code and the leakages code should be included in the licence awarded to the undertakers.
First of all we should like to take this opportunity of seeking an assurance from the Government not only that the leakages code and the disconnections code will be in the licences but also that as much as possible of the general code and the environmental code will be in them. It would be helpful to have an indication of where the drafting of the licences stands in that respect.
We are also proposing that there should be a parliamentary process whereby the codes are formally included in the instrument of appointment by means of a negative resolution. I am conscious that there may not be many precedents for a procedure of that kind. It is not common for instruments of appointment to be subject to parliamentary procedures, even the negative resolution procedure that we now propose. However, for two reasons I want to push at this door which has been partly opened.
First, can the Minister tell the House how far he anticipates that the Government may continue to be involved in the codes of practice and what opportunity there may be for Parliament to consider whether there should be changes in codes of practice over a period of time? After all, codes of practice and the conditions in which they operate change and it is appropriate that they should be varied. I should not wish to propose anything which made it difficult to change them but I do wish to propose that Parliament should have an opportunity to consider major changes at suitable intervals.
My second question seeks to establish the process by which the change might be undertaken. For example, there might be disagreement between the parties concerned about an amendment to the code. Who is the ultimate court of appeal in this matter? How shall we ensure that, when there are disagreements and when the codes of practice need revising, a Minister accountable to Parliament will be the ultimate arbiter of what the code should contain, as indeed he is when the code is first established?
I do not think that these are revolutionary amendments. They follow a line of thinking that has already been accepted by Government. I hope that these amendments will enable the Government to enlighten us further about their thinking on these matters. I beg to move.
Lord Hesketh: My Lords, the effect of this amendment would be to include in Clause 11—which provides for the making of appointments—a requirement that any relevant code of practice should be incorporated in the

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conditions of appointment and that such an inclusion should be made by an order subject to negative resolution. Codes of practice would then be enforceable under the Bill.
It would be inappropriate to write into the conditions of appointment the full details of all the various codes of practice relating to undertakers and thereby make each and every breach of any aspect of these codes directly enforceable by the director general. To do so would be to conflict with their nature as codes of practice since these are documents that should offer guidance rather than imposing rigid requirements. If this is the course that the noble Lord wishes to follow, the more appropriate course of action would be to argue for these to be written into primary or secondary legislation. It is in keeping with their status as codes of practice that we have provided in Clause 10 that contraventions of codes of practice on environmental and recreational duties shall not of themselves give rise to any criminal or civil liability which should be taken into account by the Secretary of State in deciding when and how he should exercise his enforcement powers.
In the case of the disconnection code of practice, it is the principles of the procedure to be followed before a domestic customer can be disconnected which are written into the licence adopted by the undertaker, not the complete code itself. It is therefore only for breaches of these principles that the director general can take enforcement action. Unlike the main principles of the disconnection codes, customer leakages codes are not of an appropriate nature to include in the licence. The environmental code will be open to negative resolution procedure under Clause 10 as amended tonight. With these remarks, I hope that the noble Lord will feel able to withdraw his amendment.
Lord McIntosh of Haringey: My Lords, I am disappointed with that reply. I thought that our thinking was close enough to that of the Government to enable us to make some progress on this matter, as we did at Committee stage. However, I shall have to read carefully what the Minister has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 93E:
Page 11, line 51, at end insert—
("(5A) A water or sewerage undertaker appointed under this section shall include in any annual report a statement of the extent to which it has fulfilled its duties under section 8 above and shall, before an appointment is made, furnish the Secretary of State with a statement of the extent to which its activities in the previous financial year would have fulfilled the requirements of that section if they had been duties at that time applying to the company.").
The noble Lord said: This is rather similar to the amendment moved by my noble friend Lady Birk some time ago. We want some procedure for monitoring and reporting on the fulfilment of the obligations under Clause 11, as my noble friend did with Clause 8.
If this amendment is agreed to, before an appointment is made, the undertaker will give the Secretary of State a statement of how—because these are ongoing bodies which have been in existence before—its activities would have conformed with Clause 8 in the previous year. It is rather like an application for an independent television franchise. If one is going to put up a plausible case for obtaining an independent television franchise, one has to be able to argue that one's past record is satisfactory. That might mean the past record of the individuals concerned. It might be the past record of the company making the franchise application. In the case of the water undertakings, they will all have been water authorities in the past. They will have had an opportunity to fulfil environmental and recreational duties. We are asking that they should make a statement of how they have done so in terms of Clause 8. That is the best formulation of environmental and recreational obligations that we have available.
If it is not to be done in this way, I must ask the Minister what form of screening on environmental grounds he will apply, and whether he will give any thought to how the undertakings which propose to take up licences should show that they are responsible in environmental and recreational matters. I beg to move.
The Earl of Arran: My Lords, Amendment No. 93E deals with the question of reporting on the fulfilment of the Clause 8 duties. In addition to companies being required to report in their annual report on the performance of their Clause 8 duties, they would also have to report to the Secretary of State on how their activities in the previous year would have complied with the duties before they receive any appointment as an undertaker.
As the noble Lord, Lord McIntosh of Haringey, has said, we have already dealt with the matter of reporting on the fulfilment of the Clause 8 duties in considering an amendment to Clause 10. I shall not repeat it again, so in dealing with this amendment I can be brief.
Clearly, the ability of any prospective undertakers to meet the statutory duties in Clause 8 is one of the matters that the Secretary of State and the director would have to have regard to in making any appointment. It is not necessary or appropriate to require the special reporting mechanism before any such appointment is decided upon. In making appointments, the Secretary of State will be bound by the general duty in Clause 7 which requires him to secure that the franchises of water and sewerage undertakers are properly carried out. In this way, he will have to appoint undertakers who will act in the responsible way that the noble Lord, Lord McIntosh, desires. Therefore, I hope that in the light of what I have said the concerns of the noble Lord are already covered.
Lord McIntosh of Haringey: My Lords, that is not what Clause 7 says. Maybe it should say that, but it does not. What it says is that they have to fulfil their functions properly and to make a reasonable rate of return on capital. It does not say that they should

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act in the responsible way that the noble Lord, Lord McIntosh, requires. Maybe we will have to put down an amendment to that effect in order to achieve the objective.
I do not think that is a satisfactory answer. It may well be something that we shall have to come back to again, because the initial appointment is clearly critical to the subsequent prospect of the undertakers taking seriously their environmental and recreational duties, and if the initial appointment is defective the subsequent procedures are likely to be defective as well. But in view of the hour, I think it more appropriate that I should beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 93F:
Page 12, line 7, at end insert—
("(6A) Before terminating the appointment of a company holding an appointment under this Chapter, or varying the area to which it relates, the Secretary of State or the Director shall serve notice of his intention to do so on any local authority acting as a sewerage agent for that company where its duties under that arrangement relate to a different area than that covered by the authority itself.").
The noble Lord said: My Lords, this amendment follows Amendment No. 151A at Committee stage, in which my noble friend asked for notices of termination or variation of appointments of undertakers to be notified to local authorities which were sewerage agents in the area concerned. The Government believed that the amendments were unnecessary, given the requirements in Clause 13 for the Secretary of State or the director to inform local authorities affected by replacement appointments or by variations.
At that stage the noble Lord, Lord Hesketh, undertook at col. 599 of the Official Report to consider the position of a local authority which had an agency in a different area from that covered by its own boundaries. This amendment is drafted with such a requirement in mind, and it would be useful if the Minister could tell us what further consideration has been given to this matter since the last stage. I beg to move.
The Earl of Arran: My Lords, Clause 13 is drafted to ensure that all local authorities are notified as authorities about variations or appointments which affect their areas. We accept that there is a need to ensure that all local authorities are notified, even though they may not be the agents for their particular areas. It is not the purpose of the clause that authorities should be notified by virtue of any responsibility which they may have as sewerage agents.
In practice the obligation to notify local authorities, as authorities, of variations to the sewerage appointment in their areas will normally act as notification to them as sewerage agents. The only occasion on which it would not do so would be
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if the local authority was acting as an agent outside its area. It is this case which the amendment addresses.
I must point out to your Lordships that it is only on the coming into effect of this Bill that local authorities will be empowered to act as sewerage agents outside their areas. To do so they will have to reach an arrangement with a sewerage undertaker. Surely, notification of matters which might concern them is a natural provision for a prospective agent to wish to see incorporated in a new arrangement. This is a matter which the undertaker and agent should decide between themselves and not a matter which should be imposed by legislation. An additional objection is that the amendment puts a duty on the Secretary of State or director to notify an agent. Are we also to impose a duty on the director to notify all the sewerage undertakers' contractors and suppliers?
We believe that this amendment is undesirable and unnecessary. I hope that the noble Lord will see fit to withdraw it.
Lord Graham of Edmonton: My Lords, I do. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 [Restrictions on making replacement appointments]:
Lord Hesketh Lord Hesketh moved Amendment No. 94:
Page 13, line 9, at end insert—
("( ) It shall be the duty of the Secretary of State or, as the case may be, of the Director, in making an appointment or variation to which this section applies and, where he makes such an appointment or variation, in determining what provision is to be made with respect to the fixing by the new appointee of—

(a) charges in respect of services provided in the course of the carrying out of the functions of a water undertaker or sewerage undertaker; and

(b) amounts of any other description which such an undertaker is authorised by or under any enactment to require any person to pay,

to ensure, so far as may be consistent with his duties under Part I of this Act, that the interests of the members and creditors of the existing appointee are not unfairly prejudiced as respects the terms on which the new appointee could accept transfers of property, rights and liabilities from the existing appointee.").
The noble Lord said: My Lords, Amendments Nos. 94, 97, 103 and 106A are government amendments of a technical nature. I beg to move.
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendments Nos. 95 and 96:
Page 13, line 17, leave out ("are") and insert ("consist in a building or part of a building which is").
Page 13, line 23, leave out ("are") and insert ("consist in a building or part of a building which is").
The noble Lord said: My Lords, again these are government amendments of a technical nature. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 97:
Page 13, line 33, at end insert—

(" "new appointee", in relation to an appointment or variation to which this section applies, means the company which by virtue of the appointment or variation becomes the water undertaker or sewerage undertaker for the whole or any part of an existing area;").

On Question, amendment agreed to.
Clause 14 [Conditions of appointment]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 97A:
Page 15, line 4, after ("above") insert—
("(c) conditions requiring the payment of compensation by the appointed company to any person affected by a breach to which this paragraph applies of any condition provided for in paragraphs (a) and (b) above, the amount of such compensation and the breaches in relation to which compensation may be payable being determined by or under the conditions.").
The noble Lord said: My Lords, this is an important issue. The amendment returns to the issues raised in Amendments Nos. 158A, 158B and 158D in Committee. Compensation was sought for consumers over breaches of appointment conditions. The House will recall that on that occasion the noble and learned Lord, Lord Brightman, supported the amendments and the noble Lord, Lord Harmar-Nicholls, expressed himself as being dissatisfied with the Minister's reply (col. 612 of the Official Report). There was particular concern about the effect on the "small man" of the failure of water plc services.
In their reply the Government appeared to be arguing that enforcement was more important than compensation. It is not entirely clear why both enforcement and compensation might not be appropriate. That is except for the obvious implications, namely, that enforcement is left in the hands of the Secretary of State while compensation would be a matter of a right for the consumer.
Amendment No. 97A is a lesser variant of the second amendment put forward in Committee. It would require the appointment conditions to reflect the compensation system, the amount of such compensation and the breaches to which it related to be determined under the licence itself. In other words, the amendment sets out the principle without constraining the director or the Secretary of State in negotiating the licence with the companies as to precisely which conditions should be subject to the compensation arrangements.
Since the last stage, the National Consumer Council has drawn my attention to its reactions to the reply then given by the Minister. I should like to indicate to the House some of the things which it has said:
"Compensation for breaches of these service standards are clearly important to consumers who take time off work to keep appointments, and to provide an incentive to the water plcs to improve their standards of service. It is anomalous that the government does not consider consumers to be equally deserving of compensation when there have been breaches of conditions of the licence or water quality standards, which may have been equally or more inconvenient, worrying or unpleasant than a delay in responding to a complaint".
It goes on to give a very good illustration of that. In its letter it states:
"The knowledge, for example, that consumers' washing will not be stained with brown water in the future is satisfying, but does not help with the immediate problem of baskets of streaked washing. Alternatively companies who disconnect consumers for non-payment of their bills without a court order will be in breach of the conditions of their appointment and subject to enforcement proceedings under Clause 20. This amendment would allow the Secretary of State to set up a system of compensation for consumers affected by such illegal disconnections".
Those are the words of the National Consumer Council. I am sure that had other Members of your Lordships' House been here, they would have spoken in support of this amendment. I beg to move.
Lord Hesketh: My Lords, the effect of Amendment No. 97A would be to provide under the conditions of appointment for automatic compensation to be paid by the undertakers to any person affected by breaches of the other conditions of appointment. We believe that the automatic entitlement to a payment or credit provided for in the guaranteed standards scheme will help to avoid the frustration customers at present experience because they cannot obtain any compensation for inconvenience caused in the cases covered by the scheme. This is an important new customer safeguard which has been welcomed by the National Consumer Council and other consumer organisations. We believe that it would be quite wrong to expand what has to be an easy to operate "no quibble" scheme to cover the complexity of the conditions of appointment and it is in no way a substitute for the right of civil redress. I hope that this reasoning will persuade the noble Lord to withdraw the amendment.
Lord Graham of Edmonton: My Lords, is the Minister saying that the purport of what I have suggested, which is the automatic right, is already covered in some other way under the guarantee scheme? I am always willing to acknowledge that he and his advisers can see more in the words on paper than we see—and I say that in no cavalier fashion. I am always grateful to have my attention drawn to the fact that what I believe I want is not necessary. Is the Minister telling me that what I want in this amendment is not necessary because it is achieved in some other way by another method?
Lord Hesketh: My Lords, with the leave of the House, I am sure that the noble Lord remembers the interesting exchange which we had on this matter in Committee. The point which I should like to reiterate to him is that the new guaranteed standards scheme is something which does not exist. It is a major step forward. We believe that he asks for a step forward beyond that. We should learn to walk before we can run, if I may put it in that way.
Lord Graham of Edmonton: My Lords, I am all for taking the necessary steps. The fact that I might be trying to take two at once could mean that I come a cropper. I do not believe that that would be an elegant posture in which to conclude today's proceedings at this time of night. Therefore, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Hesketh Lord Hesketh moved Amendment No. 98:
Page 15, line 36, at end insert—
("(3A) Subsection (3B) below applies in relation to the appointment of any company under this Chapter in pursuance of section 1 l(4)(a) above where provision is contained in that appointment by virtue of subsection (2) or (3) above for postponing the determination of, or of any of the terms of, the conditions of the appointment with respect to the fixing by the company of—

(a) charges in respect of any services provided by that company in the course of the carrying out of the functions of a water undertaker; or

(b) amounts of any other description which such an undertaker is authorised by or under any enactment to require any person to pay,

until a time after the transfer date and before the end of the financial year current on that date.
(3B) Where this subsection applies in relation to a company's appointment, the conditions or terms mentioned in subsection (3A) above shall not be determined in accordance with the provision so mentioned unless—

(a) notice of the proposed determination has been served on the company;

(b) the company has been allowed a period of at least twenty-eight days from the date of service of the notice for making representations or objections with respect to the proposed determination; and

(c) the Secretary of State has considered any such representations or objections which have been duly made and are not withdrawn.").

The noble Lord said: My Lords, in moving this amendment I speak also to Amendment No. 99. Clause 14 describes conditions which may be included in a company's conditions of appointment. These two amendments are concerned with the possibility that the conditions of appointment may be incomplete at transfer date. I beg to move.
Lord Brougham and Vaux: My Lords, I shall not detain the House for more than a moment or two but had my noble friend Lord Elliott or Morpeth been able to attend at this late hour he would have wished to comment on the amendment on behalf of the Water Companies Association. Therefore, I have been asked to say a brief word on his behalf.
My noble friend the Minister will be aware of the discussions currently taking place between his department and the Water Companies Association about the progress of setting Ks for the statutory water companies. I shall be grateful if he can confirm that this amendment in no way intends to prejudice those discussions.
Lord Hesketh: My Lords, with the leave of the House I can certainly give my noble friend the assurance that he requires.
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 99:
Page 16, line 14, at end insert—
("( ) Where an instrument of appointment has been served under subsection (3) of section 11 above on any company, the coming into force of the appointment for the purposes specified in subsection (2) of that section shall not be affected by any contravention of the requirements of this Act with respect to the provision contained by way of conditions of appointment in that instrument; and if the Secretary of State considers it appropriate to do so in consequence of any legal proceedings with respect to any such provision, he may by order made by statutory instrument direct that such conditions as may be
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specified in the order are to be treated as included in the appointment in question until there is an opportunity for the provision to which the proceedings relate to be replaced by virtue of any of the other provisions of this Chapter.").
On Question, amendment agreed to.
The Earl of Arran: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at eighteen minutes past eleven o'clock.