Lords Sitting of 12 June 1989

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Truro.

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, before the commencement of business, I take the opportunity to inform the House that I am to receive an Honorary Doctorate from the University of Cambridge.
Noble Lords: Hear, hear!
The Lord Chancellor: The Congregation will take place on Thursday, 15th June. Accordingly, I trust that the House will agree to grant me leave of absence for Thursday, 15th June.

Parking Restrictions: Business Vehicles
The Marquess of Aberdeen and Temair The Marquess of Aberdeen and Temair asked Her Majesty's Government:
Whether they will introduce a scheme for the issue of general passes to small businesses, enabling their vehicles making unscheduled calls to park without hindrance.
Viscount Davidson: My Lords, the regulation of parking and waiting is a matter for local highway authorities. They can at present exempt business vehicles from normal parking and waiting restrictions for the purpose of loading and unloading. They also have powers to introduce designated business parking schemes.
The Marquess of Aberdeen and Temair: My Lords, I thank the Minister for that Answer. Most of the people who are affected by parking regulations are those in the service industries—electricians, plumbers and so on. They can obtain permission from police districts but often they have to answer emergency calls from outside those districts. How are they to avoid fines and clamping, which at the moment beset them, in order to carry out their emergency calls properly and efficiently?
Viscount Davidson: My Lords, parking for business users and service industries has been discussed with the local authority associations and the police. I am advised that the police look sympathetically on the type of person whom the noble Marquess described. However, the general response has been that to grant exemptions to one class of road user would inevitably lead to similar requests from other sections of the motoring public.
Lord Underhill: My Lords, does not the noble Viscount agree that if there was a general lifting of regulations to provide for such a facility it would make nonsense of the fact that we are still waiting,
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after nearly four years, for legislation on the Home Report, dealing with street works which create congestion in busy thoroughfares?
Viscount Davidson: Yes, my Lords, but the last part of the noble Lord's question is not absolutely relevant to the Question on the Order Paper. However, I agree entirely with the noble Lord that it is essential that exemptions are kept to a minimum if parking controls are to be effective. Difficulties are envisaged over enforcement and there is scope for abuse.

Rose Theatre Remains: Preservation
2.39 p.m.
Lord Rea Lord Rea asked Her Majesty's Government:
What are their plans for the preservation and display of the Rose Theatre excavations at the end of the agreed delay in development of "up to one month" from 15th May.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh): My Lords, I am glad to be able to tell the House that the developers have voluntarily redesigned their scheme at a cost of some £10 million so as to preserve the remains of the Rose Theatre, and to enable public display once the new office building is complete. It is now for the private sector to bring forward a workable scheme for ensuring that public display.
Lord Rea: My Lords, I thank the noble Lord for that Answer, which was very much what I had been expecting. Is the noble Lord aware that the proposed solution put forward by the developers, which involves driving six piles extremely close to the foundations of the theatre through unexcavated areas, gives rise to great concern among archaeologists working on the site and all those who have specialised knowledge of the site? Is he aware that there are other solutions which would involve less damage and which would not unduly delay development, such as the scheme suggested by Ove Arup, commissioned by the Theatres Trust?
Lord Hesketh: My Lords, the developers are having archaeological investigation carried out into the adjacent areas which would be affected by the piling; and I am sure that the noble Lord, Lord Rea, is well aware that the piling avoids the known theatre perimeter. English Heritage is supervising it.
Lord Bonham-Carter: My Lords, is the noble Lord aware that the piling will take place 18 inches away from the known area of the theatre in unexcavated areas, and that there is therefore a grave risk of damage of an irreparable variety?
Lord Hesketh: My Lords, I find it difficult to go further. There will be archaeological investigation which the developers have requested. It is worth remembering that the site has actually managed to survive, having had a building completely cover it in the 1950s.
Lord Jenkins of Putney: My Lords, in accepting what the noble Lord said, I should like to make the following point. He will agree that the discovery of an important source of the British theatre is not to be put lightly on one side. While the developers have, from their point of view, been reasonable in the matter, there are differences of view as to whether the proposal which has been put forward is satisfactory. In the circumstances, would it not be a good idea to refer the matter to the Theatres Trust? That is a body created by Parliament for such a purpose. Its president is the noble Lord, Lord Goodman, and the chairman is Sir David Crouch. It is a reputable body representing a wide range of opinion which I believe could come forward with a proposal which would be acceptable to both sides.
Lord Hesketh: My Lords, I think it is fair to say that the developers have gone a great deal of the way to answering the problems raised by the discovery of the site. I should have explained earlier that the proposal envisaged will completely cover the site giving a clear space above it of about 22 feet. It will have a separate entrance from the entrance to the office building. I do not think anyone can say that that is not a commitment to preserving this important site.
Baroness Birk: My Lords, is it not the case that in this country we deal with our archaeological remains, no matter how important they are, in a very haphazard and hand-to-mouth way? Does the Minister not agree that it would be a good idea for the planning process to be strengthened to the extent that it ensures that sites are evaluated? Does he not further agree that as regards those that have any archaeological interest at all, proposals should be made on the basis of those evaluations? The evaluation should also include a short survey before planning consent is given. Does the Minister not agree that such a procedure would entail greater ease of operation for the developer, and that the preservation and conservation of sites could be achieved without having to go through all the hassle that has taken place with the Rose Theatre? It does not appear that, whatever the decision regarding the Rose Theatre, it will be entirely satisfactory all round.
Lord Hesketh: My Lords, I believe I can be entirely truthful in saying that, whatever the result, it will not be entirely satisfactory to everyone involved in this affair.
The Earl of Halsbury: My Lords, God Almighty has decreed that we age, die, crumble away, ashes to ashes and dust to dust. Does the Minister not agree that we cannot preserve the whole of the past as a memorial thereof? What really matters is that we should get proper engineering drawings of what the Rose Theatre was, with samples of the materials of construction, and that they should be preserved in a museum.
Lord Rea: My Lords, I should like to clarify one point. Is the Minister aware that the piles that are to be driven very close to the theatre will go through
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areas that have not been excavated? Does he not agree that it will be a destructive form of archaeology that will be allowed for a very short period before the piles are driven? It is obvious that the structures that may well be there will not be there after the piles have been put into position. Does the Minister not agree that there are other ways of carrying out this work that would preserve the whole site?
Lord Hesketh: My Lords, as I said earlier, the developers have gone a great way towards being as helpful as possible on the site. As I said in an earlier reply, preceding the piling the developers will have archaeologists, under the supervision of English Heritage, to investigate what is down there.

EC Lingua Scheme
2.45 p.m.
Baroness David Baroness David asked Her Majesty's Government:
What are their plans to participate in the European Communities Lingua scheme.
Viscount Davidson: My Lords, the Government will play their due part in the implementation of the Lingua programme in the form agreed by Community education Ministers on 22nd May. They will also encourage education institutions, businesses and other eligible organisations in the United Kingdom to make full use of the opportunities offered by the programme for the development of foreign language skills.
Baroness David: My Lords, I thank the Minister for that reply. Can he tell the House how he believes that the Lingua programme as it now is can help to improve the appalling record that we have in the teaching of modern languages in our schools? In France 82 per cent. of school leavers and in Germany 91 per cent. of school leavers have studied English. In this country 41 per cent. have studied French, and 11 per cent. have studied German.
Viscount Davidson: My Lords, there are more people speaking English in the world than French or German. I believe that to be a truth. The decision text refers to encouraging all citizens to acquire a working knowledge of foreign languages in place of an earlier reference to two foreign languages. The Government certainly hope to see a growing number of people in the United Kingdom able to communicate in more than one foreign language; but they are not prepared to see an implied commitment to such a policy enshrined in Community legislation.
Lord Jenkins of Hillhead: My Lords, can the Minister say whether it is seriously the view of the Government (as the beginning of the noble Viscount's last reply seemed to indicate) that because we are fortunate enough in this country, with the advantage of the United States in this regard as an ally, to have triumphed over French as a world language, it is reasonable to sit back and say: everybody should speak English and we shall do nothing about speaking any other languages?
Viscount Davidson: My Lords, I did not say that everyone should speak English. I said that English is one of the most widely spoken languages in the world. The Government also must have regard both to the United Kingdom's wider trading interests and to the large number of languages spoken by minority groups within the United Kingdom population. Therefore the Government would not in any case be willing to constrain their policy by reference to the definition of foreign languages employed in the Lingua programme.
Lord Hailsham of Saint Marylebone: My Lords, irrespective of percentages and the numbers of people with English as their cradle or second language, does my noble friend not agree that the standards of performance achieved in foreign languages in English (and I daresay Scottish) schools is lamentably low? Does the Minister not agree that we need to improve the standards to a very great extent in order to sell our goods and services abroad?
Viscount Davidson: My Lords, I agree entirely. The whole purpose of the Education Reform Act in this direction is to improve education in foreign languages.
Viscount Montgomery of Alamein: My Lords, is my noble friend aware that the second most widely spoken international language in the world is Spanish? Is he further aware that a great deal of work has been undertaken by the Hispanic and Luso-Brazilian Council—which was, incidentally, founded by my noble friend's father—to promote the teaching of Spanish and Portuguese? Will the Government recognise that this work, and the teaching of these languages, is of vital importance?
Viscount Davidson: My Lords, yes.
Baroness Seear: My Lords, does the Government not agree that it is unfortunate that the national curriculum lays down that there should be one language taught, and that the teaching of it shall not start until the age of 11; whereas most people would believe that the sooner one starts a foreign language, the better?
Viscount Davidson: My Lords, the Government's objective on agreeing to the Lingua programme was to distinguish vocational education, and education after the age of 16, from general school education. That has been achieved.
Lord Monson: My Lords, does the noble Viscount agree that from the point of view of the national interest it might well be better if young people were encouraged to learn Japanese, Mandarin, Russian or Arabic in preference to Danish, Flemish or modern Greek, or even in preference to French, German or Italian, desirable though the latter undoubtedly are from a purely cultural point of view?
Viscount Davidson: My Lords, I have before me Schedule 2, which was issued by the department quite recently, which shows that Japanese, Punjabi, Russian, Turkish, Urdu, Hindi, Hebrew, Gujerati,
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Chinese, Bengali and Arabic are all available if the school in question has a foundation subject in one of the other languages.
Lord Cockfield: My Lords, I wonder——
Lord Ardwick: My Lords, is there not——
Noble Lords: Order!
The Lord Privy Seal (Lord Belstead): My Lords, we cannot all speak at once. Let us try the noble Lord, Lord Ardwick, first.
Lord Ardwick: My Lords, is there not a national phobia about foreign languages as is evidenced by the fact that the moment a foreign statesman comes on radio or television and tries to say a few words in his own language it is immediately smothered by a translator? Does not the same thing apply in reverse? When the Queen or the Queen Mother attempt to say a few words in French immediately they are drowned by the translator. Will the noble Viscount say something to his friends in radio and television about this?
Viscount Davidson: My Lords, I think the short answer is Oui and Ja.
Lord Cockfield: My Lords, will my noble friend kindly expand on his reply to the first supplementary question? He said that it was the Government's view that it was not appropriate for British citizens to learn to speak more than one foreign language.
Viscount Davidson: I did not say that, my Lords. I said that under the Lingua scheme all languages are available, but that they are now distinguished, for vocational education and education after the age of 16, from general school education. General school education is a different matter from the Question on the Order Paper.
Lord Peston: My Lords, is the noble Viscount aware that in connection with the Lingua scheme it has been reported that his right honourable friend the Secretary of State has said that the European Commission has no locus standi on educational matters? Is it the Government's view that the Commission has no locus standi on education matters? Is that a correct interpretation of the Treaty of Rome?
Viscount Davidson: No, my Lords, it is not a correct interpretation. The Government do not oppose the idea of people learning two languages in appropriate circumstances, but they were not prepared to have the Community saying that this should be so, far less requiring that those languages should be Community languages.
The Earl of Halsbury: My Lords, does the noble Viscount agree that not only is our standard of foreign language speaking deplorable, but our standard of English speaking is equally deplorable? Is not the best way of learning good English to study comparative grammar in languages such as Latin, Greek, and so on?
Viscount Davidson: My Lords, I agree entirely with the noble Earl.
Lord Ritchie of Dundee: My Lords, while at a pinch one can understand the objection to the EC directive that three languages should be taught in our schools, what conceivable reason can there be for an objection to exchange visits, partially funded by the Lingua scheme, between member countries?
Viscount Davidson: My Lords, I have not heard of any objection to school exchanges. When they are properly planned to build on the curriculum they can contribute a great deal. But we do not need the Community to organise our school exchanges for us. Exchanges are much better arranged on a bilateral basis, and we have a flourishing and expanding programme of exchanges with a growing number of countries. I hope that that will be one way in which our knowledge of foreign languages is expanded.
Baroness Seear: My Lords, is not the real objection to the scheme that it is regarded as an interference with our sovereign rights?
Viscount Davidson: That is the first time I have heard that suggestion, my Lords.
Lord Elwyn-Jones: My Lords, is the noble Viscount aware that those of us who were taught to learn English did not find the task too difficult?
Viscount Davidson: My Lords, I must congratulate the noble and learned Lord on his brilliant English.
Baroness Blatch: My Lords, is it not true that this Government more than all their predecessors have done more for the teaching of languages in schools by making a foreign language compulsory in the curriculum? This does not preclude the learning of a second language. Would it not be better to concentrate energies on securing more teachers of foreign languages and improving the teaching of foreign languages?
Viscount Davidson: Yes, my Lords, I agree entirely with my noble friend.
Baroness David: My Lords, perhaps I may follow up my first supplementary question about how the Lingua programme will benefit those in schools now. Is the Minister aware that according to DES figures we shall be short of 2,500 modern language teachers by 1995? How will this be put right so that even one modern language can be taught?
Viscount Davidson: My Lords, I should think that 1992 will help to a considerable extent in reducing the shortage of foreign language teachers.
Lord Hunt: My Lords, is the noble Viscount aware that it has been remarkably demonstrated in a number of our primary schools that children of a primary school age have no difficulty in acquiring an extraordinary facility with two foreign languages? Is it not a terrible pity to waste that incipient knowledge by not carrying it on in the secondary stage for all our young people?
Viscount Davidson: My Lords, all things are learnt much better at a young age than they are learnt later on in life. It might interest the House to know that I was able to speak French before I could speak English.
Lord Ritchie of Dundee: My Lords, in pursuance of the point just raised by my noble friend Lord Hunt, is the Minister aware that this is because the power of mimicry, which is of paramount importance in language learning, is at its peak at primary school age and later is less good?
Viscount Davidson: My Lords, having just had a quick look at the original Question on the Order Paper, I am afraid I have to say that that question has moved a long way from it.

Greenhouse Effect: Monitoring
2.57 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether the greenhouse effect is monitored daily by any permanent international organisation, and, if not, whether they will propose that it should be.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I apologise if this is a somewhat longer Answer than usual. Detection of the greenhouse effect, which is a long-term phenomenon, will depend on careful statistical analysis of accumulated data of many kinds. One example is the measurement of sea surface temperatures made hourly around the world by national meteorological services co-ordinated by the World Meteorological Organisation. The concentrations of the principal greenhouse gases such as carbon dioxide, methane and CFCs are continuously monitored by several countries in a co-ordinated programme, including a DoE-supported monitoring site in Ireland measuring methane and CFCs.
Scientists are currently evaluating other elements such as sea ice extent and changes in glaciers. It is expected that in its report to the second world climate conference in 1990 the Inter-Governmental Panel on Climate Change, whose science working group is chaired by the Director General of the United Kingdom Meteorological Office, will include an assessment of relevant monitoring options.
Lord Molloy: My Lords, in view of that comprehensive Answer and other serious features, would it not be proper for the Government to bring this matter on to the floor of the General Assembly of the United Nations?
The Earl of Caithness: My Lords, I am sure that it will get there in any case, but I can assure the noble Lord and the House that I brought it to the attention of the United Nations environment programme in Nairobi three weeks ago.
Lord Nugent of Guildford: My Lords, is not my noble friend aware that the recent announcement of the commissioning of a second Antarctic research vessel to gather information in this context is particularly welcome?
The Earl of Caithness: My Lords, I am grateful to my noble friend. One of the great unknowns is the Antarctic. Developments there could have an enormous effect on climate change, and therefore we need further research.
Lord McIntosh of Haringey: My Lords, we are glad to hear of the Government's interest in monitoring the greenhouse effect. Will the noble Earl add to that by urging his governmental colleagues in the Department of Energy not to overturn the amendment carried by your Lordships at the Committee stage of the Electricity Bill to safeguard the conservation of energy, which is the prime way of preventing the greenhouse effect?
The Earl of Caithness: My Lords, it is one of the ways; however, it is not necessarily the prime way. As the noble Lord will be aware, the Energy Efficiency Office has done, is doing and will continue to do a tremendous job.
Lord Renton: My Lords, do not coal-burning power stations have an unfortunate effect on this matter and should not we therefore be aiming to reduce, and eventually eliminate, the coal-burning power stations as and when economic circumstances permit?
The Earl of Caithness: Indeed, my Lords. Any combustion of a fossil fuel adds to the problem, and coal is worse in that respect than either oil or natural gas. As my noble friend will be aware, we have a rather ridiculous European directive which limits the amount of gas we can burn in large combustion plants.
Baroness Nicol: My Lords, can the Minister explain to the House the reason for the Government's apparent reluctance to contribute to an international fund for the purposes of examining the greenhouse effect? I understand that the idea of such a fund is supported by the United Nations environment programme, to which he has referred, and also by the European Community. However, it appears that the Government are not prepared to support it. Can the noble Earl explain why?
The Earl of Caithness: My Lords, I am not sure to which fund the noble Baroness is referring. However, I can assure the House that if only other governments would commit the same amount of money to research as has this country—we have the only global climate monitoring station outside the United States—we might then see a little more international effort.
The Earl of Halsbury: My Lords, can the noble Earl confirm that during the course of my lifetime the glaciers have advanced and retreated about four times and that there is therefore no need to adopt planning stations?
The Earl of Caithness: My Lords, the noble Earl is absolutely right; indeed, I can confirm that even before he was born the same thing was happening. Some of your Lordships will be aware that when my ancestors, the Vikings, discovered Greenland, it was in fact green.
Lord McIntosh of Haringey: My Lords, in his reply to me the noble Earl referred to the Energy Efficiency Office. Will he be good enough to confirm to the House that the budget of the office has been maintained in real terms and that it will be maintained?
The Earl of Caithness: My Lords, the Energy Efficiency Office's budget this year is over £15 million. It has already generated a high level of awareness through a major publicity campaign and it is right that that effort should now be directed more specifically because the effect of that campaign has already become apparent.
Lord Molloy: My Lords, if I understood the noble Earl correctly, it would appear that the Government have commenced making recommendations to the United Nations. However, can he tell the House whether they will be pursuing the initial move they made, and if so, when?
The Earl of Caithness: My Lords, as the House will be aware, Sir Crispin Tickell made a major speech to the United Nations explaining the Government's view and their wish for a global climate convention. We shall take every opportunity to raise the matter. Indeed, I discussed it last week in Luxembourg with the environment Ministers. It will be raised again at the United Nations environment programme and also at the world climate conference next year.

Business
3 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 one hour and that during the adjournment the Committee stage of the Common Land (Rectification of Registers) Bill and the Report stage of the Licensing (Amendment) Bill will be taken.

Midland Metro Bill
Read a second time, and committed to a Select Committee.
Queen Mary and Westfield College Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Water Bill
3.2 p.m.
The Earl of Caithness: My Lords, 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 Caithness.)
On Question, Motion agreed to.
Clause 15 [Modification by agreement]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 100:
Page 16, line 47, after ("above;") insert—
("() the modification is a modification of a provision of the appointment which relates to the disposal of, or of interests or rights in or over, a company's protected land and is stated in the appointment to be a provision which cannot be modified;").
On Question, amendment agreed to.
Clause 18 [Modification following report]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 101:
Page 20, line 29, leave out from first ("any") to end of line 30 and insert ("provisions of a company's appointment under this Chapter which—

(a) are contained in that appointment for the purposes of section 12(2)(c) above; or

(b) being provisions relating to the disposal of, or of interests or rights in or over, a company's protected land, are stated in the appointment to be provisions which cannot be modified.").

On Question, amendment agreed to.
Clause 19 [Modification by order under other enactments]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 102:
Page 21, line 6, leave out from beginning to end of line 7 and insert ("provisions of a company's appointment under this Chapter which—

(a) are contained in that appointment for the purposes of section 12(2)(c) above; or

(b) being provisions relating to the disposal of, or of interests or rights in or over, a company's protected land, are stated in the appointment to be provisions which cannot be modified.").

On Question, amendment agreed to.
Clause 20 [Orders for securing compliance with certain provisions]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 102ZA:
Page 21, line 25, leave out ("subsection (5)") and insert ("subsections (5) and (5A)").
The noble Lord said: My Lords, in moving Amendment No. 102ZA I should like to speak also to Amendments Nos. 102ZC and 102ZD. Having dealt at some length with the issue of drinking water, the House has now given considerable and necessary attention to the question of the discharge of sewage. The concern which is expressed in these amendments relates to the provisions of Clause 20 and enforcement orders as regards river water and
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drinking water, and also to sewage quality and the degree of enforcement which is to be provided.
In Committee the Government introduced amendments to subsection (5) of Clause 20 which it was claimed—and I have no reason to deny it—met the immediate requirements of the European Commission that our legislation should be in conformity with European directives. We have looked most closely at subsection (5), as amended, and we still feel, whatever the European Commission may say, that the subsection is seriously defective and that further amendments are required. That is the purpose of this series of amendments.
The difficulty is that the director and the Secretary of State are not required under the Bill as drafted to make orders in relation to the sewerage undertaking (either final or provisional orders) if they are satisfied that the contraventions were trivial—we have been over that issue and I do not propose to repeat the argument—or that the company has given and is complying with an undertaking to take all such steps as appears to it to be appropriate. I am summarising the position, but I hope not inaccurately.
In effect that means that the Secretary of State and the director are saying to those who are discharging sewage in excess of the consents which have been granted, that provided they start to take remedial measures no order will be enforced against them, whether it be a final or a provisional order. That is in circumstances where it is already clear that very substantial investment programmes will be required by the sewerage undertakings if we are to secure that the quality of sewage discharge is increased to an acceptable level.
That is by no means a theoretical point. At the opening of the process of privatisation, the Secretary of State invited the sewerage undertakings to make application to him if they wished to be considered for consents to discharge sewage which was worse than the prescribed quality. The process is not complete, but we undersand that already up to 1,000 sewerage works have been the subject of such applications. Moreover, it is clear that the process of putting right the discharge from sewerage works will take a very long time, even if such work were to start straight away, and there is no indication of that.
The Water Authorities' Association is so concerned about the time it will take, and the cost which will be incurred, to bring sewage discharges up to an acceptable level that it has already started to complain about the standards which undertakers may ultimately be required to achieve. An article appearing in today's edition of the Financial Times, which is certainly from internal evidence inspired by the assocation and its members, says that the association has approached the Secretary of State seeking an independent inquiry into the technical needs of the industry, in an attempt to develop a more realistic framework for investment. We can be clear what "more realistic" means: it means a smaller programme for investment. The Water Authorities' Assocation is already starting to claim that, as it says, there is a bandwagon under way, fuelled by European Commission directives, political and

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media pressures, and special interest environmental lobby groups, which is getting out of control. A dreadful thought!
I have not heard the Minister say anything like that. I hope that when he replies to the amendment he will take the opportunity to repudiate such claims. I know that he is engaged in almost daily negotiations with the European Community. I know that he is carrying out those negotiations in good faith. It would be appropriate if he took the opportunity of this afternoon's debate to make it clear that the Government do not share the view expressed on behalf of the Water Authorities' Association that the political and media pressures and the activities of the special interest environmental lobby groups are getting out of control. The water authorities argue that many of the improvements demanded are of dubious benefit and that the cost of achieving them could be out of all proportion to the resulting benefits. The association refers in particular to the kind of tests that would be required with regard to the acceptability of the treatment. The example that it gives is that sewage treatment works must pass all sample tests and not just receive a suitably high average.
What is happening is clear. The considerable public relations effort and financial resources of the Water Authorities' Association are being bent towards the objective of ensuring that not only do we not start to bring our sewage discharges up to an acceptable level, but we never achieve the acceptable level laid down by the European Community. That is why we have to return to the issue of enforcement and the inadequacy of Clause 20(5).
It is a curious idea—is it not?—that the Government should say that they want to have investment programmes to improve sewage treatment; but that while those investment programmes are under way, no action should be taken by government in anticipation of any possible failure of them.
If we are to be convinced that the Government mean business with regard to the improvement of the quality of discharges, we need to know, first, what timetable is to be imposed; and, secondly, what is to be done about apparent compliance—in other words, compliance which takes the first steps, but which does not involve any significant level of investment and is designed merely to put off legal action rather than to achieve improvement. Above all, how is the improvement of quality to be guaranteed if advance notice has been given by government, as it is given by the clause as at present drafted, that no enforcement action will be taken?
I am well aware that the subsection opens with the phrase:
"neither the Secretary of State nor the Director shall be required to make"
an order. I am conscious that means that there is a possibility that, despite the provisions of the subsection, the Secretary of State or the director could make an order.
As drafted, the subsection remains an open invitation to those who wish to lower the ultimate standards of sewage discharge and those who wish
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to approach acceptable standards at as slow a pace as possible, to take advantage of the subsection; to make merely token improvements; to make a token start to the investment programme; and, thereby, to avoid the enforcement procedures which are so necessary if we are to achieve the improvement in the quality of the discharge from our sewage works.
We are pushing a little further in the direction in which we know the Government recognise that they are forced to go. The regulatory procedures are laid down in the Bill. They have gone some way towards reassuring those who are concerned about standards. We do not believe that they go far enough. The amendments are therefore necessary to complete the process. I beg to move.
3.15 p.m.
The Earl of Balfour: My Lords, despite what the noble Lord, Lord McIntosh, has said, I wonder whether his amendment would achieve what he is aiming for. I shall briefly go through it. It is assumed under subsection (5) that the Secretary of State desires to make an order and that under paragraph (b) the company has given an undertaking that it will not breach its discharge consent level. From reading Section 5(A) in Amendment No. 102ZD, which says:
"Nothing in subsection (5)(b) above shall apply in respect of any sewage treatment works which is in breach of its discharge consent level",
I have a feeling that that will allow the undertaker to get out of it. I am not happy with the wording.
Lord Nugent of Guildford: My Lords, it is always interesting to listen to the noble Lord, Lord McIntosh. He speaks with such cogency that I feel more than three-quarters persuaded before I start. I felt strongly that my noble friend the Minister should respond immediately and say, "Yes, of course, we should remove the subsection and the flexibility". I wonder sometime when we are discussing the problems of reducing pollution how much noble Lords can visualise what happens. I was going to say "on the ground", but it is more in the industrial premises which discharge the main toxic effluents into the local sewage works. There are the problems as the effluent comes in, changing perhaps more often than it should because the industrial process sometimes changes and therefore presents different problems for the treatment process in the sewage treatment works. I am referring to the type of problems that the water authorities now—and the water companies in the future—have to contend with. There is the problem of what happens when the final effluent arrives in the river, and all the problems of sufficiently monitoring conditions as they change.
While we all want standards of perfection, we are dealing with a world on the river, as the effluents are discharged, where variation is inevitable. The volume of flow of the river varies from one part of the year to another. In the summer—the dry time such as now—it may be only half of what it is at other times. We are dealing with a whole range of variables. To aim for absolute standards of

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perfection, which would be desirable if they were possible, is not realistic.
If I said to Senor Carlo Ripa Di Meana, the EC Commissioner for these matters, "How do you manage to do this in Italy with your sewage works?", I should be interested to hear his answer. I am certain that his sewage works in Italy do not deal with it. Many of his sewage works carry out no treatment at all. The ones that discharge into the sea do not. I have swum through many such discharges and what I have seen makes it clear to me that there is no treatment of any kind. Italy however is rather an extreme case.
I agree that when we come to a country such as Holland, it is outstandingly efficient. On the other hand, Holland is partially responsible for the Rhine, and look at what flows by there. We cannot look for standards of perfection. There must be an element of flexibility. As I see it, that is what my noble friend is trying to achieve in subsection (5). If it were removed, I think he would be asking the authorities as they are now and the companies of the future to try to achieve the impossible.
I support my noble friend and I hope that he will say that, while he sympathises with the pressure being put on him by the noble Lord, Lord McIntosh, in practice we must try to look at the practicable realities of the situation and a measure of flexibility is desirable. Certainly he and his right honourable friend the Secretary of State will keep the pressure on undertakers always to keep improving, but variability will still be inevitable. Therefore he must have this measure of flexibility. I hope that that is what my noble friend will say.
Lord Renton: My Lords, Clause 20 is very important. It is the clause which enables enforcement of the Bill's provisions. It is therefore right and realistic that, as regards subsection (5), a degree of flexibility is introduced, as has been so clearly explained by my noble friend Lord Nugent who speaks with such great experience of these problems, especially with regard to rivers.
I looked at the amendments which have been tabled by the noble Lord, Lord McIntosh, and which we have been discussing. Like my noble friend Lord Balfour, I was rather puzzled as to whether they achieved their object. But to the extent that they do achieve their object, the difficulty is that they impose absolute stringency without any regard at all for changing circumstances and special conditions which demand a degree of flexibility.
The background to all this, as I understand it, is this. Unfortunately, our country has during our lifetime almost continuously been backward in keeping up to date with the sewage treatment requirements of a growing population, with ever higher standards of living. One does not wish to make too many party points on the Bill because it is essentially a Bill of great public interest and application. However, I must point out that in the late 1970s the then Labour Government made a rather serious cutback in the public funds provided for new sewage treatment works. Although the
1136
present Government have improved the position a good deal, I do not know that we have ever caught up. I doubt that we have.
Surely the reality of the situation is that we should do what is proposed in subsection (5) and say that when the company concerned,
"has given, and is complying with, an undertaking to take"
the necessary steps then a little patience should be exerted by the Secretary of State and the enforcement should not be applied so stringently.
However if these amendments—especially the last one, Amendment No. 102ZD concerning the new subsection (5A)—were to be made to the Bill, quite frankly it would create an impossible position in which the company concerned, the sewerage undertaker, was doing all that it was required to do but nevertheless because of climatic or other circumstances it was unable to reach perfection. In those circumstances, for the Secretary of State to be obliged to use the enforcement provisions is not sensible.
Baroness Blatch: My Lords, the noble Lord, Lord McIntosh, certainly echoes the wishes of the whole House and the public when he speaks of his concern to reduce pollution in the treatment of sewage. Therefore on that point there is no disagreement whatever. What we are talking about is the means by which we achieve those ends. My noble friend Lord Renton has already referred to this. It seems to me that if one addresses the task which the water companies have to undertake—the task of compensating for neglect—it is probably fair to say that there has been neglect by all parties, but particularly during the latter part of the 1970s when the Labour Government made cuts in this very area of the reduction of pollution.
However if one looks at subsection (5)(b) it seems to me also that it is absolutely essential—and the public has a right to expect, and certainly those of us supporting the Bill also expect—that there should be a steady, sustained improvement towards meeting the standards. If I did not misunderstand the noble Lord, Lord McIntosh, he talked about a possible licence to lower standards. I shall not be opposing the amendment on that ground; I believe that there has to be continued improvement in meeting the new standards. Clause 20(5)(b) says that the Secretary of State or the Director has to be satisfied:
"that the company has given, and is complying with, an undertaking to take all such steps as it appears to him … to be appropriate"
in order to continue the improvement. I think that for the first time ever we have properly prescribed standards and an enforcement agency to see that those improvements are brought about. We are in the business of achieving the art of the possible.
We might make the task impossible, both financially, because it is the people who have to pay, and technically, because some of the jobs cannot be achieved technically, without giving some period for that improvement. We should go for the art of the possible and, as soon as possible and as far as is practicable, we should reach the state where we shall not be permitting any breach of the standards.
The Earl of Radnor: My Lords, logistically as well as possibly, a point to do with putting everything to rights straight away—which is what the amendment of the noble Lord, Lord McIntosh, wishes to do—is that people have been pleading for flexibility and a little time. I believe it would be quite impossible logistically to get everything in order straight away. Therefore flexibility will be a necessity. There are not sufficient mechanics, management, machinery or what-have-you to accomplish the job.
3.30 p.m.
The Earl of Caithness: My Lords, in responding to the amendment I am sure it would be a help to the House if I were first to sketch the background in two separate and important respects. The first concerns the general sewerage duties of the undertakers; and the second concerns the Government's policies for dealing with the long-standing problem of poor performance by a proportion of our sewage treatment works.
I turn first to the pattern of legal duties which under this Bill we shall impose upon the sewerage undertakers. Under Clause 67(1)(b), the sewerage undertakers are to have a general duty to make provision, inter alia,
"for effectually dealing, by means of sewage disposal works or otherwise, with the contents of those sewers".
This is the lynch-pin of the Government's sewerage policies and the key mechanism for securing that in the future the responsible bodies achieve and maintain satisfactory overall standards in the performance of their sewerage and sewage disposal function. It is of course a duty subject to the full enforcement powers of the Bill in Clause 20 and elsewhere. Accordingly the protection provided by the improvement programmes referred to in Clause 20(5)(b) are open to them here as on other matters.
But sitting alongside this, to secure proper performance of sewerage functions, there are of course the full provisions of the criminal law, not only re-enacted but extended in Part III, concerning the pollution of water and in particular the proper regulation of discharges of trade and sewage effluent to water. Many might feel that this imposed on the undertakers a sort of double jeopardy. They are liable to the criminal law for the proper quality of discharges from each of their sewage treatment works. But alongside this they also have a statutory duty for the overall proper performance of their sewage disposal functions.
I have to tell the House that this is a formidable combination, and we reflected long and hard whether this degree of double jeopardy was not in fact too onerous. But we attach great importance to the proper control and performance of sewage treatment operations, and we accordingly concluded that it was appropriate. The undertaker will have to achieve an appropriate level of overall performance. This, then, is the first element in the picture which the House should have in mind in making a judgment on the amendment of the noble Lord, Lord McIntosh.
The second element is the history of sewage treatment and disposal. I first preface my arguments with two special comments which are not special
1138
pleading. First, let no one assume that the performance of sewage treatment and disposal in this country is in some way uniquely bad. Indeed, my noble friend Lord Nugent of Guildford referred to the performance of some other countries. In international terms our performance is good. After all, more householders are connected to mains sewerage than elsewhere in Europe; and we treat more of that sewage before disposal than elsewhere. My second remark, in fairness to all those now and in the past involved in this undertaking of fundamental importance to the health of the community, is that control and regulation here is subject to particular difficulty and unpredictability. It is the prey of new housing and other development pressures to which it must respond. And when problems arise, a works cannot simply be closed down. All aqueous effluents involve difficult monitoring and control problems, but general sewerage effluents involve more than any other.
That is the background against which the figures quoted so often by the Opposition must be seen. It is a fact that about 20 per cent. of discharges from treatment works have recently failed to reach their consents standards. My noble friends Lord Renton and Lady Blatch reminded us of the reasons for that. That is not acceptable, and the Government are doing a great deal to tackle the problem, as I shall describe later. But there are also points that the House must bear in mind.
First, 20 per cent. is an outside figure. Some works may have failed to comply only very marginally. Again my noble friend Lord Nugent of Guildford gave some reasons for that; for example, the results of seasonal variations. Secondly, some proportion of the non-compliance is due to infringement of licences by industrial concerns making disposals to sewers, and for which the law rightly says the authority has no responsibility or liability. Thirdly, some proportion is due to unforeseeable accidents; for example, works breaking down, and so on. Accidents should not happen, but it is beyond the gift of man entirely to prevent them.
There is a further consideration which this House must not lose from sight. Aggregate data on the performance of treatment works has only been available for the past three years as a result of the stronger control and administration procedures introduced by this Government when they implemented the Control of Pollution Act. When information is published for the first time, it is easy to assume that in the years before the picture was much better. Any critic would say that, wouldn't he?
However, a responsible Opposition would look for evidence. There is no good evidence to support that. Against it we have the evidence of the major resewering and sewage disposal operations of recent years. Noble Lords, in fairness, should really have in mind all that has been done and is being done by the water authorities in this regard, along the Mersey, Tyne, Tees and elsewhere. All this is by way of background, but it is essential background. It is the background to my saying, as this Government have said firmly in recent years, that performance is not as good as it should be.

1139
What, then, are we doing about it? The noble Lord, Lord McIntosh of Haringey, said he did not know when the work that we have promised would start. I have to say that that really surprised me. As I thought the whole House knew, we have in place a £1 billion programme to bring all non-complying treatment works—so far as it is practicable to do so—into compliance with their consents by March 1992. That is by any standards a major programme and a major investment. I have not the slightest doubt that it will leave this country's performance in this area at a very high level indeed.
It is the case that over the period of this programme, and so long as its requirements are being observed, neither the Government nor, I expect, the NRA will feel it appropriate to initiate legal challenges if the interim consents necessary for works while the necessary improvements are undertaken are being observed. I remark in passing that the allowance of such interim consents is not something new, invented to facilitate privatisation. It is a mechanism of policy which is in place and which has been used for some years past.
This is a proper and sensible approach. What alternative would the critics want? Perhaps we should allow injunctions to close down works entirely and devastate the health and well-being of the communities dependent upon them.
The noble Lord, Lord McIntosh, who is, if I may say so, customarily fair and responsible in such matters, has not said so and would not, I am sure, say so. But he and others should recognise and spell out the implications of what they ask for. Surely, they can only conclude that what we are doing is fair and right.
In sum, what is the position? We are maintaining, and indeed in some ways extending, the overall pattern of legal liabilities in this area. We are requiring the clear problems to be tackled, and making sure that the necessary resources are available. We are taking the minimum necessary steps, through the terms of the consent system, to ensure that those programmes should be implemented.
Before I begin to discuss the amendment, I must tell the noble Lord that I have not read what he quoted to me from the newspapers. I shall take the first opportunity I can to do so. The amendment asks that the proper, due performance by the companies of these programmes shall not be a matter that the Secretary of State can take into account in deciding whether to use his enforcement powers. I put it to your Lordships that that is entirely unreasonable and wholly unjust.
The water authorities now, and the companies in due course, will be undertaking major programmes for the communities' benefit, to remedy what is not some current fault but inadequacy of attention and investment for decades past. In this they deserve, so long as they duly and diligently perform the agreed programmes, to have the gratitude and support of the House. They do not deserve to be exposed to the risk of ambush at every turn by regulatory authorities exercising their powers unreasonably. This is what
1140
Clause 20(5)(b), in its relation to the general sewage disposal duty in Clause 67, secures. It is, I suggest, the minimum that decency can offer.
The regulatory framework for sewage disposal—both the general duties in Clause 67 and the criminal sanctions on pollution control in Part III—are in combination a harsh regime in such an important field, and rightly so. But harshness must be tempered by fairness. That is all that Clause 20(5)(b) achieves. It is the minimum this House can offer.
Lord McIntosh of Haringey: My Lords, I am glad in a way that a number of noble Lords have started by raising the historical record. I am glad of that for two reasons. First, it enables me to apologise to the House, as I have already apologised to the Minister, for a misstatement in a speech which I made last Tuesday. I said then that it was not until 1985 that investment in our sewerage undertakings regained the level it had reached when the Conservative Government came into office. That was incorrect. What I meant to say was that the investment in the sewerage undertakings did not regain the highest level it had enjoyed under a Labour Government until 1985. I believe that in fact it was later than that. I apologise for that error.
Secondly, it enables me to repeat that investment in real terms in improving our sewerage undertakings and in capital works in those undertakings was higher under a Labour Government than it had been under a Conservative Government. That is a statement of fact which ought to be taken into account when we consider the historical record. However, much more important than the historical record are the prospects of improvement in the future. I agree with the Minister that we do not want to have a regulatory regime and an enforcement regime which would force a sewage works to close down entirely. That is not the object of the exercise. However, in the Bill there is a perfectly rational procedure of provisional orders which are designed to secure compliance. Those provisional orders are to be followed by final orders, if they are essential. It is this process, from provisional orders to final orders, which is being ignored by the Government in insisting, or attempting to insist, on the wording of Clause 20.
I make two points about that: first as to the ultimate objective of the investment programme and, secondly, as the noble Baroness, Lady Blatch, mentioned, as to how to get there. The point about the ultimate objective is made very clear, again, by the Financial Times in reporting the views of the water authorities:
"The question the industry is asking is whether some of the billions of pounds required to improve quality to the level deemed necessary could not be better spent elsewhere, either within the industry on alternative infrastructure projects, or on additional health, education or transport services".
In other words they really do not want to do it at all. One industry chief is quoted as saying:
"Consumers are being driven towards very high expectations … we will be getting marginal benefits for a very substantial increase in costs … we are moving away from common sense".
"Mr. Ridley and Mr. Michael Howard, water minister, are thought to be sympathetic to some of the arguments being put forward, but feel increasingly hemmed in, particularly by Brussels".

1141
There are legitimate grounds to doubt whether the water industry and the sewerage industry really want to get involved in improvement and the investment required at any time, let alone at a time which we and the public would consider acceptable.
In his speech the Minister referred to the compliance programme ending in the run-up to March 1992. It is my understanding that some 30 sewage treatment plants will still be breaking the sewage consents after March 1992 and that those 30 include some of the largest in the country. If the Minister is able to reassure me and the House that no significant number of sewage treatment plants are set to break the March 1992 deadline, that will be very helpful.
None of this has dented in any way the arguments which we put forward on these amendments. Let us defer for the moment the issue of whether the companies concerned have any real desire to undertake the expenditure and to achieve the improvements which are necessary. The clause as drafted does not meet the Government's own objectives. It does not secure that the progress from provisional order to final order is met in these cases. It provides far too large a loophole, in subsection (5)(b), to the process of enforcing compliance. What it says in effect is that as long as the water company declares that it will have an investment programme and makes a start on it—and how much of a start is not defined—the enforcement procedures will not be in train.
That is what is not good enough. If we have enforcement procedures they ought to be used. The Secretary of State and the director ought to be capable of setting them in train. It is a matter of logic as much as of anything else that we should insist on these amendments and that we should improve the wording of the Bill and of the enforcement procedures in the Bill. I commend the amendments to the House.
3.43 p.m.
On Question, Whether the said amendment (No. 102ZA) shall be agreed to?
Their Lordships divided: Contents, 98; Not-Contents, 118.

DIVISION NO. 1

CONTENTS

Addington, L. [Teller.]

Cledwyn of Penrhos, L.

Airedale, L.

Cocks of Hartcliffe, L.

Allen of Abbeydale, L.

David, B.

Amherst, E.

Davies of Penrhys, L.

Ampthill, L.

Dean of Beswick, L.

Ardwick, L.

Dormand of Easington, L.

Attlee, E.

Elwyn-Jones, L.

Aylestone, L.

Ennals, L.

Birk, B.

Ewart-Biggs, B.

Bonham-Carter, L.

Ezra, L.

Boston of Faversham, L.

Falkender, B.

Bottomley, L.

Fisher of Rednal, B.

Briginshaw, L.

Fitt, L.

Broadbridge, L.

Flowers, L.

Brooks of Tremorfa, L.

Gallacher, L.

Bruce of Donington, L.

Galpern, L,.

Burton of Coventry, B.

Graham of Edmonton, L.

Callaghan of Cardiff, L.

Gregson, L.

Carmichael of Kelvingrove, L.

Grey, E.

Grimond, L.

1142

Hampton, L.

Peston, L.

Hanworth, V.

Phillips, B.

Harris of Greenwich, L.

Ponsonby of Shulbrede, L. [Teller.]

Henderson of Brompton, L.

Hooson, L.

Rathcreedan. L.

Howie of Troon, L.

Rea, L.

Hunt, L.

Ritchie of Dundee, L.

Jay, L.

Ross of Newport, L.

Jeger, B.

Sainsbury, L.

Jenkins of Hillhead, L.

Saint Brides, L.

Jenkins of Putney, L.

Seear, B.

John-Mackie, L.

Serota, B.

Kearton, L.

Shackleton, L.

Kennet, L.

Shepherd, L.

Kilbracken, L.

Somers, L.

Leatherland, L.

Soper, L.

Listowel, E.

Stallard, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B.

Stoddart of Swindon, L.

Lloyd of Kilgerran, L.

Taylor of Blackburn, L.

Lockwood, B.

Tayor of Mansfield, L.

Lovell-Davis, L.

Tordoff, L.

McIntosh of Haringey, L.

Turner of Camden, B.

McNair, L.

Underhill, L.

Mason of Barnsley, L.

Wallace of Coslany, L.

Mayhew, L.

Walston, L.

Molloy, L.

White, B.

Monson, L.

Williams of Elvel, L.

Mulley, L.

Willis, L.

Nicol, B.

Winchilsea and Nottingham, E.

Ogmore, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hesketh, L.

Allerton, L.

Hives, L.

Arran, E.

Holderness, L.

Balfour, E.

Home of the Hirsel, L.

Bellwin, L.

Hood, V.

Beloff, L.

Hooper, B.

Belstead, L.

Hylton-Foster, B.

Blatch, B.

Ironside, L.

Blyth, L.

Jenkin of Roding, L.

Boyd-Carpenter, L.

Johnston of Rockport, L.

Brougham and Vaux, L.

Joseph, L.

Bruce-Gardyne, L.

Kimball, L.

Butterworth, L.

Kinloss, Ly.

Caithness, E.

Kinnaird, L.

Campbell of Alloway, L.

Layton, L.

Campbell of Croy, L.

Long, V.

Carnock, L.

Lovat, L.

Clitheroe, L.

Lyell, L.

Cockfield, L.

McAlpine of Moffat, L.

Coleraine, L.

McAlpine of West Green, L.

Congleton, L.

Mackay of Clashfern, L.

Constantine of Stanmore, L.

Macleod of Borve, B.

Cottesloe, L.

Malmesbury, E.

Cranbrook, E.

Mancroft, L.

Cullen of Ashbourne, L.

Margadale, L.

Davidson, V. [Teller.]

Marley, L.

De Freyne, L.

Maude of Stratford-upon-Avon, L.

Denham, L. [Teller.]

Dilhorne, V.

Merrivale, L.

Dudley, B.

Mersey, V.

Dundee, E.

Middleton, L.

Eccles, V.

Milverton, L.

Eden of Winton, L.

Monk Bretton, L.

Effingham, E.

Montgomery of Alamein, V.

Elibank, L.

Munster, E.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Elliott of Morpeth, L.

Nelson, E.

Erroll of Hale, L.

Newall, L.

Faithfull, B.

Norfolk, D.

Foley, L.

Norrie, L.

Fraser of Kilmorack, L.

Nugent of Guildford, L.

Gainford, L.

Orkney, E.

Gibson-Watt, L.

Oxfuird, V.

Gray of Contin, L.

Pender, L.

Hailsham of Saint Marylebone, L.

Penrhyn, L.

Peyton of Yeovil, L.

Halsbury, E.

Plummer of St. Marylebone, L.

Henley, L.

1143

Porritt, L.

Strange, B.

Portland, D.

Strathclyde, L.

Quinton, L.

Strathcona and Mount Royal, L.

Radnor, E.

Rankcillour, L.

Strathspey, L.

Rawlinson of Ewell, L.

Teviot, L.

Renton, L.

Thurlow, L.

Seebohm, L.

Trafford, L.

Sharples, B.

Trefgarne, L.

Shaughnessy, L.

Trumpington, B.

Skelmersdale, L.

Westbury, L.

Slim, V.

Wynford, L.

Stanley of Alderley, L.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.51 p.m.
Lord Gallacher Lord Gallacher moved Amendment No. 102ZB:
Page 21, line 38, after ("person") insert ("other than an undertaker").
The noble Lord said: I wish to move Amendment No. 102ZB on behalf of my noble friend Lord McIntosh of Haringey. This amendment addresses the provision of Clause 20(3) whereby, in deciding whether to issue a provisional order, the Secretary of State or the director must have regard to the extent of likely loss or damage to any person as a result of any continued non-enforcement. The amendment is tabled to clarify that the purpose of the subsection is to protect consumers, the environment or others outside the water industry who may suffer loss as a result of a failure to comply. The amendment specifically exempts any loss or damage to an undertaker as a consideration in deciding whether to issue a provisional order.
I hope that the Government will indicate that the provision is not meant to be one which paralyses action while loss or damage to all parties is considered, but is intended as a spur to action to remove loss or damage from innocent parties at the earliest possible date. The amendment would remove the provision whereby information is to be excluded from the director's register where its inclusion would be damaging to the commercial interests of any person.
Under subsection (3) as it stands, the Secretary of State has the power to direct the director not to enter a particular provision in the register for that reason. At the Committee stage, when asked to bring forward examples of that, the Government accepted that they would consider the issue and hoped to bring forward an amendment if no example were found to justify the exclusion. It is now hoped that the Government will accept the amendment, having found no example. If that should be so, clearly it would be welcome to us. I beg to move.
Lord Hesketh: My Lords, the Secretary of State or the director are required by subsection (3) of Clause 20, in deciding whether to make a provisional order instead of a final order, to have particular regard to the extent to which any person is likely to sustain loss or damage in consequence of a contravention of a condition or statutory requirement. The effect of the amendment is to exclude from that consideration whether the contravention will result in the water or sewerage undertaker sustaining loss or damage in
1144
consequence of a contravention of a condition or statutory requirement.
I hope that it will help the noble Lord if I explain the purpose of the subsection. A provisional order is one that can be brought into force very quickly where urgent action is required. Under the provisions of Clause 22(4) and 22(5), failure by an undertaker to comply with a final or a provisional order may be the subject of civil proceedings brought by any person who is affected by a contravention of the order and who consequently sustains loss or damage.
The fact that compensation may be sought in relation to a provisional order means that, where such an order has been made, the appointed company will be immediately liable to an action for damages if it fails to comply with the order. That is why Clause 20(3) requires the Secretary of State or the director, in deciding whether to make a provisional order, which would come into force very quickly, or a final order, which takes some time because it is subject to the procedures in Clause 21, to have particular regard to the extent to which any person is likely to sustain loss or damage in consequence of a contravention of a condition or statutory requirement enforceable under Clause 20.
I understand the concern of the noble Lord, Lord Gallacher, in moving the amendment. It is to exclude from the consideration of the sort of enforcement order to be made any consideration of whether the water or sewerage undertaker concerned will sustain loss or damage as a consequence of a contravention of a condition or a statutory requirement.
I hope that I can assure the noble Lord that we believe that his well intentioned amendment is not appropriate. Even if the costs of correcting the breach which will be borne by the company could be regarded as a loss—which would not be a correct intepretation of the subsection—they would flow not from the continuance of the breach, but from the costs of remedying the breach. Secondly, as I have already explained, Clause 20(3) concerns a relevant consideration as to the choice between making a final enforcement order or a provisional enforcement order. The undertaker will be the subject of an enforcement order in any event. The Secretary of State or the director cannot decide not to make an enforcement order. Even if it made a material difference to the finances of a company whether an enforcement order came into force quickly or after the lapse of, let us say, six weeks or so, and the Secretary of State misinterpreted the section in the way that is suggested, it would clearly be an irrelevant consideration for him to take into account the effect of one enforcement order compared with another on the finances of the company. Finally, his decision would be liable to be struck down by judicial review. For those reasons, I hope that noble Lords will be able to resist the amendment.
Lord Gallacher: My Lords, I thank the Minister for the detailed reply that he has given to me on this amendment. It is only truthful to tell the House, that in part, I understood and that, in large measure, I did not understand. In those circumstances therefore, I

1145
think that the sensible thing for me to do is to take away the reply, study it and decide whether or not the assurances given by the Minister are satisfactory in the context of what we are seeking to do through this amendment. If they are satisfactory, nothing further need be done. If it is my view that something further needs to be done, there may be an opportunity at the final stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 102ZC and 102 ZD not moved.]
Baroness Birk Baroness Birk moved Amendment No. 102A:
Page 23, line 1, leave out ("or 9") and insert (", 9 or 10").
The noble Baroness said: My Lords, in moving this amendment, I shall speak also to Amendment No. 102B.
These are very simple and, I believe, non-controversial amendments. All they do is make the code of practice enforceable under Clause 10 by the Secretary of State or the director general through the appointment of the companies in Clause 20. In the same way that Clauses 8 and 9, which cover environmental duties, are enforceable under Clause 20, so should Clause 10 make the code of practice legally enforceable. I beg to move.
4 p.m.
The Earl of Arran: My Lords, the code of conservation, access and recreation, will give practical guidance on how the undertakers should carry out their statutory environmental duties in Clauses 8 and 9. Such guidance cannot be couched in the precise legalistic terms which would be required if the substance of the code were to give rise to legal obligations enforceable by the Secretary of State. For those noble Lords who wish to check this for themselves there is a draft copy of the code in the Library of the House. It is some 30-odd pages long, and consists more of suggestions than prescriptions. That does not of course mean that it is not important guidance, and the House has decided, with the Government's full agreement, that it should be subject to negative resolution of both Houses.
While we do not think that these amendments can be accepted, because, as I have said, the subject matter of the code necessarily lacks the exactness whch would be needed if it were to give rise to legally enforceable obligations, this in no way means that the code can be ignored by the undertakers. It must be quite clearly understood that their statutory conservation, access, and recreation duties in Clauses 8 and 9 are enforceable by the Secretary of State under the clause we are discussing. As a consequence of Clause 10(2) he must take into account breaches or likely breaches of the code in the exercise of those enforcement powers.
With that explanation, I ask the noble Baroness to withdraw this amendment.
Baroness Birk: My Lords, perhaps before he sits down the Minister can clarify one point. He said that the code cannot be ignored by the undertakers. He also explained why the Government do not want
1146
to make the provisions legally enforceable and mentioned acceptance of the amendment moved by the noble Lord, Lord Greenway, last Thursday. I should have thought that that would have made these amendments even more acceptable because they are in the same line of thinking.
The noble Earl said that the code cannot be ignored but in what way will the Government enforce it? Will it be left as just a very loose set of guidance notes in the hope of earning the goodwill of the undertakers? That does not seem to make very good sense to me.
The Earl of Arran: My Lords, with the leave of the House, perhaps I may just repeat that as a consequence of Clause 10(2) the Secretary of State must take into account breaches or likely breaches of the code in the exercise of these enforcement powers. My point about the draft code is that the provisions should not be too rigid, too limiting and imprisoning; rather they should be flexible and sensitive to any new requirements that may be needed. It is a draft for practical guidance.
Baroness Birk: My Lords, I feel that that answer is very unsatisfactory but I shall take it away and consider very carefully what the Minister has said. I shall then decide how to proceed at the next stage. I do not think that his remarks tie up with the contents of the other clauses of the Bill. They make the code of practice seem an even weaker vessel than we had feared before. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 102B not moved.]
Clause 23 [Special administration orders in relation to water or sewerage undertakers]:
Lord Hesketh Lord Hesketh moved Amendment No. 103:
Page 26, line 30, leave out from ("and") to second ("the") in line 31 and insert ("in a manner which protects").
On Question, amendment agreed to.
Schedule 5 [Transitional Provision on Termination of Appointments]:
Lord Hesketh Lord Hesketh moved Amendment No. 104:
Page 207, line 41, leave out ("by means of) and insert ("in accordance with").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 105:
Page 208, line 19, leave out sub-paragraph (7) and insert—
"(7) For the avoidance of doubt, it is hereby declared that the transfers authorised by paragraph (a) of sub-paragraph (4) above include transfers which, by virtue of that paragraph, are to take effect as if there were no such contravention, liability or interference with any interest or right as there would be, in the case of a transfer or assignment otherwise than in accordance with a scheme under this Schedule, by reason of any provision having effect (whether under any enactment or agreement or otherwise) in relation to the terms on which the existing appointee is entitled or subject to the property, right or liability in question.").
On Question, amendment agreed to.
Schedule 6 [Special Administration Orders]:
The Earl The Earl of Arran moved Amendment No. 106:
Page 211, line 13, leave out from ("to") to end of line 15 and insert ("a power conferred by the company's memorandum or articles of association shall be deemed to include a reference to a power conferred by a local statutory provision or by virtue of the company's holding such an appointment.").
The noble Earl said: My Lords, on behalf of my noble friend, I should like to move Amendment No. 106. Where a special administration order is in force Schedule 6 to the Bill applies and modifies sections of the Insolvency Act 1986. Paragraph 4 of Schedule 6 relates to Section 14 of the Insolvency Act. The amendment proposed is technical and clarifies the reference to powers conferred by the company's memorandum and articles of association and local statutory provisions. I beg to move.
On Question, amendment agreed to.
Clause 25 [Government financial assistance where special administration orders made]:
Lord Hesketh Lord Hesketh moved Amendment No. 106A:
Page 28, line 45, after ("Act") insert—

("(a) the terms and conditions on which a grant is made to any company under this section may require the whole or a part of the grant to be repaid to the Secretary of State if there is a contravention of the other terms and conditions on which the grant is made; and

(b)").

On Question, amendment agreed to
Clause 29 [Mergers of water or sewerage undertakings]:
Lord Hesketh Lord Hesketh moved Amendment No. 107:
Page 34, line 37, at end insert—
("(10) if the Secretary of State considers that it is appropriate for subsection (3) above to have effect with a reference in paragraph (b) above to a different amount, or for the condition set out in that paragraph to be modified in any other respect, he may, in relation to mergers after the coming into force of the regulations, by regulations make such modifications of that paragraph and, for that purpose, of the other provisions of this section as may be prescribed.").
The noble Lord said: My Lords, this amendment is concerned with the criterion for automatic reference to the Monopolies and Mergers Commission of mergers of water and sewerage undertakers under Clause 29 of the Bill.
Subsection 3(b) of Clause 29 requires a merger reference to be made on the basis of the asset value test specified in Section 64 of the Fair Trading Act 1973. This amendment is designed to enable the Secretary of State to make regulations to fix the threshold level for water mergers independently of changes to the 1973 Act criterion; or to change the conditions for automatic reference, if he considers this to be appropriate.
The purpose of the special water provisions is to safeguard the ability of the Director General of Water Services to compare the relative performance of water companies by ensuring that there is an adequate number of independently owned water enterprises.
On reflection we believe that linking the water merger reference criterion to that specified in the Fair Trading Act may not be appropriate for all time. For the moment, we consider the £30 million asset value test to be appropriate. It ensures that companies not already vulnerable to reference under the 1973 Act are not subject to reference under the special water mergers regime. It also ensures that there is an adequate number of water enterprises in independent ownership of the director general's purposes. We are concerned however that future changes to the Fair Trading Act thresholds, though in general justified, may, if applied also to water mergers, undermine the objectives of the Bill's provisions.
There is also the possibility that the asset size test for water merger references may in the future become inappropriate. There may for example be significant fluctuations in asset values so that a change to some other criterion might be considered more appropriate.
The amendment enables the Secretary of State to make regulations to fix the asset size threshold at a level different from that in the Fair Trading Act, or to change the basis of the criterion for water merger references, if he considers it appropriate. This provides a sensible safeguard against future changes which might undermine the purpose of the water mergers provisions. I beg to move.
Lord McIntosh of Haringey: My Lords, clearly it must be right that there should be a degree of flexibility in setting the reference criteria. On that basis I do not think that we would oppose the amendment. However, there are two directions in which the criteria may be varied; namely, upwards or downwards. In other words one can make the powers of the Monopolies and Mergers Commission more or less effective or more or less stringent.
When we considered a comparable matter in Committee, the noble Lord, Lord Elliott of Morpeth, expressed concern about the £30 million asset value criterion as it applied to statutory water companies. I believe that his concern was that the £30 million had been set at too low a level and would bring too many statutory water companies within its ambit. My concern is that we might land up with too high a level and find ourselves unable to resist creeping amalgamation and further larger and more powerful private monopolies.
If the Minister is able to help on this matter, I should like from him some indication as to the intention of the Secretary of State. Does the Secretary of State intend that the reference criteria shall be higher or lower than under the 1973 Fair Trading Act?
Lord Hesketh: My Lords, the straightfoward answer to that question is neither. It is for the purposes of comparison—as I explained when I moved the amendment—that we wish to keep flexibility. If, for instance, one had a state of affairs where the assets reduced greatly, then the turnover might be by far the more applicable way to judge it. That is the point. I am entirely genuine in saying to the noble Lord, Lord McIntosh that we are not

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seeking to move such a provision. We are seeking to provide in the Bill the means to do so if it were appropriate.
On Question, amendment agreed to.
Clause 31 [The Director's register]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 108:
Page 36, line 23, leave out ("or the commercial interests of any person").
The noble Lord said: My Lords, this amendment to Clause 31 relates to the director's register. That is a register, which has to be maintained for public purposes, of appointments, terminations, directions, consents, determinations given, provisional and final orders for enforcement under Clause 20 and undertakings given to the Secretary of State for the purpose of avoiding provisional or final enforcement orders. It comes back to the substantive amendment that we were discussing a few moments ago.
When we considered this matter in Committee, we argued that the Secretary of State ought not to have the right to direct the exclusion from the register of such matters that might be against the commercial interest of any person. It is certainly correct that if it is against the public interest, it ought not to be excluded from the register. But if the register is to have any effect, it must be for the public interest and not for the commercial interests of any persons. In this case "persons" largely refer to water and sewerage undertakings. When we put this question the Government were on the whole sympathetic to the idea and undertook to investigate whether there could be any damage if our amendment or a comparable amendment were to be accepted.
We are glad to understand that the Government have found that there are no reasons why this amendment should not be accepted. It is in that confidence that I commend it to the House.
The Earl of Arran: My Lords, as the noble Lord, Lord McIntosh, said, we debated a similar amendment in Committee when indeed I undertook to reconsider the ambit of the subsection. The noble Lord, Lord McIntosh, agreed to withdraw his amendment to allow the Government to reconsider the provisions of the subsection.
We have considered carefully the noble Lord's case and we accept that the words deleted by the amendment are unnecessary. We are therefore now pleased to commend this amendment to your Lordships.
On Question, amendment agreed to.
Clause 32 [Duty of undertakers to furnish information to the Secretary of State]:
4.15 p.m.
Lord Hesketh Lord Hesketh moved Amendments Nos. 108ZA and 108ZB:
Page 36, line 44, after ("Chapter") insert ("and, in relation to any time before the transfer date, of any statutory water company within the meaning of the 1973 Act").
Page 36, line 46, after ("with") insert (", or with any proposals relating to,").
The noble Lord said: My Lords, in moving Amendments Nos. 108ZA and 108ZB I speak also to Amendment No. 171B. These are technical amendments designed to make Clause 32 comprehensive. They will ensure that the Secretary of State can obtain information on any proposals relating to the carrying out of the functions of the water undertakers in advance of the transfer date.
On Question, amendments agreed to.
Clause 37 [General duty with respect to water supply]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 108ZC:
Page 40, line 8, after ("available") insert ("at the same level of charge for the same level of service in accordance with section 76(3) below)").
The noble Lord said: My Lords, in moving Amendment No. 108ZC I speak also to Amendment No. 113.I apologise to the House that this grouping has not appeared on the printed list. This was caused by the fact that the noble Lord, Lard Stanley of Alderley, who is responsible for Amendment No. 113, was in a train stuck at Rugby this morning. He was not here in time to give his agreement to something that he and I had discussed last week; namely, that the two amendments should be considered together.
The reason for these two amendments will be obvious. Amendment No. 108ZC clarifies the fact that the general duty with respect to water supply extends to the provision of supply at a standard level of service for a standard price across the country. The amendment in the name of the noble Lord, Lord Stanley, to which I have added my name, makes necessary, indeed essential, the further point that for domestic consumers there should be no difference in the charging clause of the Bill—that is, Clause 76 and the surrounding clauses.
This matter does not arise only on this Bill. It arose when the Committee considered the Electricity Bill last Monday. It is a matter of principle that the supply of water, like the supply of electricity, will be considered to be a public service even after privatisation. Amendments Nos. 108ZC and 113 do not in any way question the fact of privatisation. That is the Government's intention and this is not a wrecking amendment seeking to damage that.
However, it will be commonly agreed that in most people's understanding the issue of whether the undertaking is privately or publicly owned is not all that important. People feel instinctively that wherever they live electricity ought to be at the same price under privatisation as under public ownership; and that the same should apply for water as applies, for example, to the postal service. Perhaps a better example than the postal service—which is publicly owned—is other energy supplies where there is a standard price per unit. Nobody is saying that water prices shall under all circumstances be the same for everybody. At the moment water prices are not the same for everybody because they are based on rateable values. Rateable values will no longer be available when the domestic rating provisions are removed in England and Wales in 1990. But the

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Government have foreseen other ways of charging for water. We agree that those should continue.
The issue of metering is not raised here. If there are differences between one local authority area and another on the community charge basis, and if anybody feels aggrieved by that after the passage of this Bill, or after the passage of these amendments, then he has the option of metering his water supply. The same will apply under these amendments as in the Bill as drafted. However these amendments exclude something that is instinctively objectionable to a very large number of ordinary people: the possibility that water supplies, like electricity supplies, in rural areas in particular should be charged at a higher price than water supplies in any other area.
Nobody is denying that the cost of supplying in rural areas may be higher than the cost of supplying in other areas. That is a matter of fact. We know that there are variations in the cost of supply. But it has been the practice as regards public utilities that differences in the cost of supply are evened out. Those who happen to live in rural areas ought not to suffer from differences in the cost of supply.
If the principle of equal charging throughout the country had not been accepted for electricity and water, it is difficult to imagine that the programme of rural electrification and rural connection of water supply to a wider grid would have taken place. If there had been no common standard of charging for electricity or water, then the burden on people living in rural areas of connection to a national grid or to the public water supply would have been too great and the quality of life in our rural areas would have suffered very seriously as a result.
To allow the possibility of returning to differential charging for water in rural areas would be an injustice and would be thought to be an injustice by many thousands of people living in rural areas. It ought not to be permitted. The amendment that I have proposed and the amendment in the name of the noble Lord, Lord Stanley, will secure that it will not happen. I beg to move.
Lord Stanley of Alderley: My Lords, as I understand it, the amendment of the noble Lord, Lord McIntosh, must be grouped with the one that is in my name and in the names of the noble Lord, Lord Ezra, and the noble Earl, Lord Shannon. It is a paving amendment. I am sorry that I have rushed your Lordships on this, but I cannot be responsible for British Rail having a signal failure at Rugby.
The purpose of my amendment, which is linked with this, is that it is to ensure, as the noble Lord, Lord McIntosh, has said, that the disadvantaged rural user of water in any water plc should be charged the same charge as his more fortunate neighbour, as has been the practice in the past. I have altered my amendment to match a similar one that I introduced at Committee stage to take account of the view of my noble friend Lord Renton that it should deal only with domestic consumers.
My reasons for asking your Lordships' support are many, but my main reason is the same as that of the
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noble Lord, Lord McIntosh, that I stated a week ago today in debate on the Electricity Bill. I believe most passionately in preserving small local communities because they contribute so much to our national wellbeing in character and stability. That is more than recognised on the other side of the English Channel.
Since the Committee stage, I have corresponded with my noble friend Lord Caithness to see whether he could meet my point. Although, as is his nature, he has replied sympathetically, he has sadly been unable to do so: hence my amendment. My noble friend raised, quite rightly, some technical matters in his letter and on the Floor of the Committee. I hope he will not raise them again, because I do not believe they are well founded and, anyway, they might irritate me, which I am sure he does not for one minute want.
There are just two points which I should counter before my noble friend has a go at me. One was partly dealt with by the noble Lord, Lord McIntosh: that is the problem of different rateable value areas. One might feel aggrieved that the chap next door in a different rateable area had a higher or a lower rate. A high rate might encourage one to put in a meter, which is exactly what I believe the Government want. I am not complaining that if someone, perhaps in a larger house, is using more water, that he has to pay more before metering comes in. That is fair because in a larger house more water is likely to be used. There is always the possibility of putting in a meter.
At Committee stage my noble friend conceded in a reply to my noble friend Lord Wise that it will be possible to charge different rates for different areas in the same plc. He gave reasons why it would not happen. Indeed, he, like my honourable friend Mr. Howard in another place, expressed the same hope that these charges would not be differential. In reply to a similar question, my honourable friend said:
"Were the anxieties expressed by my honourable friends…well-founded, I would share them. I represent a rural constituency and the interests of my constituents would be at stake".—[Official Report, Commons; 21/2/89; col. 1263.]
We are all on the same side, or I hope we are, but somehow we do not have it quite right. The important point is that it is your Lordships' duty to legislate not on hopes and "ifs", but to legislate on facts. The fact is that water public liability companies will be able to charge differently. The fact is that they will be driven by profit and the director general will have no power to stop them because of Clause 7(3)(a), which I need not repeat to your Lordships but which gives a prior possibility to consider profitability before service.
As I see it, I am at one in principle with my noble friend on the Front Bench and with my honourable friend in another place. I merely wish to put their hopes on the face of the Bill, so ensuring that all are treated equally in terms of price for water. I hope your Lordships will agree that provision of water is a real necessity for life.
Lord Ezra: My Lords, the noble Lords, Lords McIntosh and Lord Stanley, have now touched on what I think is one of the most serious issues in this

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important Bill that we have embarked on. The Bill will transfer public utilities and a vital service into private utilities. It is for that reason that the Government have put in place, and we have debated in great depth, various protective measures—a highly regulatory system. This is a vital service which will still be run on a monopolistic basis.
Here we have a possible loophole because Clause 7(4), to which the noble Lord, Lord Stanley, referred, would make it possible in theory—whether in practice or not is another matter—for rural inhabitants to be charged the full cost of getting water supplies to them. That would seriously worsen their present position. We had a similar debate, as your Lordships who were involved will recall, on the Electricity Bill. There exactly the same issue arose and the vote at the end was very close run.
I believe that we must demonstrate very clearly that, if it is the practical intention not to discriminate against rural users of water, then that intention should be clearly demonstrated on the face of the Bill. We have been told on more than one occasion that while the wording of the Bill has been fairly vague, the intention behind it is clear. However, Ministers change, governments change, administrators and boards of companies change. If it is generally considered by this House that there should not be discrimination against people located in rural communities, I submit to your Lordships that the provisions for their water supply should be stated very clearly so that there is not the slightest doubt about it.
4.30 p.m.
Lord Trafford: My Lords, I have great sympathy with the amendments and the intention behind them, which is the elimination of discrimination. I accept what my noble friend Lord Stanley and the noble Lords, Lord Ezra and Lord McIntosh, said. Where I am left somewhat confused is whether this will be the effect of these amendments. Underlying the amendments has been the intention to protect against discrimination rural consumers of water. If the amendments were to be put on the face of the Bill as I read it, it is possible that the people who would then be disadvantaged are the urban communities. That is a risk that we have to bear in mind. If the purpose of the amendments is to remove discrimination on the cost of water supply, it is not much good removing it from rural consumers and handing it over excessively to urban consumers. That appears to be a possibility in the light of the wording of the amendments.
I am not against the idea of trying to eliminate discrimination. I also heard the comments made in Committee and elsewhere about the safeguards and monitoring and the powers of the director general to carry them out. However, I have a strong feeling that somewhere and somehow the lack of discrimination should be emphasised.
In view of the variation in rateable values my concerns are not the same. I do not wish to reopen the argument about metering versus flat rate charges. However, it cannot be fair to base the charge for water on a property, however that is charged, until we know how much each person consumes. The
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water consumption of two people in two properties side by side may be very different.
I accept that kind of differentiation in respect of direct charges. However, leaving out the question of monitoring the exact amount consumed, if one wishes to remove discrimination it is not much good passing it from one group of consumers to another. That is my anxiety. When one puts together the duties under Clause 7 and the wording of the amendments I believe that that could be the possible consequence of the amendments and I felt it right to express my anxieties to the House.
Lord Renton: My Lords, this is an important matter which has had an interesting evolution in our proceedings. It began when my noble friend Lord Stanley of Alderley, supported from both sides of the House, tried to achieve a greater uniformity of charges throughout rural areas. For example, it would mean that all farmers, factories and so forth must be charged the same for thousands of gallons on a metered supply.
It appeared to me that those who were really important and most vulnerable in rural constituencies were the domestic consumers. Today my noble friend Lord Stanley of Alderley has tabled an amendment which covers their position precisely. In Amendment No. 113 he does not limit the issue to the rural consumers because it relates to all domestic consumers in a particular area.
There is an obvious desire in all parts of the House for domestic consumers to be treated equally and not to be discriminated against. Therefore I hope and expect that my noble friend on the Front Bench will be with us at least in spirit. As my noble friend Lord Trafford has wisely pointed out, it is a question of taking on board the fact that, although we are anxious about the rural consumers, the position of urban consumers is deserving of equally careful consideration.
I do not know whether Amendment No. 113 is practicable. If it is I should like to see it accepted by the Government. With respect to the noble Lord, Lord McIntosh, I believe that if we are to pass amendments relating to charges it is better that we should do so by amending Clause 76, dealing specifically with charging powers, than by amending Clause 37 as he has proposed, dealing with the general duties of undertakers. It is nearer to the point to deal with the matter as an amendment to Clause 76; that is, if either way is the right way.
Noble Lords will be interested to hear the comments of my noble friend on the Front Bench. However, it would be unfortunate—I should like to be political for one moment—because it could lose the Government a large number of votes if in addition to the increase in charges which are likely to take place in many areas (inevitably and properly so, because so much has yet to be achieved in attaining the right water quality) there is a feeling of injustice and discrimination within any particular area. In those circumstances the number of votes lost may be considerable.
Baroness White: My Lords, far be it from me to worry myself unduly about the number of votes

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which may be lost by the party opposite. However, I wish to make a point which perhaps has not been fully understood by the noble Lord, Lord Trafford. Generally, it is true that the distribution costs of water in a thinly populated rural area are considerably higher per consumer than those in a thickly populated urban area.
In the Principality of Wales we have the ironic situation that if one lives on the shore of Lake Vyrnwy which supplies Liverpool, or in the Elan Valley which supplies Birmingham, it is probable that one is already paying a higher water charge than if one lived in either of those great cities. As the noble Lord, Lord Stanley of Alderley, has said, it is most important that we should try to protect and sustain the smaller rural communities. They have enough problems as it is with agriculture and with incomers putting up the price of houses without having extra burdens for water. It is almost on their doorstep but they could be charged much more than people in other areas.
I do not wish to detain the House but it is important to recognise these genuine problems and some of the reasons for them. In Wales we have the same problems with transport and water. The costs of distribution are much higher per consumer because it is a thinly populated area.
I very much regetted the fact that the noble Lord, Lord Stanley, lost by only two votes his amendment dealing with similar issues in the Electricity Bill. Surely, however strong our feelings may be we must recognise that electricity is open to some kind of competition and one may have a possible choice. However, in respect of water there is no choice. Water is an absolute necessity for all human beings and there is a complete monopoly. Therefore I hope that the House will see fit to accept Amendment No. 113.
The Earl of Radnor: My Lords, I support the amendment and I take up the words of my noble friend Lord Trafford. My reason for supporting it has been repeated again and again: it is to support rural communities which are distant, waning, and to some extent under pressure. Although an element of subsidy is creeping in it must be only small because basically we are an urban country. Our rural population has diminished and is continuing to do so. An even rate must be charged across urban areas and rural communities. The amendment is worthwhile and I give it all my support.
Lord Peyton of Yeovil: My Lords, I apologise to the noble Lord, Lord McIntosh, because I was not present when he moved the amendment. However, I hope he agrees that that does not prevent me from giving it my support, albeit briefly. I was encouraged to hear my noble friend Lord Renton say that he was confident that our noble friend on the Front Bench was with us in spirit. That carries me some of the way. It depends upon what kind of spirit is being talked of. I hope that my noble friend's spirit will be shown in tangible form this afternoon in his response to this very important amendment.
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My noble friend Lord Renton said that he thought that the Government should accept this amendment if it was practicable. It is not for me to judge whether the amendment is practicable or impracticable, but, if that is the Government's objection to it, then the noble Lord, Lord McIntosh, having moved the amendment, must do as he thinks fit. I hazard a guess that most noble Lords would be very happy to leave this for the Government to go away if they felt so inclined and bring back at Report stage something which better answers the objection.
Lord Renton: My Lords, for the sake of accuracy I must make it clear that I was suggesting that it was Amendment No. 113 in the name of my noble friend Lord Stanley which should be accepted by the Government if it was practicable, because I feel that the amendment of the noble Lord, Lord McIntosh, is in the wrong place in the Bill.
Lord Peyton of Yeovil: My Lords, with respect to my noble friend, that does not alter the sense of what I am saying. I do not mind whether either or both these amendments are practicable. If the objection is on the grounds of practicality then it would be acceptable to me because the Government will obviously want to take the next step and go away and find something better. I do not wish to dwell at length on this matter because the arguments have been made. I think that we are all concerned, and rightly so, that the burdens of those living in remote areas should not be unfairly and oppressively increased.
Faced with an argument of the strength of this one, I should have felt very confident that the Government would immediately intervene in the debate and say that they accepted this point. However, I am somewhat depressed by the memory of last week's experience when the same arguments were eloquently adduced by my noble friend Lord Stanley of Alderley, and received widespread support from both sides of the Committee. Nevertheless the Government decided that they could not even take the matter away with a clear undertaking that they would come back with something adequate at the next stage. In those circumstances my noble friend felt certain—and I agreed with him—that the right thing to do was to divide the House.
I hope that, although my noble friend on the Front Bench was not involved in that exchange, he has had the opportunity to dwell upon it and to consider how unfortunate it would be if those of us who sit behind him and who feel strongly on this issue should be driven to take the same action this afternoon.
4.45 p.m.
Lord Nugent of Guildford: My Lords, I should like to ask my noble friend how the proposed charging system in this Bill varies from that in the 1973 Act. These charging structures are very complicated. I am not absolutely clear as to how they will work under this Bill. I know fairly well how the 1973 Act worked. I should like to read out some subsections in Section 30.

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"In fixing charges for services, facilities or rights a water authority shall have regard to the cost of performing those services, providing those facilities or making available those rights.
"A water authority may make different charges for the same service"—
having had regard to the cost of performing it—
"facility or right in different cases, but it shall be the duty of every water authority to take such steps as will ensure that, as from a date not later than 1st April 1981, their charges are such as not to show undue preference to, or discriminate unduly against, any class of persons".
The phrases "undue preference" or "discriminate against" were always regarded as the Ark of the Covenant. This did not mean that all the charges were going to be exactly the same, but that there should not be undue preference.
The complications in the clauses of the present Bill are very much greater than those of the 1973 Act and I should like my noble friend to elucidate what it is that he is proposing. I am sure that the noble Lord, Lord McIntosh of Haringey, does not expect all charges to be exactly the same everywhere; there must be some regard to cost. What we should like to know is that there is not going to be undue preference.
Lord Ross of Newport: My Lords at 10 o'clock on Saturday night I lost my private water supply. A pipe burst and I was without water in my household for seven to eight hours, and I realised what a problem that is. The farmer next door said, "We've been going to the wells in the field a few hundred yards away for the last 30 years and you'd better start doing it now". There is a mains supply within 30 yards of my cottage. I am trying to persuade my farmer neighbour and a contractor to connect to that supply. At the moment they are unwilling to do so because they think that the charges will be much higher and that it is better to retain the very faulty supply which comes from the hill behind us.
If this amendment were not to be accepted in principle by the Government, it would be another nail in the coffin of trying to persuade my neighbours to get on to the main. In addition it must be to the advantage of the water supplier plc to have more consumers. If we are going to put barriers in the way of people connecting to mains where they exist in very rural areas—a mains supply was put through only a few years ago—then it must be to the advantage of the water plc that as many people should use that supply as possible as well as keeping the charges down.
It is also worth making the point that most of the supplies come from the rural areas. The Elan Valley goes a very long way to Birmingham and Birmingham goes to Liverpool. There is a quid pro quo the other way. I make that point because I know that in rural areas where people are not connected to the mains. They are looking at this issue. Most people think that they will not connect to the mains, whereas they ought to connect. There is a fear that charges will go through the roof. If they do not connect it will make it much more difficult and mean higher prices for the people who are connected to such mains.
Lady Kinloss: My Lords, I should like to support the noble Lord, Lord Stanley of Alderley, in his amendment. I wonder whether the Minister can tell us in his reply why domestic consumers of water, whether in rural or urban areas, should not pay the same amount. Would the noble Lord not agree that the Post Office makes the same charge whether it delivers mail in the street where the sorting office is or in the remotest area of the country?
The Earl of Caithness: My Lords, Clause 37 sets out the general duties of the undertakers with respect to water supply. Under subsection (1) every water undertaker is required to develop and maintain an efficient, economic and wholesome supply within its area. Further, it is required to maintain, improve and extend the supply network so that it is able to meet its water supply obligations.
Amendment No. 108ZC in the name of the noble Lord, Lord McIntosh of Haringey, would add a further specific requirement to that general duty—namely, to require that all supplies are made available at the same level of charge for the same level of service. A similar proposal is introduced by the proposed Amendment No. 113 to Clause 76(3). Clause 76 makes provision for water and sewerage undertakers to fix and recover their charges according to charges schemes. Subsection (3)(a) provides that a charges scheme may make different provision for different cases, including different provision in relation to different circumstances or localities.
Amendment No. 113 seeks to qualify this provision by requiring that the charges made under the scheme must be for domestic supplies for the same level of service throughout the area supplied or serviced by the undertaker. We adopted a similar amendment in Committee, together with a further amendment tabled by my noble friend Lord Stanley which required the removal of the words "all localities" from subsection 3(a) of Clause 76. The aim of the two amendments was similar—namely, to remove the possibility of discriminating against rural customers.
I explained that rural customers—indeed, all customers—would enjoy considerable protection from discriminatory charging by a combination of the duties imposed on the director general by Clause 7(3)(a) and by Conditions B and D of the model instrument of appointment. That point was rightly raised by my noble friend Lord Nugent, who has great experience of the 1973 Act which contains very much the same as is in this Bill. He said that there has to be some flexibility between charges. He made that clear to the noble Lord, Lord McIntosh though I do not know whether the noble Lord, Lord McIntosh, took it on board.
My noble friend said that there was to be no undue discrimination. I confirm to my noble friend that we have translated what is in the 1973 Act into Clause 7(3)(a) of the Bill and by Conditions B and D of the model instrument of appointment. That is why, when he looks at the Bill, he will see that it is somewhat different from the 1973 Act, but one must then take into account the model instrument of appointment. In that way we cover exactly what the

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1973 Act set out to do. I hope that sets my noble friend's mind at rest.
In particular, the charging formula in Condition B of the model instrument of appointment limits the overall level of charges increases, though the undertaker has powers to decide which charges are increased and by what amounts. As a result of the limit on increases there are no incentives to the undertaker to increase its charges to rural customers since there would have to be a reduction in charges elsewhere. Further, the ban on undue discrimination in Condition D would prevent the undertaker from making abitrary increases in its charges to one group at the expense of another.
I also explained that having a flat rate charge could produce some perverse charging patterns. For example, it could be interpreted as requiring a flat rate applicable to rateable values over the whole area of the water undertaker. Far from imposing fairness, that would mean a significant reduction in the charges to those in rural areas because rateable values there are lower for the same type of property. That is positive discrimination. One might even say to my noble friend Lord Stanley that it is vested interest discrimination. Who knows?—I might even benefit where I live in the country. A corollory to this would be a significant increase in the charges to inner city properties. I do not put forward to your Lordships that there is any justification for such discrimination against the inner city areas.
It does not look terribly good for the noble Lord, Lord McIntosh of Haringey. First he says, "I do not like the fact that there is to be a control on prices and I will vote against a control on prices so prices can go up to whatever limit they decide". That is certainly what the noble Lord did in the early part of our Committee stage; he voted against a control on prices. He is now saying, "Well, for all my friends in Haringey to whom I have been an incredibly good servant over the years, I am sorry, chums; your water rates are going to increase substantially as a result of what I propose to vote for today".
The noble Baroness, Lady White, also commented that prices in urban areas would have to increase as a result of what the noble Lord, Lord McIntosh, proposed. I wonder whether the properties in the Elan Valley or on the shores of Lake Vyrnwy are really comparable to the inner city properties to which she referred, because I do not believe that she is comparing like with like. For example, can the noble Baroness tell me how much the resident of a three-bedroom detached house in Cardiff might pay? I do not know, but it would reveal that one should not take a few individual examples to make a case.
If it is not a flat rate on rateable value that the noble Lord, Lord McIntosh of Haringey, has in mind, what is it? Would it be a national scheme? That is one interpretation of the noble Lord's amendment. It is such a vague amendment one does not know. Is it a flat rate per property? That would not reflect the size of the property or indeed the number of occupants. Perhaps the noble Lord is on to a new wheeze—a flat rate per person, a water community tax. Surely that is not what the noble
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Lord wants. Perhaps the level of service is intended to refer to the number of domestic appliances, with all the difficulties that would bring. Perhaps the noble Lord wants universal water metering. If so, he is indirect conflict with the noble Baroness, Lady White, because I can remember that at an earlier stage it was mentioned—I think by the noble Baroness—that the Welsh Water plc-to-be does not want metering and that it is to charge on a different rate.
It is a false analogy to mention electricity. The noble Lord, Lord McIntosh, sought to persuade your Lordships that it is the right analogy because electricity is charged through metering. At the moment in this country the majority of properties are assessed on domestic rates, and the noble Lord was wrong to say that domestic rates would cease to be the base for water rates from 1990. It will be the year 2000, and that is exactly why the water authorities are bringing in metering schemes to assess the implications of that in various parts of the country. Again, that was debated at some length by your Lordships at an earlier stage.
The noble Lord alleges that the rateable value method of charging means that water charges are not uniform throughout the area of the undertaker. He is right, but he should not assume that the same rateable value poundages in all parts of a given undertaker's area are uniform. In fact, I do not think that the amendment is at all clear in its effect.
The Earl of Balfour: My Lords, before my noble friend sits down, perhaps I may ask one further question. It appears to me that, under Clause 76, even if meters are introduced under subsection (3) (at the top of page 88) the charging scheme may make different provisions for different cases, including different provisions in relation to different circumstances or localities. Therefore in those circumstances even the meters could vary. I am sure that is not what any Members of your Lordships' House desire.
The Earl of Caithness: My Lords, my noble friend makes an entirely valid point. It shows that little thought has been given as to how the amendment would sit in the Bill as it stands. I am grateful to my noble friend.
I should like to take up the comment made by my noble friend Lord Stanley. He said that the fact is that water companies will be able to charge differently, that they will be driven by profit and that the director general will not be able to stop adverse discrimination against rural users. I have to say to my noble friend that that is quite untrue. The provisions in Clause 7 and in the licence are designed to provide a protection against undue discrimination. There is no loophole of the kind that the noble Lord, Lord Ezra, mentioned. In my view, discrimination against rural areas would be a serious matter and could well amount to undue discrimination.
Lord Stanley of Alderley: My Lords, perhaps my noble friend will give way for a moment. Can he explain to the House what Clause 7 means in giving

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a prior responsibility to the director general to look after the return on capital before all else? How does that fit in?
The Earl of Caithness: My Lords, we are back on to this same old subject and I am grateful that my noble friend has raised it yet again. I ask him to open the Bill and turn to Clause 7. He will see in subsection (2)—this is exactly what I told him in Committee—that,
"The Secretary of State or, as the case may be, the Director shall exercise the powers mentioned in subsection (1) above in a manner that he considers is best calculated … to secure that the functions of a water undertaker and of a sewerage undertaker are properly carried out as respects every area of England and Wales".
The important duty is to get a supply. I pity some of the areas that my noble friend is seeking to protect if he says that the director general does not have that duty, because that is the duty. It is important to get a proper, efficient and palatable supply of water.
I continue dealing with my noble friend's allegation which I said was untrue. In considering whether to take action the Secretary of State and the director general will of course have to act reasonably. The courts will provide the discipline for that. I have no doubt that those who represent rural interests, such as the NFU, will ensure that Secretaries of State, of whatever allegiance, are kept up to the mark. Having said that, there can be no doubt that I am with my noble friend Lord Renton, who commented on this in spirit.
We are discussing two different amendments. One is in the name of the noble Lord, Lord McIntosh of Haringey. That is the amendment being moved. It is a wide amendment with unforeseen consequences. I hope that I have raised in your Lordships' House some of the very serious concerns that it poses and some of the difficulties and discrimination that will result from it. The second amendment we are discussing is that tabled by my noble friend Lord Stanley. It has received a great deal of support in your Lordships' House. As my noble friend Lord Peyton pointed out, there is nothing between us on whatever side of the House we sit. We are seeking exactly the same result; the difference between us is how we put it on the face of the Bill. Given what is on the face of the Bill and in the model instrument with Conditions B and D, I contend that my noble friend's concerns are covered and taken care of. However, if he is not satisfied, my door is always open. I shall be happy to discuss the problem between now and another stage. There is so little between us—indeed there is common ground in what we seek to achieve—that it seems sad that we cannot reach agreement. I am perfectly happy to try to do so.
5 p.m.
Lord McIntosh of Haringey: My Lords, the Minister has sought to make a distinction between the two amendments that we are debating. Perhaps I may repeat the reasons why the two are necessary and why they fit together in order that we may get more clearly in our minds the issue that is before the House. I believe that the issue was well understood by almost every noble Lord who spoke before the Minister replied.
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As has been rightly said, Clause 37 is concerned with the general duties of water undertakers. In that clause is placed the question of maintaining,
"an efficient and economical system of water supply".
That is the fundamental obligation on water undertakers. Nothing in this amendment or any other will derogate from that fundamental responsibility. But the general duty is more precisely defined in Clause 37(1)(a). It refers to the requirement to provide,
"supplies of wholesome water to premises in that area and for making such supplies available to persons who demand them".
That is quite precise. "Making such supplies available" is going much further than the most general obligations. It still leaves open the question of the basis on which supplies are made available. If they are made available on a charging basis which discriminates between rural and urban customers, then they are not being made available to persons who demand them in any commonsense way on fair and equal terms. Therefore it is necessary to turn from Clause 37 to Clause 76 at page 88 of the Bill in order to understand precisely what the Government mean.
A number of noble Lords, and particularly the noble Lord, Lord Trafford, seem to think that our amendments run the risk of remedying discrimination against rural customers by discriminating against urban customers. I believe it is necessary to remind the House that Clause 76(3) goes out of its way to say:
"A charges scheme may make different provision for different cases, including different provision in relation to different circumstances"—
There is no disagreement about that—
"or localities".
It is the Government who are deliberately and in full consideration adding the question of different charges in different localities to the face of the Bill. No one is denying that there will be different circumstances which lead to the necessity for different kinds of charges. After all, the principle behind the privatisation procedure is that different water authorities, although monopolies in their own areas, will be competing with each other on price. According to the Government, one of the measures of their efficiency will be the ability to provide water supplies at the most economical price.
I must not allow the Minister get away with saying that I am simply opposed to controls on prices. I said that I preferred not to have privatisation but that if we had it the proposed controls on prices were not adequate in the absence of controls on excess profits. These are different methods of control. It is not my proposition that we should do without any controls whatever. Clause 76 deals with charging. The Government, very deliberately, consciously and explicitly, lay open the possibility of charging different amounts by locality. The point at issue is not that there should be uniform prices everywhere. Obviously we are speaking about rural areas where the cost of supply is so much greater. The point is that it should be possible for charges to be greater by locality.
The amendment tabled by the noble Lord, Lord Stanley, being debated with this amendment to

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which I have my name, does not seek to standardise all charges throughout the whole country, as has been claimed. It states that the charges should be,
"at the same level of charge for the same level of service throughout the area supplied or serviced by the undertaker".
This is not the same amendment that was brought forward at Committee stage; it is one that has been carefully considered. I put it to the House that it does not upset the basic charging arrangements set by the Government for water; it does not call into question the issue of control of prices; and it does not propose any difference in charging or raise the issues of metering as opposed to charging on some other basis. I agree with the Minister that charging on the basis of rateable value can continue to the year 2000. If I said to the contrary then I apologise: I made a mistake. This amendment does not raise any other issue than one made necessary by the use of the phrase "different provision in different localities" and that those living in rural areas should not have to pay more for their water.
I am not competent to add to the very strong points made by noble Lords who live in rural areas. As the Minister rightly said, I am a Londoner and I have very little direct experience. I am tempted by the noble Lord, Lord Renton, to withdraw my amendment because of the electoral consequences for the Government if it is not allowed to go through. Everything that I have heard from noble Lords who have much greater experience than I convinces me that the issue has not been adequately resolved by the answer given. I shall give way first to the noble Lord, Lord Stanley, and then to the noble Lord, Lord Renton. The noble Lord, Lord Stanley, indicated first that he wishes to intervene.
Lord Renton: My Lords, I ask the noble Lord to deal with the point that I raised; namely, that if this matter is to be dealt with on the face of the Bill by means of either of these two amendments, surely it will be better to amend Clause 76 than Clause 37.
Lord McIntosh of Haringey: My Lords, I believe that you have to do both. That is my point. Unless the general duty on undertakers includes a duty to make supplies available and also to make them available on a specific and fair basis, then Clause 76 does not have its full effect. That is why the two are put together.
Lord Stanley of Alderley: My Lords, I am in the hands of the House. As this issue affects my amendment quite considerably, perhaps I may make two points. I wonder how many of your Lordships have been in the position of feeling that whatever you say or do is bound to be wrong. I feel that very strongly at the moment.
I appreciated my noble friend saying that he would meet me again to try to resolve this problem. It is one which my noble friends Lord Renton and Lord Peyton and indeed every noble Lord has recognised. Will he when he meets me concede the point that the picture has now changed? Privatisation has come into the formula whereas before ordinary water companies were involved. There is a slightly
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different picture now, Secondly, will he concede the point that somewhere in the Bill there must be a better definition to ensure that domestic consumers in any one water plc area pay the same price? My noble friend says "Yes"; I say that we want it and noble Lords say that they want it. It is not in the Bill. I cannot agree with my noble friend that the point is covered as the Bill is presently drafted. Is he prepared to say that he will try to find a way through so that both these points are met?
Lord McIntosh of Haringey: My Lords, in order to comply with the rules of debate I shall gladly give way to the Minister.
The Earl of Caithness: My Lords, I am grateful to the noble Lord. With the leave of the House, as my noble friend Lord Stanley knows full well, if I offer to meet him everything is up for grabs. I agree with him on his first point in so far as there is a change of ownership. To me it is not really the ownership that matters; what matters is getting the Bill right and keeping the fairness that is there in the 1973 Act and as we believe we have it in this Bill. I am happy to discuss whatever my noble friend would seek to raise with me.
I listened with great care to the noble Lord, Lord McIntosh. His amendment is different. It relates to all water supplies, not just to domestic supplies. I fear that he has studiously avoided replying to any of the questions that I put to him.
Lord McIntosh of Haringey: My amendment does not refer to all water supplies. It refers to Clause 76(3). The whole point of the linkage between the two amendments is that my amendment does not propose any change in the charging system for all water supplies. As amended by Amendment No. 113 in the name of the noble Lord, Lord Stanley of Alderley, the clause would propose further protection for domestic consumers. There is no conflict between the two amendments.
I am discouraged by the noble Earl's repetition of his argument that there is adequate protection in the terms of the model instrument of appointment. He claims it to be comparable with that of the Water Act 1973. It may satisfy the noble Lord, Lord Nugent of Guildford, to say that there is no undue discrimination but the point we are making and which I understood the noble Lord, Lord Stanley, to be making, is that the undue discrimination protection is good enough for a public water industry but is not good enough for a privatised water industry. If I have misunderstood the noble Lord I shall gladly give way.
Lord Stanley of Alderley: My Lords, the noble Lord has not misunderstood me. He has understood me absolutely right. My noble friend did not answer my last question as to whether he would meet me to discuss putting something on the face of the Bill before Third Reading.
The Earl of Caithness: My Lords, with the leave of the House, I think I did answer that question. I said that I was happy to discuss anything with my noble friend.
Lord Harmar-Nicholls: My Lords, is the noble Earl—
Noble Lords: Order!
Lord McIntosh of Haringey: My Lords, I am happy to give way to the noble Lord.
Lord Harmar-Nicholls: My Lords, if either of the two amendments was accepted it would to some extent remove the discrimination in rural areas. But would it mean transferring the discrimination to affect the urban areas? Does the noble Lord accept that point?
Lord McIntosh of Haringey: My Lords, it could not conceivably transfer discrimination to urban areas because the amendment limits the opportunity for the water companies to discriminate on the ground of locality. It would improve the position for domestic customers in rural and urban areas.
These two amendments are a seamless robe. They are both necessary. However, the more important of the amendments is the one in the name of the noble Lord, Lord Stanley. If he wishes to withdraw his amendment in order to take part between now and Third Reading in discussions with the Minister it is only right that I should offer to withdraw my amendment first. If on the other hand he feels that the assurances he has been given are not enough and that he wishes to proceed with his amendment, I shall put mine to the House.
Lord Stanley of Alderley: My Lords, I am grateful to the noble Lord for that generous suggestion. My amendment arises again later tonight. I shall have tea and think about it. I think it would be correct to give my noble friend on the Front Bench a chance to have a cup tea with me and consider the matter further.
Lord McIntosh of Haringey: My Lords, I would not wish in any way to interfere with negotiations between the Government Front Bench and the Government Back Bench. On that basis, although I believe that my amendment is necessary and may have to be re-inserted at Third Reading, it is appropriate that I should ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 108ZD:
Page 40, line 19, at end insert ("or, in accordance with any regulations made by the Secretary of State—

(a) a local authority in the area concerned; or

(b) any person resident in the area concerned

on application in either case to the High Court and where the Secretary of State exercises the power to make regulations conferred on him by this section.
(3) Any references in section 20 above to the Director shall be interpreted as though they were references also to a local authority or person resident in the area, as the case may be.").
The noble Lord said: My Lords, this amendment returns to an issue which I hope will be of as much concern to noble Lords who are interested in the
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rights of domestic water consumers as how the enforcement provisions can be implemented and how they will be dealt with in practice. In Committee we considered the possibility of co-opting local authorities into the enforcement process as equal partners with the Government and the Director General of Water Services. That option did not find favour with the Government or with the Committee. What we are proposing now deals with the objections raised by the Government and still, we hope, achieves rights for local water customers and for the local authorities representing them in the enforcement procedure.
It is fundamentally wrong that only the Secretary of State and only the director general should have the right to institute actions under the enforcement provisions of the Bill. Our amendment says that the Secretary of State shall have the power to make regulations for local authorities in an area or for local residents to have the right to apply to the High Court to activate the enforcement provisions. The nearest analogy I can make is with access to the law in general. It must be a principle of the law—I speak as a non-lawyer—that access to the law is available to all citizens who feel themselves aggrieved or in any way in need of the law of the land. When we are dealing with the supply of water, a natural monopoly and an essential element not just of civilised life but of life, the enforcement procedures against the monopolists, in particular the private monopolists who are to be created under the Bill, are quasi-legal in their effect. Unless these enforcement procedures are not only there but are available to everybody who wants them they will not be fully effective and will not be seen to be fully effective.
It cannot be right for the Secretary of State and his appointee—the director general—alone to have the opportunity to trigger the enforcement procedures laid down under the Bill. If anyone reads Clause 20 of the Bill and sees the way in which the enforcement procedures are set out—and set out, if I may say so, with a good deal of clarity and force—they will experience some disappointment when they realise that instead of those procedures being available to ordinary people, they are available only to the Secretary of State and to the Director General of Water Services.
There cannot be much confidence in enforcement procedures which claim to be available to protect water consumers if the consumers themselves, and the local authorities which represent them, do not have the power to trigger enforcement proceedings. The Secretary of State clearly has an interest: he has an interest in ensuring that the water industry and the sewerage industry proceed on an even keel. But the Secretary of State has no interest in finding fault with the system; and the director general, who is the regulator, has an interest in exposing faults in the system rather than finding fault in it. He is the appointee of the Secretary of State. Moreover, however much his powers may be set out in the Bill, that is still not enough to give him the degree of independence which I think ordinary people would feel is necessary to ensure access to the enforcement procedures.
No one is saying that the proposed system is perfect; indeed, in order to overcome the kind of objections we met in Committee, we have left it in the power of the Secretary of State to make regulations to secure wider access to the enforcement procedures. Therefore, in the way in which he sets the regulations he can protect the water authorities from frivolous complaints. That is what I understood to be the objection to our previous amendments. I do not like putting forward the provision that this should be done in regulations set by the Secretary of State, but that is what we have done in order to overcome that objection.
This is not a very strong amendment. It is deliberately designed to recognise the objections raised in Committee and to be a proper Report stage amendment. However, it is a start and indeed it gives the Secretary of State—any Secretary of State—the opportunity in future years to make more widely available the enforcement procedures of Clause 20, and those of surrounding clauses, which should be available to all of us from the start of the privatisation of the water industry. I beg to move.
Lord Ezra: My Lords, I support the important underlying feature of this amendment which enables local interest to be brought into the enforcement procedures. Water is a matter of local interest and it is organised on a local basis. While it is quite clear in the regulatory system which has been created that the Secretary of State and the director general must play the predominant role, I think that we should always be searching for ways in which local interest can be introduced. It is on this basis that I hope the Government will give sympathetic consideration to the underlying objective of the amendment.
Lord Hesketh: My Lords, Clause 37 deals with a water undertaker's basic water supply duty. Every undertaker is required to develop and maintain an efficient and economical system of water supply within its area. This general duty forms the foundation of which the following specific water supply duties are built. The duty is enforceable by the Secretary of State or the director under Clause 20. The purpose of this amendment is to provide for the duty in this clause to be enforceable, in accordance with regulations made by the Secretary of State, by a local authority or an individual.
If the noble Lord's real concern is to ensure that individuals are able to take action against the undertaker to protect their interests, I can assure him that it will not be met by this amendment. The Bill already provides in the following clauses of this chapter for individuals to take action against an undertaker for failure to comply with specific water supply duties. It is right and proper that an individual should be able to act where he suffers loss or damage through an undertaker's failure to comply with a duty that is owed specifically to an individual.
The amendment proposed would simply lead to confusion about what was expected of the undertaker without improving the position of the individual consumer. In our discussions on a similar amendment in Committee, it was argued that the
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local authorities were required to inform themselves of the wholesomeness and sufficiency of water supply, but that they were given no powers to take enforcement action if they found them to be below standard. I expressed the view that such a power would be a source of confusion. I still maintain this to be so.
Although the standards which water undertakers are required to comply with are well-defined, the course of corrective action is not necessarily so clear. The situation will become even more confused if individuals were to take enforcement action. Further, after the earlier debate took place, the provisions of Clause 20 were strengthened considerably by our amendments. It was then acknowledged that some requirements could not be complied with overnight. The Secretary of State or the director may well have agreed programmes of remedial action with the water and sewerage undertakers concerned. Further action emanating from a range of enforcement interests would cut across agreed programmes. There would be over 400 enforcement authorities and 50 million individuals able to take enforcement action.
We do not believe that this amendment would be of benefit to consumers. It is already open to individuals to take action against undertakers in cases where they are adversely affected by breaches of the individual supply duties. The enforcement procedures now have the approval of the European Community and we see no reason to confuse that system.
Before I conclude, perhaps I may explain the clear steps which local authorities will be able to take if they believe that there is a breach of the Clause 37 duties in circumstances where they consider enforcement action is necessary. First, they may approach the Secretary of State or the director general; and, secondly, local authority representatives can voice the concerns at the meetings of the customer service committees where they will have about one-third of all the representation. The customer service committees are required by Clause 27(1)(c) to refer any matters relating to enforceable duties to the director general. In that way the director general can decide on what action to take in the light of his wider knowledge of matters such as agreed programmes for remedial action.
We believe that this amendment is unnecessary and hope that your Lordships will be able to resist it.
Lord McIntosh of Haringey: My Lords, I find some parts of that answer distinctly disingenuous. The noble Lord seeks to argue that because the European Commission has agreed to the enforcement procedures set out in Clause 20, then that means that it has agreed to the way in which these enforcement procedures are to be triggered. Nothing could be further from the truth; indeed, if the European Commission had been so bold and intrusive as to say, "Not only do we think that the wording for enforcement procedures is necessary; but this is how it should be triggered and this is who the enforcement procedures should be available to", there would have

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been a howl of disapproval about the interference in our domestic affairs. No doubt there would also have been a howl from No. 10 Downing Street, as well as from the Benches opposite.
The question of how we implement our enforcement procedures is a matter for this country; it is not a matter for the European Commission. What we are saying by way of this amendment is that the implementation of the enforcement procedures is simply not adequate in that it is not available to people in the way that it ought to be. The availability of the enforcement procedures is confined to the Secretary of State and to the Director General of Water Services who is appointed by the Secretary of State. The argument behind the amendment—namely, that it should also be available, in accordance with regulations set by the Secretary of State, to local authorities and to individuals—is as strong as it was before the Minister rose to his feet to reply.
It is simply not the case that our amendment would cut across any undertakings or exemptions being given by the Secretary of State. The regulations which he is empowered to make under this amendment would ensure that exemptions granted to water undertakings would be adhered to. It ensures that undertakings given by the water suppliers to improve the quality of their water supply would be adhered to and would be an adequate defence. The Secretary of State can ensure that by the way in which he makes regulations; in other words, we are not exposing the water undertakers to complaints by 50 million people without regulation. In some ways I wish that we were. In some ways I believe that local people know far more about what is wrong and have far more right to take action, as they do under any other branch of the law, than the Secretary of State or his appointee. However, we have not been as bold as that. We have been much more cautious and circumspect.
I am deeply disappointed that the Minister has not recognised the realism and constructive nature of the amendment. I am sorry to say that his answer has not satisfied me. It is necessary for me to seek the opinion of the House.
5.31 p.m.
On Question, Whether the said amendment (No. 108ZD) shall be agreed to?
Their Lordships divided: Contents, 89; Not-Contents, 111.

DIVISION NO. 2

CONTENTS

Addington, L. [Teller.]

Cledwyn of Penrhos, L.

Allen of Abbeydale, L.

Cocks of Hartcliffe, L.

Alport, L.

David, B.

Amherst, E.

Davies of Penrhys, L.

Ampthill, L.

Dean of Beswick, L.

Ardwick, L.

Dormand of Easington, L.

Attlee, E.

Elwyn-Jones, L.

Aylestone, L.

Ennals, L.

Birk, B.

Ewart-Biggs, B.

Broadbridge, L.

Ezra, L.

Brooks of Tremorfa, L.

Falkender, B.

Bruce of Donington, L.

Falkland, V.

Carmichael of Kelvingrove, L.

Fisher of Rednal, B.

Gallacher, L. [Teller.]

1170

Galpern, L.

Nicol, B.

Gladwyn, L.

Ogmore, L.

Graham of Edmonton, L.

Peston, L.

Greenway, L.

Phillips, B.

Grey, E.

Pitt of Hampstead, L.

Hampton, L.

Prys-Davies, L.

Hanworth, V.

Rathcreedan, L.

Harris of Greenwich, L.

Ritchie of Dundee, L.

Hatch of Lusby, L.

Ross of Newport, L.

Henderson of Brompton, L.

Seear, B.

Howie of Troon, L.

Shannon, E.

Hughes, L.

Shepherd, L.

Jay, L.

Somers, L.

Jeger, B.

Stallard, L.

Jenkins of Putney, L.

Stanley of Alderley, L.

John-Mackie, L.

Stedman, B.

Kilmarnock, L.

Stoddart of Swindon, L.

Kinloss, Ly.

Taylor of Blackburn, L.

Kirkhill, L.

Taylor of Mansfield, L.

Listowel, E.

Thomson of Monifieth, L.

Llewelyn-Davies of Hastoe, B.

Thurso, V.

Tordoff, L.

Lloyd of Kilgerran, L.

Turner of Camden, B.

Lockwood, B.

Underhill, L.

Longford, E.

Wallace of Coslany, L.

Lovell-Davis, L.

Walston, L.

McIntosh of Haringey, L.

White, B.

McNair, L.

Williams of Elvel, L.

Mason of Barnsley, L.

Willis, L.

Mayhew, L.

Winchilsea and Nottingham, E.

Milverton, L.

Mulley, L.

Winstanley, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hesketh, L.

Alexander of Tunis, E.

Hives, L.

Allerton, L.

Holderness, L.

Arran, E.

Hood, V.

Balfour, E.

Hooper, B.

Belhaven and Stenton, L.

Hylton-Foster, B.

Beloff, L.

Ingrow, L.

Belstead, L.

Jenkin of Roding, L.

Bessborough, E.

Johnston of Rockport, L.

Blatch, B.

Joseph, L.

Blyth, L.

Kaberry of Adel, L.

Boyd-Carpenter, L.

Killearn, L.

Brougham and Vaux, L.

Kimball, L.

Bruce-Gardyne, L.

King of Wartnaby, L.

Butterworth, L.

Layton, L.

Caithness, E.

Long, V.

Campbell of Alloway, L.

Lyell, L.

Campbell of Croy, L.

McAlpine of Moffat, L.

Carnock, L.

Malmesbury, E.

Carrington, L.

Margadale, L.

Clitheroe, L.

Marley, L.

Constantine of Stanmore, L.

Marshall of Leeds, L.

Cottesloe, L.

Maude of Stratford-upon-Avon, L.

Craigavon, V.

Craigmyle, L.

Merrivale, L.

Cranbrook, E.

Mersey, V.

Cross, V.

Middleton, L.

Davidson, V. [Teller.]

Montgomery of Alamein, V.

Denham, L. [Teller.]

Mottistone, L.

Dilhorne, V.

Munster, E.

Dundee, E.

Murton of Lindisfarne, L.

Eccles, V.

Nelson, E.

Eden of Winton, L.

Norfolk, D.

Elibank, L.

Norrie, L.

Elliot of Harwood, B.

Nugent of Guildford, L.

Elliott of Morpeth, L.

Onslow, E.

Faithfull, B.

Orkney, E.

Fanshawe of Richmond, L.

Orr-Ewing, L.

Foley, L.

Oxfuird, V.

Fraser of Carmyllie, L.

Pender, L.

Fraser of Kilmorack, L.

Penrhyn, L.

Gardner of Parkes, B.

Peyton of Yeovil, L.

Gibson-Watt, L.

Prior, L.

Gray of Contin, L.

Radnor, E.

Halsbury, E.

Rankeillour, L.

Harvington, L.

Rawlinson of Ewell, L.

Henley, L.

Renton, L.

1171

Rodney, L.

Trafford, L.

Sharples, B.

Trefgarne, L.

Skelmersdale, L.

Trenchard, V.

Strange, B.

Trumpington, B.

Strathclyde, L.

Vaux of Harrowden, L.

Strathcona and Mount Royal, L.

Westbury, L.

Windlesham, L.

Strathspey, L.

Wynford, L.

Swansea, L.

Young of Graffham, L.

Swinfen, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 38 [Standards of performance in connection with water supply]:
5.39 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 108ZE:
Page 41, line 18, after ("circumstances") insert ("being circumstances not under his control").
The noble Lord said: My Lords, the amendment returns to issues raised in Committee on Amendment No. 290A, where the provision in Clause 38(6)(d) for water undertakers to be exempt in certain circumstances from the requirements of the regulations was tested to prompt a government response. The Minister argued (at col. 1018 of Hansard for 15th May) that the undertaker must have the opportunity to be exempted in the case of circumstances beyond his control. The amendment takes up the Minister's suggestion and inserts precisely such an exemption. The wording that we insert is:
"being circumstances not under his control".
Where no fault arises in the undertaker, an exemption may be provided for. Where there is any question of circumstances being under the control of the undertaker, there should be no opportunity for exemption. The Minister is asked to explain further what circumstances may arise which, though under his control, will nonetheless give rise to an exception to the requirement for standards of performance in connection with water supply under Clause 38. I beg to move.
Lord Hesketh: My Lords, Amendment No. 108ZE would restrict the circumstances in which a water undertaker is to be exempted from the requirements of regulations in respect of individual standards of service, otherwise known as the guaranteed standards scheme, to circumstances not under the control of the undertaker.
I appreciate that in putting forward this amendment the noble Lord, Lord Graham, has taken some account of the points I made during Committee in relation to an amendment which would not have allowed any exemptions to these regulations. However, there are three objections which I have to this new amendment. The first is that by not qualifying the word "control" by "reasonable", the undertaker could still be liable where he has not taken contingent action to avoid some event happening even though it was quite unreasonable, having regard to the costs concerned, for him to do so. For example in the case of a major burst the circumstances may be so exceptional that it would
1172
be unreasonable for the undertaker to have been expected to restore the supply within the period specified in the regulations.
Exceptional circumstances are by their nature difficult to define, but the type of situation we have in mind here is where, in the case of a major city centre burst, the undertaker's water mains records may not be comprehensive. Therefore the complexity of the problem may not be appreciated until the pipework is unearthed.
Furthermore, it is far too expensive to have ready off-the-shelf replacements for all the unusual special types of pipework that may be found in an ageing distribution system. In some cases therefore a special pipe may need to be manufactured. In the meantime, a temporary repair may mean that some of the customers are without their normal supply. In the event of a dispute between the customer and the undertaker on whether the circumstances really were so exceptional that the undertaker could not reasonably be expected to restore the supply, the matter could be referred to the director general to resolve.
My second concern is that there have to be exemptions to the undertaker needing to meet the requirements in the first place. The example I gave in Committee from the draft regulations for the guaranteed standards scheme is where a customer informs the undertaker that he no longer wishes to pursue a complaint. In those circumstances the undertaker will naturally be exempt from having to pay £5 where he failed to respond to the complaint within a specified standard time.
Finally, an important exemption to the guaranteed standards scheme is that non-domestic customers are not covered by it. The £5 payments for large industrial and commercial concerns would hardly be relevant. I understand the concern of the noble Lord, Lord Graham, to limit the circumstances in which the undertaker will be exempt from the requirements of the regulations provided under subsection (2). However, I hope that in the light of my explanation the noble Lord will appreciate that even this new amendment could impose an unreasonable burden on the undertaker which would increase the cost of all water to customers and make it difficult to provide for certain exemptions to assist in the practical operation of the regulations themselves. It is for those three reasons that I hope that the noble Lord, Lord Graham, will feel able to withdraw his amendment.
5.45 p.m.
Lord Graham of Edmonton: My Lords, I appreciate that the Minister has listened very carefully to my arguments, because they were his arguments on the previous occasion. Now that I have used them he has three objections to them. I suppose that if at Third Reading I were to try to meet the points which he has made this time he would find two or three more objections to the points which I have tried to deal with.
I understand that the Minister is saying that there are limits and duties, but those should not be so onerous or punitive as to make impossible the ability

1173
of an undertaker effectively to provide what we all want—a satisfactory supply of water.
I also took very careful note of the circumstances which the Minister had in mind. However at this stage in this kind of debate, almost inevitably there will be hypothetical situations. I understand the point which he made that sometimes it would be impossible to foresee every contingency. For instance, because of the nature of a catastrophe in a city centre, there would be major matters to be dealt with which could not be immediately foreseen. Therefore one could not expect the undertaker to have on the shelf or off the peg the precise piping required.
I was interested that the noble Lord said that the ageing distributive system could well be found to be a matter of concern. We shall come to a debate on later amendments under which we shall want assurances from the Government in regard to the companies which are in a sense being let off the burden which we seek to put on them in the amendment. Those companies are being asked in our later amendments to keep faithful records and from time to time to report on the precise state of their infrastructure. I am satisfied, first, that the Minister will not change his mind; and, secondly, that in the debate we have put the points which we wanted to make. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 46 [Supply of water for non-domestic purposes]:
Baroness Blatch Baroness Blatch moved Amendment No. 108A:
Page 53, line 28, leave out ("new").
The noble Baroness said: My Lords, I wish to thank my three noble friends the Ministers for their consideration and considerable correspondence both with myself and my noble friend Lord Cranbrook between the Committee and the Report stages. I shall take into account much of that correspondence in presenting the amendments today.
Amendment No. 108A is an adaptation of Amendment No. 312 at Committee stage tabled by the noble Earl, Lord Balfour. Clause 46 deals with the supply of water for non-domestic purposes and the equivalent provision in the current legislation is Section 27 of the Water Act 1945. That Act provides that water undertakers are not under a duty to give a non-domestic supply, if giving that supply would interfere with their other obligations or involve unreasonable expenditure. The provision in the 1945 Act refers to "a supply", not "a new supply" and not "an increased supply". The equivalent provision in Clause 46(3) of the Bill refers to "a new supply".
My concern in tabling this amendment is that an existing non-domestic consumer could have a very low water consumption. He could change the use of his premises to one which would result in a vastly increased water consumption. Under Section 27 of the 1945 Act the water undertaker would not be under a duty to supply water for that increased use if giving that supply would interfere with its other obligations.
Under Clause 46 of the Bill as drafted, the water undertaker would be under a duty to give such an increased supply. In responding to the amendment of my noble friend Lord Balfour in Committee, my noble friend Lord Arran stated that the amendment was unnecessary as the undertaker could put a limit on the quantity of water to be provided in the non-domestic supply agreement. I agree that if Clause 46 of the Bill were to be enacted in its present form, water undertakers would be very sensible to include such a water restriction in non-domestic supply agreements. However my concern is with all the existing non-domestic supply agreements. There must be hundreds of thousands of them which do not contain any such quantity restriction.
In a letter from my noble friend the Minister to my noble friend Lord Cranbrook on 30th May, it was accepted that there were very few existing agreements containing conditions relating to the amount of water to be provided. For example, I understand from Anglian Water that the vast majority of non-domestic supply agreements do not contain any quantity limitations, for as the current legislation is drafted there is no need for such a quantity limitation. Therefore it is no answer to say that undertakers can include a quantity limitation in their domestic supply agreement. That does not cover the case of the hundreds of thousands of existing non-domestic supply agreements. All that amendment seeks to do is to remove the word "new" from Clause 46 and thus return the legislation to the equivalent of what is contained in Section 27 of the 1945 Act. I hope that the Minister will accept this amendment. However, if he is not minded to accept it, will he consider putting some form of wording in the Bill which will provide protection for all the hundreds of thousands of existing non-domestic supply agreements which were drafted on the basis of the current legislation, and which contain no quantity limitation? I beg to move.
The Earl of Arran: My Lords, as my noble friend has explained, the intention behind this amendment is to enable an undertaker to refuse to provide an increased supply of water for non-domestic purposes in cases where the clause currently provides for it to refuse a new supply. As my noble friend said, we discussed this issue at length in Committee. I have since written to my noble friend Lord Cranbrook on the subject. While I must admire my noble friend's persistence in pursuing this matter, I am afraid there is little further of substance I can add to what has been said previously.
Clause 46 re-enacts the existing provisions in Section 27 of the Water Act 1945, in so far as it limits an undertaker's obligations in relation to the initial provision of a supply, and in so far as it provides for the initial supply to be subject to appropriate terms and conditions, such as a limitation on the amount of water to be provided. The supply will thereafter be governed by the terms of the contract. Where there is no right to increase a supply under the contract, and an increase is required, a new contract for that amount will need to be negotiated.

1175
As regards existing agreements, we understand few actually contain conditions relating to quantity. This is presumably because the water authorities have not felt it necessary to take what might seem a prudent precaution because they have been satisfied that the risk of increased consumption prejudicing other supply obligations has been minimal. It may well be that they have been influenced by practical considerations. Many non-domestic agreements involve very low consumption and relate, for example, to supplies to cattle troughs. To switch such supplies to alternative use on a significant scale is likely to require much larger quantities of water, and perhaps for it to be supplied at higher pressure. This may well be beyond the technical capacity of the existing pipework and associated apparatus. In such circumstances new works would therefore be necessary to provide the increased supply, unless the existing agreement provided for the right to demand that such works be carried out, or such a provision was implied. However, that is unlikely. The request for the increase would amount to a request for a new supply, which would bring it properly within the safeguards of Clause 46.
The danger with Amendment No. 108A is that it would give an undertaker the right to discontinue an existing supply of water for non-domestic purposes, at current levels, because it took the view that to continue to provide the supply would put at risk its other supply obligations. Persons receiving the non-domestic supplies could, therefore, have their supplies and the businesses that are dependent on those supplies, put at risk. This is interference with agreed contracts and is clearly not acceptable, as I am sure noble Lords will accept.
I hope that in these circumstances my noble friends will agree that this amendment is misconceived, and will accept that there is nothing to be gained by pursuing it further.
The Earl of Cranbrook: My Lords, I think, with deference, that my noble friend has not been very fair. The provision in the Bill is not a re-enactment of the 1945 Act. It introduces new terms and conditions by the word "new" which the amendment seeks to delete.
If my noble friend were to agree to some form of wording that did not include the word "new", he would genuinely be proposing a re-enactment of the 1945 Act, under which the existing water authorities have been operating. I do not think my noble friend is necessarily justified in making an assumption from the fact that at present, as he admits, very few existing agreements contain conditions relating to the amount of water provided. Incidentally, I can confirm that in the Anglian region the vast majority of non-domestic supply conditions contain no reference to any maximum quantities. The reason why they contain no such reference is that the wording of the 1945 Act did not contain the word "new". Therefore, at all times, they were able to refuse additional supplies if those supplies would interfere with their other obligations or would involve unreasonable expenditure. They operated within a different framework.
1176
Therefore, I do not believe it is fair to say that Clause 46 is simply a re-enactment of the 1945 Act. Under the current legislation, an undertaker has no duty to provide an increased non-domestic supply if giving that supply interferes with his other obligations or involves unreasonable expenditure. It is for that reason that few existing agreements contain quantity limitations. I hope that my noble friends will see the strength of this argument.
The Earl of Balfour: My Lords, I wish to add a few further words on this point. My noble friend the Minister stressed that if someone suddenly started to use a lot of water, a new agreement could be reached between the supplier and the user. However, there is nothing that I can see within this clause which clearly states that an agreement exists. Let us suppose that someone has a half-inch pipe, but runs it at full bore on a 24-hour basis. His consumption of water will increase considerably. I am concerned that, in respect of supply, a provision should be put on the face of the Bill to state that the user shall not be allowed to use more water than was agreed, or, if he does use more water than was agreed, a new agreement must be drawn up. The undertaker should also have the option of changing his mind. I feel there is something missing in this clause.
The Earl of Caithness: My Lords, I am grateful for what my noble friends Lord Cranbrook and Lord Balfour have said. However, I remind the House that we are on Report. My noble friend has replied to the mover of the amendment. With respect, it would have been helpful if these points had been made before my noble friend replied. I wish to say from the Dispatch Box that I have noted what my noble friends have said and I shall discuss it with my noble friend. However, I think we should stand by the rules of the House on Report.
Baroness Blatch: My Lords, I am grateful, albeit out of order, for the support I have received. However, I take issue here. I do not think that there is something missing; I think that there is something here that should not be here. To delete the word "new" would bring this Bill into line with the 1945 Act. That is what we seek. I am absolutely certain from the reply that my noble friend the Minister gave, that we all know what we want and we are all in agreement on that. We do not wish to lay an unreasonable duty on the water companies. I hope that my noble friend the Minister will consider my request that if he cannot accept the amendment as set out, perhaps he will ensure that this Bill is consistent with that requirement of the 1945 Act. I apologise for being so persistent. We simply want the Bill to be consistent with that requirement of the 1945 Act, so that an unreasonable duty is not put upon the water companies. I beg leave to withdraw the amendment.
The Deputy Speaker (The Earl of Listowel): My Lords, does the noble Baroness wish to press her amendment?
Baroness Blatch: My Lords, I accepted a nod as an agreement that something would take place

1177
between now and Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6 p.m.
Baroness Blatch Baroness Blatch moved Amendment No. 108B:
Page 54, line 49, at end insert—
("(10) Nothing in this section shall impose any duty on a water undertaker to provide a supply of water directly from, or maintain any connection with, a water main which is a trunk main which is or is to be used by a water undertaker for the purpose of conveying water from a source of supply to a filter or reservoir or from one filter or reservoir to another filter or reservoir.").
The noble Baroness said: My Lords, this amendment is an adaptation of Amendment No. 312B which I moved in Committee. The purpose of this amendment is to amend the Bill to make it clear that a water undertaker is under no duty to supply water for non-domestic purposes directly from a trunk main. In his response rejecting the amendment I moved in Committee, the noble Lord, Lord Hesketh, referred to bulk supply mains.
However, my main concern is with connections to a particular category of trunk main and not with bulk supply mains. Some confusion may have arisen because of the definition of trunk main in Clause 182(1) of the Bill. The trunk main definition is as follows:
"'trunk main' means a water main which is or is to be used by a water undertaker for the purpose of—
(a) conveying water from a source of supply to a filter or reservoir or from one filter or reservoir to another filter or reservoir"
or, alternatively a bulk supply main.
I have accordingly refined my amendment so as to place a water undertaker under no duty to provide a non-domestic supply from a trunk main falling within category (a) of the definition, a trunk main which is used primarily for taking water from, for example, a bore hole to a reservoir or from one reservoir to another.
I am informed that it is bad practice to supply direct from a trunk main, although it occurs in a few cases—often isolated farm supplies. These trunk mains, as opposed to bulk supply mains, normally take water from a treatment works to a reservoir or tower for storage. The trunk main itself may not have much storage to back it up and hence will be liable to variations in quantity and pressure. It would therefore be difficult for a water undertaker. to guarantee supplies from this category of trunk main.
Clause 45(5)(a) already provides that a water undertaker is under no duty to provide a supply of water for domestic purposes from a trunk main. All I am seeking is the insertion of a similar provision in Clause 46 relating to non-domestic supplies.
In his letter to me of 7th June my noble friend Lord Hesketh said that the limitation on domestic supplies from trunk mains is mainly on quality grounds because trunk mains may carry untreated water. Does the Minister realise that so-called non-domestic supplies may also be used for drinking and cooking? For example, the supply to a canteen in a factory would be a non-domestic supply. Also, if one looks at Clause 46(1)(a), one sees that supplies to premises which do not consist in the whole or in
1178
any part of a building come under Clause 46. Such supplies—to caravans for example—would be used for domestic purposes and not non-domestic purposes as the marginal note suggests. Therefore I am afraid that I cannot accept my noble friend the Minister's water quality argument.
Although my main concern is with non-domestic connections to trunk mains in category (a) of the definition in Clause 182 of the Bill, I am also still concerned about the implications of connections to bulk supply mains. If there was a problem on a service pipe the water undertaker could be required to cut off the supply to a large number of consumers while repairs were carried out. Surely the interests of the wider public should prevail over the interests of just one customer. I also understand that in Germany no supplies are given direct from trunk mains of either sort.
As I have met the Minister's reasons for rejecting my Committee stage amendment I hope that my noble friend will now be able to accept the revised amendment. I beg to move.
The Earl of Cranbrook: My Lords, I apologise for speaking in the wrong order on the last amendment. This is an issue which is felt to provide quite severe operational difficulties for the future water supply companies. For example, if there was a problem on a service pipe connected to any kind of bulk main supply, whether of treated or untreated water, the undertaker might have to stop the bulk main supply in order to deal with the problem of one user. Inevitably that would create severe problems for a large number of other premises supplied with water from that main. Therefore for operational reasons this is a serious problem. I hope that my noble friend will consider the amendment in that light.
The Earl of Arran: My Lords, as my noble friend Lady Blatch has said, we discussed this issue in Committee and I have since written to her in an effort to put her mind at rest. However, I apologise because it appears that I have failed to do so. I admire her persistence in returning to the subject.
We acknowledge that in some cases there will be technical difficulties, as my noble friend has explained, in providing a supply of water direct from a trunk main. The water in such mains may not be of the quality appropriate to the needs of a non-domestic customer. It may not be subject to constant pressure or it may be present in the mains only intermittently. In all those cases the director general, properly advised as he will be, is very unlikely to determine terms and conditions which would result in supplies being given from such a main. However, there may be cases where a supply from a trunk main is appropriate. We are not persuaded that there should be an absolute rule against non-domestic supplies provided from trunk mains or that an undertaker should have the final say in these matters. We consider it only fair and reasonable that the question of the suitability of particular pipes should ultimately be decided by the director who will consider each case on its merits.
One aspect of the amendment which my noble friend may not have appreciated is that it would

1179
enable an undertaker to cease supplying water to existing non-domestic customers where the supply was provided by means of a connection with a trunk main. I am sure that your Lordships will agree that it would be most unreasonable to discontinue an existing supply on which a customer's livelihood could well depend simply because it was provided by means of such a connection.
Furthermore, my noble friend has suggested that there is a danger that if non-domestic supplies from trunk mains are permitted, a supply to a factory for a use which included its canteen would result in the employees not receiving wholesome water. I can assure my noble friend that that would not be the case. Such a supply would be a supply for domestic purposes because of the definition of "domestic purposes" in Clause 182(2) of the Bill. It would therefore be subject to Clause 42(2)(a) which provides that an undertaker is not obliged to connect a service pipe for a domestic supply with a trunk main.
With those words, I hope that I can persuade my noble friend to withdraw her amendment.
Baroness Blatch: My Lords, I thank my noble friend the Minister for that reply. I am not quick enough to take into account the reference that he made at the very end of his explanation about Clause 182. Therefore, I should like to read what he said.
I am concerned about the number of cases which might be subject to referral and the consequent increase in the workload of the director and in bureaucracy. It seems to me that the amendment would resolve that problem. However, I should like to read what my noble friend has said. I wonder whether my noble friend the Minister has any idea of the number of referrals likely to be made if the amendment is not accepted.
The Earl of Arran: My Lords, with the leave of the House, I do not have that number in my head at the moment; but if it is helpful to her, I undertake to write to my noble friend.
Baroness Blatch: My Lords, that is a kind offer and I shall accept it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 108BA:
Page 55, line 28, after ("occupier") insert—
("(aa) in the case of a hydrant fixed to any main other than a trunk main requisitioned under section 40 above or laid by an undertaker but not so requisitioned, by the person requisitioning or the undertaker laying that main").
The noble Lord said: My Lords, here we return to the issue of fire hydrants and who should pay for their installation. We have already had a canter over this particular course; but we consider the issue very important indeed and wish to engage the government spokesmen once again.
The amendment provides that the cost of installing a fire hydrant fixed to a mains other than a trunk main by an undertaker should fall on that undertaker
1180
rather than on the fire authorities. The existing position is an anomaly which has persisted since the fire service legislation of 1945. It differs from the case of gas and electricity utilities, where the costs are borne by an undertaker when services are installed in new housing developments.
Surely the best outcome would be for the cost of installation of such hydrants to fall on the developer or the purchasers of the developer's houses. I should like to remind the Government that—very shortly in England and Wales, and already in Scotland—community charge payers in an area as a whole will have to pay for fire hydrants which may not be of direct benefit to them. It is incongruous that the community charge payer in a depressed borough should pay for hydrants installed on a new private housing estate of expensive dwellings being built on its outskirts. Unless the Bill is amended, that will be the position; namely, that the hydrants that will be installed will have to be paid for by the fire service. That cost will then be met by the community charge payer instead of the developer.
At the Committee stage, the noble Lord, Lord Hesketh, said:
"The costs incurred by a water undertaker are directly related to the fire authorities' functions and incurred solely at the instigation of those authorities."—[Official Report, 15/5/89; col. 1031.]
I do not think that that is a fair analogy at all. It is certainly the case that the need for hydrants is a requirement by the fire authority; it is a legal obligation. However, the instigation is the developer's choice. If the developer had not decided to develop in a certain place, there would not have been a legal obligation to provide the hydrant. The fire authority is merely responding to developments in its area.
As my noble friend Lord McIntosh pointed out, the matter was relatively unimportant when it concerned only public authorities. The matter now concerns water undertakers in the private sector and fire authorities in the public sector. In principle, there seems to be no reason why there should be a subsidy from the public to the private sector of a kind that would ultimately benefit water undertakers' shareholders.
If the Minister cavils at how marginal these matters are, I should simply remind the House that there are marginal matters which we should have pressed the other way, but which the Minister has argued would be sensible. We believe that this is a matter of great importance, not least to the generality of ratepayers who will find that their charges for fire services through the community charge will be marginally increased when, in our view, and in the circumstances that I have outlined, they should be borne by the developer.
Clause 47 indicates various exemptions. Clause 47(6) states that the expenses incurred by a water undertaker in that respect will be borne:
"by the owner or occupier of a factory or place of business, by the owner or occupier for the time being of that factory or place".
But it goes on to say that those expenses will be borne:
"in any other case, by the fire authority concerned".
We believe that developers of the kind that we have indicated should be in the same situation as those to whom I have just referred. I beg to move.
The Earl of Caithness: My Lords, as the noble Lord, Lord Graham of Edmonton, said, we debated this issue in Committee. Then, it was the noble Lord, Lord McIntosh of Haringey, who moved the amendment and my noble friend Lord Hesketh who spoke on behalf of the Government. There has been a change of bowling in the Opposition. The noble Lord, Lord Graham, has put forward the arguments in a similar way to that proposed by the noble Lord, Lord McIntosh. There has also been a change of batsman and I shall defend in much the same vein as did my noble friend Lord Hesketh.
Apart from the case of factory owners who pay for their own hydrants, the costs incurred by a water undertaker are directly related to the fire authorities' statutory functions. They are incurred at the request of those authorities and not as a result of the requisition of the mains supply. These are not therefore charges which it is appropriate to recover from the water undertakers' customers or from owners and occupiers of premises who may have requisitioned a water main on which a fire hydrant is then located.
I contend that it is not reasonable to compare the provision of fire hydrants with that of electricity or gas, as did the noble Lord. I shall go further and compare it with domestic water supply services which are, by and large, limited to the private use of customers. A fire hydrant serves a public emergency purpose. Fire fighting is a public service which it is right should be supported centrally from public funds. Not least in accountability terms, it is clearly better for fire authorities to continue to be responsible for costs incurred at their request.
6.15 p.m.
Lord Graham of Edmonton: My Lords, the Minister can see the case for an exemption in respect of the supply of water to factories which is a public service. A distinction is made with regard to factory owners, so do not let us argue that there are no distinctions. The Minister makes a distinction, for which he makes a case, and everyone else is lumped in. We are certainly mindful of the change in the circumstances of local authorities. Fire services are maintained by the public. They are paid for by the public, substantially by the central exchequer—the taxpayers—but they are also funded by the local people. I can envisage, as I know the Minister can envisage, many an area where the additional burden of providing the fire hydrants will turn out to be punitive for the existing payers. I believe that the developers—the undertakers—are equally able to pass on the cost without it having to be borne by the public. I do not think that the Minister has given a satisfactory answer and I therefore intend to test the opinion of the House.
6.16 p.m.
On Question, Whether the said amendment (No. 108BA) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 108.

DIVISION NO. 3

CONTENTS

Addington, L.

Listowel, E.

Airedale, L.

Llewelyn-Davies of Hastoe, B.

Ardwick, L.

Aylestone, L.

Lockwood, B.

Barnett, L.

Lovell-Davis, L.

Birk, B.

McIntosh of Haringey, L.

Brooks of Tremorfa, L.

McNair, L.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Meston, L.

Carter, L. [Teller.]

Nicol, B.

Cledwyn of Penrhos, L.

Northfield, L.

Cocks of Hartcliffe, L.

Ogmore, L.

Craigavon, V.

Peston, L.

David, B.

Pitt of Hampstead, L.

Davies of Penrhys, L.

Ponsonby of Shulbrede, L.

Dean of Bes wick, L. [Teller.]

Prys-Davies, L.

Dormand of Easington, L.

Rathcreedan, L.

Elwyn-Jones, L.

Ritchie of Dundee, L.

Ewart-Biggs, B.

Ross of Newport, L.

Fisher of Rednal, B.

Shackleton, L.

Fitt, L.

Stedman, B.

Gallacher, L.

Taylor of Blackburn, L.

Galpern, L.

Thurso, V.

Graham of Edmonton, L.

Turner of Camden, B.

Hatch of Lusby, L.

Underhill, L.

Hooson, L.

Wallace of Coslany, L.

Hughes, L.

Walston, L.

Hunt, L.

Whaddon, L.

Jay, L.

White, B.

Jeger, B.

Williams of Elvel, L.

Jenkins of Putney, L.

Willis, L.

John-Mackie, L.

Winstanley, L.

Kennet, L.

Young of Dartington, L.

Kirkhill, L.

NOT-CONTENTS

Airey of Abingdon, B.

Gray of Contin, L.

Aldenham, L.

Greenway, L.

Alexander of Tunis, E.

Halsbury, E.

Alport, L.

Harvington, L.

Arran, E.

Henley, L.

Ashbourne, L.

Hesketh, L.

Auckland, L.

Hives, L.

Balfour, E.

Holderness, L.

Bauer, L.

Hooper, B.

Belstead, L.

Hylton-Foster, B.

Blatch, B.

Ingrow, L.

Blyth, L.

Jenkin of Roding, L.

Boyd-Carpenter, L.

Johnston of Rockport, L.

Brougham and Vaux, L.

Joseph, L.

Caithness, E.

Kaberry of Adel, L.

Campbell of Alloway, L.

Killearn, L.

Campbell of Croy, L.

Kimball, L.

Carnock, L.

King of Wartnaby, L.

Clinton, L.

Layton, L.

Clitheroe, L.

Long, V.

Colwyn, L.

Lyell, L.

Constantine of Stanmore, L.

McAlpine of Moffat, L.

Cottesloe, L.

Macleod of Borve, B.

Cox, B.

Malmesbury, E.

Craigmyle, L.

Margadale, L.

Cranbrook, E.

Marley, L.

Cross, V.

Marshall of Leeds, L.

Davidson, V. [Teller.]

Maude of Stratford-upon-Avon, L.

Denham, L. [Teller.]

Dundee, E.

Merrivale, L.

Eden of Winton, L.

Mersey, V.

Elibank, L.

Middleton, L.

Elliott of Morpeth, L.

Milverton, L.

Faithfull, B.

Monk Bretton, L.

Fraser of Carmyllie, L.

Montgomery of Alamein, V.

Gibson-Watt, L.

Mottistone, L.

Grantchester, L.

Munster, E.

1183

Murton of Lindisfarne, L.

Sharples, B.

Nelson, E.

Skelmersdale, L.

Norrie, L.

Somers, L.

Nugent of Guildford, L.

Stanley of Alderley, L.

Onslow, E.

Strange, B.

Orkney, E.

Strathclyde, L.

Orr-Ewing, L.

Strathcona and Mount Royal, L.

Oxfuird, V.

Pender, L.

Swansea, L.

Penrhyn, L.

Terrington, L.

Peyton of Yeovil, L.

Trafford, L.

Radnor, E.

Trefgarne, L.

Rawlinson of Ewell, L.

Trumpington, B.

Reay, L.

Vaux of Harrowden, L.

Renton, L.

Windlesham, L.

Rodney, L.

Wyatt of Weeford, L.

Selborne, E.

Wynford, L.

Shannon, E.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.24 p.m.
Clause 49 [Powers to disconnect service pipes and cut off supplies]:
Baroness Blatch Baroness Blatch moved Amendment No. 108C:
Page 58, line 3, after ("shall") insert ("if that undertaker has reasonable grounds for believing that such disconnection or cut-off may last longer than forty-eight hours").
The noble Baroness said: My Lords, this amendment is an adaptation of Amendment No. 320ZB which I tabled at Committee stage. Clause 49(8) places a duty on a water undertaker to notify a local authority within 48 hours of disconnecting or cutting off the supply of water to an inhabited house. The purpose of the amendment is to cut down on bureaucracy and remove that duty from a water undertaker in those cases in which notification to a local authority would serve no useful purpose.
In Committee I said that it was likely that most of those notifications would be made to the local authority after the event and therefore it seems to be an unreasonable requirement on the water companies. None of the water undertakers' normal operational work would involve a cut-off for more than 48 hours. My amendment at Committee stage would have restricted the requirement to give notice to cases in which the water supply was disconnected by reason of non-payment of water charges. In rejecting that amendment the noble Lord, Lord Hesketh, stated that there were public health reasons why a water undertaker should notify a local authority of disconnections by reason of essential works which could last for a considerable period. I agree that if there were to be lengthy disconnection for operational reasons—for example, for a period of over 48 hours—there would be good reasons on public health grounds to require the water undertaker to inform the local authority of that disconnection.
However, I understand that such lengthy disconnections would only happen on very infrequent occasions. I think all noble Lords would agree that there is no point in a water undertaker giving a local authority notice of a disconnection after the supply has been restored. Therefore in rewording my amendment I now provide that the water undertaker should only be required to give
1184
notice to the local authority if it has reasonable grounds for believing that the disconnection may last for longer than 48 hours. This amendment would not affect notices in respect of disconnections following non-payment of water charges because at the outset the water undertaker would not know when the customer was likely to make payment. On the other hand, the water undertaker would know at the outset whether the operational works involved one of the rare cases in which disconnection for longer than 48 hours would be needed.
I feel that my new amendment meets the objections made by the noble Lord, Lord Hesketh, to the previous amendment. I therefore hope that he will accept it.
Lord McIntosh of Haringey: My Lords, it may be useful for me to speak first to Amendment No. 108CA, which is grouped with this amendment. To put it politely, there was a certain amount of confusion over this matter at Committee stage and I confess that I was one of those who were confused. Amendment No. 108CA to some extent is intended to put matters right.
The position set out in the Bill is an extreme and rather strange one. It requires that local authorities shall be notified of all disconnections, however short and for whatever reason, and that they shall be notified straight away or within 48 hours. There is no provision at all for the local authorities to be given any useful analysis of the disconnections. They are just disconnections. All the reasons may be lumped together, as may all the periods of time. In other words, as it stands this is not a very useful provision, and, as the noble Baroness, Lady Blatch, said, it may in fact become a burden on local authorities without being of any assistance to them.
The first purpose of the exercise of notification surely should be that the numbers of serious disconnections should be known. We suggest a period of 24 hours rather than 48 hours, but I would not be stood at the wall for that. Secondly, there should be some kind of analysis of why there should be disconnections. Clearly if disconnections are made for physical reasons such as road works or any other interruption of supply, it is of interest in an engineering sense; if disconnections are made for reasons of non-payment of bills that is of interest in a social sense; and if there are disconnections for any lengthy period of time, that is of interest in a public health sense.
Unless the reason for disconnection is given, there is not much point in the whole exercise. Neither is there a great deal of point in having disconnections notified as they occur or soon afterwards. Our amendment proposes that they should be notified in six-month batches with an analysis of why the disconnections took place and the lengths of time involved.
Having said why I think that notification in a revised form is important, it is necessary to consider whether the local authorities are the right people to be notified. Clearly, from the point of view of public health, it is right that the local authorities should be notified. That is why we have left the subsection unchanged. However, from the point of view of

1185
customer service, whether, in the engineering sense, it is a physical breakdown of supply, or, in the social sense, disconnection because of non-payment, the customer service committee ought to know. It is for that reason that Amendment No. 108CA provides for the notification that I have described. I believe it to be sensible. However, it is to the customer service committee rather than to the local authority.
6.30 p.m.
The Earl of Cranbrook: My Lords, I speak to Amendment No. 108C which stands in my name. I should like to raise one further point. In Committee the noble Lord, Lord Hesketh, said on 18th May at col. 1304 that to the best of his knowledge there were no problems with a similar provision in the existing legislation. From the operational view of a water authority, the current equivalent provision is contained in Section 39 of the Water Act 1945 immediately following the provision in Section 38 which gives the water undertaker power to cut off supply following non-payment of charges. In practice, Section 39 has always been regarded as requiring notice solely in respect of disconnection for non-payment of water charges. That is one of the aims of Amendment No. 108C. It so happens that in this Bill the powers of disconnection for all purposes are contained in Clause 49, along with the notice provision. So there is need for an amendment to make the position clear.
It may be useful if I remind noble Lords of the figures. They were quoted in Committee. In the Anglian Water region there are 1,900 disconnections a year following non-payment of water charges. But there are about a quarter of a million cut-offs for operational reasons that last for less than 48 hours. If we multiply that figure by 10—on the basis that there are 10 regional water authorities—we arrive very arbitrarily at a figure of two and half million such notices circulating through the system each year. If they were sent by first class post this would represent expenditure of approximately £0.5 million. If they were sent by Fax there could be some red hot telephone lines.
The amendment restricts the requirement to give notice to a local authority of disconnections following non-payment of water charges and those rare cases when there are good grounds for anticipating that a cut-off for operational reasons is likely to last more than 48 hours.
Lord Renton: My Lords, the prospect of one's water supply being cut off, even for an hour or two, is not to be relished. However, it seems that it happens quite often. I am thankful to say that I have not experienced it to any great extent. Clearly, when it happens, the local authority should be informed—and in reasonable time. I see no objection to my noble friend's amendment.
Although it may have some other attractions, I am somewhat alarmed to find that Amendment No. 108CA reveals my ignorance of our language. I have never before come across the word "disaggregated". I know what "aggregated" means—at least I think I do—but if we are to have an entirely new word inserted in a statute I think that it may require
1186
definition. Surely we could do better than to use such a terrible word.
Lord McIntosh of Haringey: My Lords, before the Government rise to reply, I must defend the word "disaggregated" which has been in common use for many years in economics, as my noble friend Lord Jay, and indeed the noble Lord, Lord Home of the Hirsel, who is such a distinguished economist, will confirm. Unless one has the ability to disaggregate data—to take data which is produced in aggregate terms and to apply it to specific circumstances—then one is depriving oneself of one of the major tools of economics. So far as I know, ever since the word was first used 60 years ago, there has been no satisfactory alternative to it.
Lord Hesketh: My Lords, I am very grateful to my noble friend Lord Renton for asking the question that I dared not ask. Clause 49 sets out the circumstances in which a water undertaker is able to cut off or reduce supplies of water. Subsection (8) requires an undertaker to serve notice on the relevant local authority within 48 hours of cutting off a supply to an inhabited house. This requirement is for public health reasons. The purpose of Amendment No. 108C is to limit the requirement to notify the local authority to those disconnections that the undertaker has reason to believe will last longer than 48 hours. My noble friend Lady Blatch explained that the reason behind her amendment is concern that under the provisions as they stand the water undertaker will be required to notify the local authority even of disconnections that last no more than an hour or two.
The purpose of Amendment No. 108CA is to provide for each water undertaker to notify the relevant customer service committee of all disconnections exceeding 24 hours or causing a danger to health which have occurred over the preceding six months.
Clause 49(8) re-enacts Section 39 of the Water Act 1945. It is a provision which has worked satisfactorily for at least 40 years so far as we are aware. We should be surprised to hear that local authorities have insisted on the service of notices for disconnections lasting short periods or that they have prosecuted authorities for not doing so. However, having said that, I have some sympathy with the arguments of the noble Baroness because I am always ready to improve the Bill. I am not, however, convinced that the onus should be on the water undertaker to decide which disconnection should be notifed to a local authority. Nor do I agree that all disconnections lasting less than 48 hours should not be reported to a local authority.
As to Amendment No. 108CA, I explained on a similar amendment in Committee that the customer service committees will have access to information on interruptions of supply required to be published each year under Licence Condition I by undertakers in their levels of service information and service target reports. Interruptions of supply are among the service indicators for which targerts are to be set in order to improve the quality of service and encourage increased efficiency.

1187
In our view it is disconnection for non-payment which will be of primary interest to the customer service committees. This is a central matter for company customer relations. Unlike disconnection for necessary works, there is no requirement on the undertaker to provide an alternative supply where the disconnection is likely to last for more than 24 hours.
I gave an undertaking to the noble Lord, Lord Ezra, in Committee that I would consider whether an appropriate amendment might be made either to the Bill or to the licence to require water undertakers to provide customer service committees with numbers of these disconnections for non-payment of charges. I am now happy to announce that we propose to make it a condition of appointment that the water undertaker informs the relevant customer service committee of the number of domestic premises which have been disconnected for non-payment of charges during each consecutive period of six months. The information is to be broken down to show the number of premises in each operating division or equivalent of the undertaking.
In conclusion if my noble friend Lady Blatch will agree to withdraw Amendment No. 108C, I give her an assurance that I shall look again at this provision with a view to meeting the concern about disconnections where the supply is re-connected within a few hours. I would also hope, in the light of the new requirement and the conditions of appointment, that the noble Lord, Lord McIntosh, will feel able to withdraw Amendment No. 108CA.
Lord Ross of Newport: My Lords, On behalf of my noble friend Lord Ezra, perhaps I may thank the noble Lord for the concession that he has made. My noble friend is grateful.
Lord McIntosh of Haringey: My Lords, as I do not have the right to reply before the noble Lord sits down, perhaps I may thank him. The provision in the conditions of appointment is an acceptable substitute and I shall not be moving Amendment No. 108CA.
Baroness Blatch: My Lords, I am most grateful to the Minister for his reply. What has been suggested will be a useful performance measure when it comes to the customers' committees making judgments about the performance of their particular company. It is also a case of, just occasionally, persistence paying off. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108CA not moved.]
Clause 51 [Duty as respects constant supply and pressure]:
Baroness Blatch Baroness Blatch moved Amendment No. 108D:
Page 61, line 20, after ("above") insert ("—(a)").
The noble Baroness said: My Lords, Clause 51 places a water undertaker under a duty to provide a constant supply of water at an adequate pressure. Clause 51(9) provides a defence to that duty, if the
1188
undertaker can show that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
The defence under the Bill differs from the defence under current legislation. Under current legislation it is a defence for undertakers to show that they have failed to comply with the constant supply and pressure duty by reason of frost, drought and unavoidable accident or other unavoidable cause.
My concern in tabling the amendment is with the practical problems which could arise, in particular with respect to a water undertaker's apparatus which was constructed many years ago. It obviously will not be possible for water undertakers to upgrade all their apparatus overnight to take account of the new, more stringent, defence in the Bill.
Although my Committee stage amendment was rejected, in responding my noble friend Lord Arran stated that pipes laid under the old provisions will continue to be subject to the old conditions. The Bill's requirements will apply only to pipes laid under the provisions of the Bill. I welcome that response, but my concern is that the Bill as drafted does not provide what my noble friend Lord Arran stated.
My amendment therefore provides for the existing defence to continue to apply to works or apparatus constructed before the transfer date under this Bill. All the amendment does is to achieve what my noble friend Lord Arran interpreted the Bill to provide in responding to my Committee stage Amendment No. 321AZA. I hope therefore that my new amendment will be accepted.
A further point is that my noble friend Lord Caithness has written to me on my Committee stage amendment stating that he would expect the courts to accept arguments that it would be unreasonable to expect undertakers to have to dig up and relay pipes laid at a time when there was an exemption for frost to avoid damage by frost. However I argue that it is unreasonable to leave water undertakers with that element of doubt. There can be no certainty as to what a court would decide. I feel that rather than leave these matters to the decision of the courts the position must be made clear in the Bill.
My noble friend Lord Caithness went on in his letter to state that undertakers should show all due diligence in laying new pipes—that is, the replacement of old pipes. I accept that. If my amendment were even further refined to provide that the existing defence should continue to apply to apparatus constructed before the transfer date—as long as the water undertakers had carried out a reasonable programme of replacement—that would meet my requirements. It seems that both my intentions and those of the Government are getting closer all the time. Even at the risk of being criticised for being persistent again, I ask the Government to consider my amendment further on that basis. I beg to move.
6.45 p.m.
Lord Renten: My Lords, I am very sorry, but I have to say to my noble friend, whose efforts I greatly admire, that I am afraid that her new defence would

1189
not really be in the interests of those to whom she is offering it.
The trouble is this. Under subsection (9) there is a defence stated in very broad terms. It shall be a defence:
"for that undertaker to show that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence."
That is without limitation of particular circumstances. That wide defence can be shown in any circumstances. But under my noble friend's defence, it is limited to those cases where the mains, reservoirs, pumping stations etc. were laid or constructed before the transfer date, and also where the undertaker was prevented from complying with his obligations through frost, drought, unavoidable accident, or unavoidable cause. That looks very nice and broad and helpful. But in practice if we have a defence which specifies limited circumstances, we are not really adding anything to the opportunities of defence in circumstances where there may be prosecutions. Therefore I hope that in the interests of the undertakers it will simply be the broad defence that is left to them. I may be wrong, but that is how I feel about it.
The Earl of Caithness: My Lords, as my noble friend Lady Blatch said, this amendment was discussed previously in Committee. I appreciate that the amendments relate to the current legislative position. My noble friend's concern is that water undertakers shall not, immediately after the transfer date, be required to dig up and relay pipes laid under the old conditions. I do not believe that this is the effect of the clause as drafted. It will ultimately be a matter for the courts to determine what constitutes "reasonable steps" and the exercise of "all due diligence" in relation to any case.
However we trust that the courts will accept the argument that taking all reasonable steps and exercising all due diligence will not extend to undertakers having automatically to dig up and relay mains etc. laid or constructed before the new conditions came into force. Clearly, however, undertakers thereafter will be expected to carry out a normal programme of maintenance on that apparatus which will, for example, from time to time include repairing run down water mains. In doing so it is right that they should be required to take all reasonable steps and exercise all due diligence to avoid breaching their duties. The side effect of these amendments would be to provide an absolute defence even in these circumstances. In other words, there would be no recourse for a consumer who was adversely affected should the undertaker, in carrying out future repairs, fail to take even the most basic measures to avoid frost.
I believe my noble friend will find that that is an undesirable effect. Not only do I hope that she will bear in mind what my noble friend Lord Renton said, but I hope she takes on board the unforeseen consequence of the amendment before us. I believe that we have met her concern in the Bill. I appreciate that it was important to have this matter properly aired. We considered it and that is why the Bill is so worded.
Baroness Blatch: My Lords, I hope I may be permitted a question. If I understood the Minister correctly, he is saying that it is reasonable to assume that the water companies' will make every effort to bring antiquated old apparatus up to standard, but it cannot be expected to be done overnight. Therefore they need to convince a court that they have a reasonable programme of improvements. If there were damage to a piece of apparatus that the company had not started restoring or bringing up to the new standard, would that be grounds for defence against a charge of negligence, for example?
Lord Renton: My Lords, will my noble friend allow me to intervene? I think she will find that it is a rule of interpretation of statutes that they are assumed not to have retrospective effect unless the opposite is stated.
Baroness Blatch: My Lords, I am grateful for that reply and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 108E not moved.]
Clause 53 [Regulations for preserving water quality]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 108F:
Page 62, line 41, at end insert—
("(f) to issue, with any demand to consumers in respect of water charges, a statement of the water quality achieved in the area concerned, including details of any failure to meet standards prescribed for the purposes of section 52 above.").
The noble Lord said: My Lords, in our view it is a reasonable request to make of the Government that if they are anxious to ensure that water consumers are made more intelligent concerning the quality of the water that they drink, they ought to look with favour upon this or a similar amendment. The amendment asks the Government to lay on water undertakers a duty to advise consumers of the quality of the water which they are selling and the deficiencies in it.
Last Tuesday my noble friend L-ord McIntosh reminded the Minister that it is relatively simple to obtain from Thames Water Authority, for instance, a description of the quality of the water in various parts of its area and match that against EC standards.
I do not make a party point because the Government are genuinely seeking to enliven the debate on the quality of water. From time to time the Minister vigorously defends the quality of the water consumed in his country. However, as a reasonable man he acknowledges that where standards are laid down, whether he accepts them as sensible, there are shortfalls or deficiencies.
There are people who may seek to exploit the situation and be alarmist and sensational about it. But the overwhelming majority of water consumers who are satisfied with its treatment and that it is pure to drink will not be alarmed if they are told that its quality fails to match up to standard. My noble friend Lord McIntosh referred to last week's experience of Thames Water Authority. On that

1191
occasion the eight districts that were tested within the area—one of which was Enfield—were below standard. However, in another area all standards were satisfied. There are many ways in which the quality of the water can be affected.
In the amendment we wish to widen the spectrum of the informed consumers. The Minister may reasonably say to me that the provision is costly and unnecessary; and that it is possible to obtain the information by making a telephone call. However, we wish to have a statement of the water quality in the area concerned, and any failure to meet the required standards should be issued with the demand.
If the Minister is unable to accept the amendment, I should like him to say something to encourage the water companies not to be afraid to inform their consumers what they are drinking. I am sure that the undertakers will be able to defend their positions and say that the water is safe to drink. However, I know that the Government wish to improve environmental standards and water is a basic provision. I believe that an educated public will be more on his side than against him. It will be armed with information. The amount of debate which has taken place in the newspapers, on television and in your Lordships' House has increased enormously, and I believe that the public will welcome such intelligence. I believe that they are entitled to it. I beg to move.
Lord Renton: My Lords, I hope that my noble friend will not accept the amendment. The administrative effort involved in adding the information to the demand for charges will add marginally to the administrative cost. If the water is already "wholesome"—to use the word contained in Clause 52—there is no need to state it. If it is not, it should not be supplied, and the water undertaker will be in breach of his duty if he does so. The word "wholesome" is not used in the amendment. I do not complain about that because it refers to Section 52 where the word is used. I cannot find the word "wholesome" defined in the Bill. If water is heavily chlorinated in order to kill bacteria, for example, does that make it wholesome? I am not sure. If water is so hard that it interferes with one's dishwasher, does that make it wholesome? My general feeling is that this amendment should not be accepted.
The Earl of Caithness: My Lords, as we have explained in earlier discussions, full details of all analytical data for an area taken in accordance with the water quality regulations will be freely available to customers. The results will show any breaches of the standards. However, I am sure that the noble Lord, Lord Graham of Edmonton, will agree with my noble friend Lord Renton that the imposition of a requirement on undertakers regularly to send out all this unsolicited information to every customer regardless of whether they want it would be a costly and time consuming exercise and thus quite unjustified. But we are not alone in that we are anxious that customers are fully aware that they can easily obtain this information if they want it and
1192
where they can obtain it. We are therefore drafting a regulation requiring undertakers to notify customers when sending out their bills where detailed information on the quality of water supplied may be inspected or obtained. In this way anyone who wishes to have specific information about their water quality will know how to go about obtaining it. Clause 53(4) as drafted already allows the regulations on information provision to make such a requirement.
We agree with the noble Lord's sentiments that information on drinking water quality should be fully and freely available to customers and our regulations will ensure this. Indeed, we believe that they are the most comprehensive in Europe in making this information available. Not only will there be information about compliance with the standards but there will also be information about progress on compliance programmes, and about the quality in supply zones, at service reservoirs and treatment works. A requirement to notify customers where and how they can obtain all this information would be a neat and simply way of meeting noble Lord's concerns.
On the last amendment which the noble Lord debated with me I played a very straight bat. On this occasion I offer him something to catch.
The Earl of Cranbrook: My Lords, before my noble friend sits down, he used the words "freely available". Under COPA it is the present custom for water authorities to require a charge for extra costs incurred in providing such information. Did the Minister mean free?
The Earl of Caithness: My Lords, yes, I did mean free.
7 p.m.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister because we are not apart on the central issue. That is to oblige water undertakers to make available to their consumers information about the quality of the water. However, the Minister said that, by regulation, he would oblige water undertakers to give information on the demand about where consumers can obtain the details but not the actual details.
The noble Lord, Lord Renton, made heavy weather of the extra costs involved. It is this Government, which he supports, which over the past few years have laid duty after duty on local authorities about the amount of information which they must include on their rate demands. This has applied whether the local authority liked it or not or whether the individual who received it wanted it or not. The Government have never hesitated in imposing upon local authorities the duty of making detailed information available. This amendment is saying that if the information is correct and not alarmist, the people who are paying for the water should be told where there is a deficiency in the standard.
The noble Lord, Lord Renton, talked about standards. These are EC standards, and there is no argument but that the Government accept them.

1193
They acknowledge that there are some deficiencies. I am saying that the people paying for the water are entitled to know of those.
I understand from the Minister that in future when I receive my water demand it will say that if I want further information I can obtain it from the office in Waltham Cross or by ringing a certain telephone number. The overwhelming number of consumers who are satisfied with water which is wholesome will not want to do that. They will not need to. I am saying that there is no extra cost involved.
I am not sure whether the Minister said something about a duty of reporting progress towards compliance. That is a very important matter. We have moved earlier amendments to have written on the face of the Bill that the consumer is entitled to information which shows what is being done. I am satisfied with the general answer that the Minister has given but it is important that the consumer should be told what progress his water supplier has made towards complying with the standards. Could the Minister say a little more about that matter?
The Earl of Caithness: My Lords, with the leave of the House, I do not think that I can add very much to what I said to the noble Lord. I have given him a very full answer. There will be more information than the noble Lord originally asked for in this amendment. It will be made available under regulations. This will enable the customer to receive a great deal of detail. If the noble Lord wants all of that detail enclosed with the half-yearly water bill, it would be considerably more than that which we receive with the rates, because we are talking of a very comprehensive set of details that will be defined under Clause 65.
I hope that the noble Lord will reflect upon this matter and read what I have said. I do not think that I can help him further without knowing the specific information that he requires.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister. I think that he has gone as far as he can. I do not accept that the information will be in such detail that it cannot be included in the demand. The Government did not hesitate in forcing local authorities to give additional information in the past. I believe that the customer is only going to be told where he can obtain the information.
I have news for the Minister. I am certain that where this information is freely available the local press and local radio stations will look upon it as their duty to draw the attention of their readers or listeners to the detail of individual entitlements. That may serve the purpose as well as this amendment. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Arran: My Lords, your Lordships may feel that this is an appropriate moment to break for dinner. I suggest that we return to the Report stage of this Bill at five minutes past eight. I beg to move that further consideration on Report be now adjourned.
1194
Moved accordingly, and, on Question, Motion agreed to.

Common Land (Rectification of Registers) Bill
7.05 p.m.
Baroness Blatch: 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.—(Baroness Blatch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS LOCKWOOD in the Chair.]
Clause 1 [Removal from registers]:
Baroness Blatch Baroness Blatch moved Amendment No. 1:
Page 1, leave out lines 12 to 18 and insert—

("(a) that—

(i) there is a dwellinghouse on the land and, if and so far as the land is not the site of that dwellinghouse, it is ancillary to that dwellinghouse; or

(ii) the land is ancillary to a dwellinghouse which is not on the land; and

(b) that the requirements of paragraph (a) above have been satisfied at all times since 5th August 1945.").

The noble Baroness said: Not for the first time today I have cause to be grateful to my noble friend the Minister and his officers for the enormous consideration which has been given to this Bill between Second Reading and this stage. Most of the points that were raised at Second Reading have been considered. Noble Lords will see that the amendments on the Marshalled List are the result of that work.
Amendment No. 1 clarifies the position of land which is ancillary to a dwelling, whether or not that dwelling is situated on the site. The substance of what will be the rewritten Clause 1 and subsection (2) remains the same. The scope of this Bill is therefore not extended by this amendment. We have clarified the position.
At Committee stage there was confusion about a dwelling and the garden. The word "curtilage" was mentioned. However, this rewritten subsection clarifies the position. I am reasonably confident that the wording is right, although there has been some difficulty in arriving at that wording. I should like to put on record that the changing of this subsection of Clause 1 in no way inhibits or thwarts the progress towards presenting a major Bill on common lands at some future date. I beg to move.
Lord Graham of Edmonton: To the best of my knowledge and understanding of the matter I accept entirely what the noble Baroness has said. She is aware that there are those outside the House who take a great interest int his matter, who are very keen that nothing more than the minimum should be taken at this stage, pending the major Bill. The Minister will recall that in a sense the provision was

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a manifesto commitment. We are waiting to see whether this tidies up the matter.
I shall read with care what the Minister says. I am grateful for what the noble Baroness has said. There are other stages in this Chamber. It is very important that the noble Baroness should have taken great care to ensure that there is no scope for people to misinterpret what has been done. Neither should it be used as a peg to argue other issues in a procrastinating way in another place. I am not teaching my grandmother to suck eggs but it is absolutely crucial that one avoids that possibility. I have heard what the noble Baroness has said and I raise no objection to the clarification.
Lord Monk Bretton: I welcome Amendment No. 1. It will deal with what we referred to colloquially at Second Reading as the garden-only case. I am quite sure that that is all to the good. I am very pleased to see that something has been done to clarify this situation. I strongly support the amendment.
Lord Hesketh: I undertook at Second Reading to look into the matter of whether the garden-only situation was adequately covered and to take appropriate action after discussion with the sponsors. The amendment gives effect to that undertaking and removes the ambiguity that previously existed.
The noble Lord, Lord Graham, asked about a Bill and its arrival. I cannot add to what I said on Second Reading a month ago. It remains our aim, as we stated in our response in January 1987 to the Common Land Forum Report, to introduce comprehensive legislation based broadly on the forum's recommendation at a suitable opportunity when parliamentary time permits. The situation remains to day as it was a month ago.
Lord Graham of Edmonton: Before the noble Lord sits down, the arguments until about six months ago were that there was, if not dispute, doubt as to what should be included in the Bill. Refreshing my memory on my feet, my understanding is that the major objections to the thrust of the new legislation were clarified. That is therefore out of the way and the Government are simply saying that it is now a question of the management of parliamentary time. There is no issue of substance but merely a question of finding time.
This Bill has gone through quickly and I appreciate that it contains only one tiny element of a major Bill that is to come forward. The Minister will understand that there is likely to be considerable all-party support for that Bill when it arrives. If these few words encourage him to produce that Bill sooner rather than later, then our purpose will have been served.
Lord Hesketh: I think I should clarify the situation. Not all the outstanding issues have been completely resolved, and that is part of the reason why we have not yet been able to consider a firm date.
On Question, amendment agreed to.
Baroness Blatch Baroness Blatch moved Amendments Nos. 2 and 3:
Page 1, line 27, after ("relates") insert ("or in the case of any part of it").
Page 1, line 29, at end insert ("or, as the case may be, that part of it.").
The noble Baroness said: With the leave of the Committee, I shall move both amendments together.
Amendments Nos. 2 and 3 give the power to the Commons Commissioner or his agent to consider part of a person's land or property. It is reasonable to assume that, with the Bill as drafted, when an application is made, for example, for deregistration and it involves a house, some land, and perhaps some other land over which there is doubt on whether it is ancillary, it is likely that if any one part of it does not conform and is not consistent with the requirements of the Bill, the whole package could be rejected. These two amendments allow the commissioner to consider any part of an application. In other words, perhaps two parts accepted and one part rejected.
My noble friend Lord Monk Bretton also had a particular concern and I believe that these two amendments go a long way towards meeting that concern. I beg to move.
On Question, amendments agreed to.
Baroness Blatch Baroness Blatch moved Amendment No. 4:
Page 2, line 3, at end insert—
("() Section 17(2) of the said Act of 1965 (procedure of Commons Commissioners) shall apply to a matter referred to a Commissioner under this section as it applies to a matter referred under that Act.").
The noble Baroness said: The amendment simply takes Section 17(2) of the 1965 Act and applies it to this Bill. It is a purely procedural piece of legislation. Again, it enables the Commons Commissioners to refer an application to another commissioner. Perhaps I may quote the appropriate part of Section 17(2) of the 1965 Act. The reason why I wish to include this part in the Bill is that it refers only to the 1965 Act and we wish it to apply to the present Bill. It reads:
"Any matter referred to under this Act to a Commons Commissioner shall be dealt with by such one of the Commissioners as the Chief Commons Commissioner may determine, and that Commissioner may sit with an assessor selected by the Chief Commons Commissioner from the panel appointed under this section".
It is purely a procedural amendment designed to bring this Bill into line with the 1965 Act. I beg to move.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Regulations]:
Baroness Blatch Baroness Blatch moved Amendments Nos. 5 and 6:
Page 2, line 6, after ("also") insert ("(a)").
Page 2, line 7, at end insert—
("(b) require any notice of such an objection to be accompanied by such documents, statements or declarations as the regulations may prescribe; and

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(c) require a registration authority, on receiving such a notice, to take such steps as the regulations may prescribe for informing the public of the objection.").
The noble Baroness said: Again, with the leave of the Committee, I move these amendments together.
The amendments give power to the Secretary of State to make regulations, and in particular to make regulations notifying the public. The whole purpose of having this Bill before the Chamber at the moment is because this amendment was not included in the 1965 Act. It seems to me that among all the regulations that need to be made by the Secretary of State he must make a regulation that requires notification to be given not only to owners of land but also the kind of notification that one would make with any planning application. Therefore, these are particularly key amendments. Although regulations were made under the 1965 Act, this was a glaring omission and I hope that these two amendments will receive support. I beg to move.
On Question, amendments agreed to.
Clause 2, as amended, agreed to.
Remaining clause agreed to.
In the Title:
Baroness Blatch Baroness Blatch moved Amendment No. 7:
Line 3, leave out ("is") to ("; and") in line 4 and insert ("a dwellinghouse or which is ancillary to a dwellinghouse and in respect of which that requirement has been satisfied at all times since 5th August 1945").
The noble Baroness said: This is the final amendment to the Bill. It is a consequential amendment making the title consistent with the amended Bill. I beg to move.
On Question, amendment agreed to.
House resumed: Bill reported with amendments.

Licensing (Amendment) Bill [H.L.]
7.19 p.m.
Report received.
The Earl of Arran: My Lords, I beg to move that the House do now adjourn during pleasure until 8.5 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 7.20 to 8.5 p.m.]

Water Bill
Consideration of amendments on Report resumed.
Clause 54[Offence of supplying water unfit for human consumption]:
Lord Addington Lord Addington moved Amendment No. 109:
Page 64, line 15, at end insert ("or by the Customer Services Committee for the area affected").
The noble Lord said: My Lords, the aim of this amendment is to try to give a little more power to local areas as regards the right to prosecute an
undertaker supplying water that is unfit for human consumption. When this matter was considered in Committee the Government were successful in a Division over whether anyone could prosecute an undertaker for supplying that water. However, this amendment means that the customer services committees of the local areas will be allowed to undertake prosecutions on behalf of local people. The consumers will then have a local representative capable of taking some positive action as regards someone who has provided water that is unfit for human consumption. I suggest that the customer services committee is a far more suitable body as it will mean that local people will not have to go to the far too bureaucratic machinery in Whitehall and will thus be more in contact with their desires and aspirations and also with local problems. I beg to move.
Lord Graham of Edmonton: My Lords, this seems to be an eminently sensible amendment. Anything that can be seen by local people to be giving them an entrée into what will be a radically changed situation is to be welcomed. I take note of what the Minister and his colleages have said that there will be little change except improvement. Nevertheless, there will be a great deal of apprehension and I believe that this amendment will go a long way to help to ease that apprehension out of the minds of a great many water users.
Lord Ross of Newport: My Lords, it seems to be a sledgehammer to crack a nut that one has to leave prosecution solely to the Secretary of State or the Director of Public Prosecutions. I should think that this is one way in which at local level people can react and get others to act on their behalf when a disaster occurs such as that which happened recently in Cornwall and elsewhere in the western region. I hope very much that the Government will consider this amendment seriously.
Lord Hesketh: My Lords, the effect if Amendment No. 109 would be to enable the customer services committee for the area affected to institute proceedings where it believes a water undertaker has supplied water unfit for human consumption. Clause 54 as it stands restricts the power to prosecute to the Secretary of State and the Director of Public Prosecutions. We discussed a similar amendment during the Committee stage of the Bill and while I understand the good intentions of the noble Lord, Lord Addington, in tabling this amendment I must reiterate what I said then. The Government believe that the power to prosecute should rest with the public authority which is charged with enforcing quality standards. For public supplies the Secretary of State is the enforcing body. The prosecution power in Clause 54 is one of the weapons he can use to carry out that responsibility.
One of the key tasks of the customers services committees will be to investigate matters raised by individual customers and they will have an important role in following up customer complaints about drinking water quality. However, they will have no right to prosecute undertakers for failure to

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meet level of service standards with regard to their other duties. Therefore to give CSCs the right to prosecute under Clause 54 would give them an unprecedented power not echoed in the rest of the Bill.
The CSCs will try to resolve complaints with the undertaker and in the case of drinking water complaints will consult the relevant local authority. Where a CSC considers that the undertaker is unreasonable it can then refer the matter to the director general. To give them an independent power of prosecution would be wholly inappropriate to the structure of customer protection in the Bill whereby they report to and advise the director general.
Where a drinking water complaint was referred by a CSC to the director general then certainly where it concerned the possibility of water having been supplied unfit for human consumption he would be expected to refer it to the Secretary of State for possible prosecution. It is of course open to a customer to complain to the Director of Public Prosecutions. The power of prosecution under Clause 54 extends to him as well as to the Secretary of State. He represents the public interest and his inclusion in this clause enables the public to complain to someone other than the Secretary of State. Indeed it is open for anyone to request either of the prosecuting bodies to institute proceedings against an undertaker.
Supplying water unfit for human consumption is a very serious matter; hence the penalties for doing so may be substantial. I can assure noble Lords that the Government would not shirk from their responsibilities in prosecuting an undertaker under Clause 54 if it did indeed supply water unfit for human consumption. With that assurance, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Graham of Edmonton: My Lords, before the noble Lord sits down, will he say more about the powers of customer service committees before matters are passed higher up the chain to the director or to the Secretary of State? Local people may persistently put forward evidence on which no action is taken. The Minister says that the director will be one stage removed from the Secretary of State. The noble Lord should be encouraging the local committees to be vigilant and to use their opportunities to put evidence before those who are above them.
Lord Hesketh: My Lords, the customer service committees will report directly to the director general. They will have an important job, which is to be vigilant. We expect them to be so, as the noble Lord also wishes. On that point I feel that there is agreement on both sides of the House.
Lord Addington: My Lords, I still would have liked to see some local representation and someone lower down the scale being able to take this action. However, having heard what the Minister has said, I can see that we shall not get that concession. I can only hope that the bodies in question will be rather
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more active and vigilant than they have been in the past. There is considerable room for improvement. I am not prepared to divide the House. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.15 p.m.
Clause 55 [Provision of water where piped supplies insufficient or unwholesome]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 109ZA:
Page 64, line 35, after ("premises") insert ("in replacement of a private supply to those premises")
The noble Lord said: My Lords, Clause 55 is concerned with the provision of water where piped supplies are insufficient or unwholesome. Subsection (1) is concerned with circumstances in which it is not practicable to supply water in pipes but where it is practicable to supply water other than through pipes. Where the water is inadequate in quantity or too unwholesome for life or health the local authority may notify the undertaker of the danger to health and require it to provide a supply other than in pipes.
Under subsection (2) a local authority that gives notice in that way has to pay all the costs. It will be noted that subsection (1) does not specify why the water should be insufficient or unwholesome, whether it is through the fault of the undertaker or for any other reason. In effect this means that the only risk to a water undertaker which fails to provide an adequate supply of wholesome water is a fine of £5 a day. On the insistence of the local authority this supply has to be met other than in pipes—presumably by tankers. The local authority has to pay the costs but does not have any special resources from which to find the money. The charges therefore fall on the local residents.
Under our amendment this extraordinary provision that the local authority should always pay the costs of the replacement supply is restricted to a private supply. Where we are dealing with a former private supply what in effect we have is a new public supply. It seems just about reasonable that the costs of that should be borne by the consumers. In Committee the noble Lord, Lord Hesketh, called this a private private supply. However, where the failure is within the public supply, surely, unless it can be shown to the contrary, the failure is the responsibility of the undertaker. It is the undertaker's failure, and the cost of the tanker or the replacement supply ought not to be charged to the local authority and to the local authority's ratepayers.
I said that local authorities have no resources for this purpose. Perhaps the Minister will indicate that resources may be available. I understand that Clause 125 of the Local Government and Housing Bill now before another place provides for reimbursement of costs of this kind. Will Clause 125, or whatever clause it turns out to be when the Bill reaches us, be applicable in this case? We seem to have another case where the privatised water companies are to be unduly protected against what would otherwise be properly described as commercial risks. The risks,
which are the only justification for profits, ought to be charged to the undertakers and not to local authorities and thence to local people. I beg to move.
The Earl of Balfour: My Lords, I have studied this clause carefully because paragraph 76C of Schedule 22 has almost identical words applying to Scotland. The supply in question could come from a well. It might be found by the local authority environmental health department to be unfit to drink. In that case the water undertaker, or in the case of Scotland the water board, might be approached to supply water. As the clause is worded the local authority may pass on the cost to the person concerned; it may bear the cost itself; or it may ask the undertaker to carry out a certain amount of the work.
I envisage the case of a hill village in Wales which draws a good supply from a well. The well then runs dry or becomes polluted. Water does not run uphill and the undertaker may well have a difficult job to get a pipe to go up to that hill village under any sort of pressure without putting in a pump. That, so far as I can see, is the reason for the provision in this clause. With very great respect, I argue with the noble Lord, Lord McIntosh, on this issue and I say that his amendment is unnecessary.
The Earl of Arran: My Lords, perhaps I may expand upon the background relating to this amendment. Clause 55 provides that, in certain cases, where it is not practicable at reasonable cost for a water undertaker to provide or maintain a sufficient supply of wholesome water for domestic purposes to particular premises through its pipes, it may be obliged to provide a supply of water by alternative means. This would normally mean providing a supply of water by means of a tanker or standpipe. A local authority is required to notify the undertaker of premises in its area where the insufficiency or unwholesomeness of the existing water supply is such as to be a danger to health. The local authority would be liable to meet the undertaker's charges for providing an alternative supply but would be able to recover them from the owner or occupier provided with the supply of water.
As my noble friend Lord Hesketh explained when we discussed this clause in Committee, the circumstances when an undertaker would be required to provide a supply of water other than by pipes would generally involve the failure of a private water supply. A private supply may become unwholesome or insufficient for domestic purposes and thereby constitute a danger to health. Because of the location of the properties served by the private supply it may not be feasible for the undertaker to provide a supply of water for domestic purposes by pipe. In these situations the undertaker would be required to provide a supply of water by alternative means, usually by standpipe or tanker.
The purpose of the amendment tabled by the noble Lord, Lord McIntosh of Haringey, is to limit the ability of the undertaker to recover his expenses in providing an alternative supply to those cases where the supply was necessary as a result of the failure of a private supply to those premises.
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The amendment is wholly unnecessary. Any concern that the undertaker would be able to recover his costs in providing an alternative supply as a result of his failure to maintain a piped supply is misplaced as I will explain. Subsection (l)(a) provides that where it is not practicable at reasonable cost for an undertaker to maintain a supply of water by pipes a local authority is able to require the undertaker to provide a supply by alternative means.
Lord McIntosh of Haringey: My Lords, I hope the noble Earl will permit me to intervene here. Subsection (l)(a) does not say "to maintain", it says:
"to provide or maintain such a supply".
The Earl of Arran: My Lords, perhaps I may continue with my response and return later to the point made by the noble Lord.
The provision in subsection (l)(a) is essentially to cover cases of temporary supply failure—for instance, due to frozen pipes—when it would be unreasonable to require the undertaker to lay replacement pipes in order to maintain the piped supply. The undertaker would not pass on his charges in these circumstances since the owner or occupier would already be paying for a supply of water. Indeed, the provision in subsection (2) enabling a water undertaker to recover its costs is limited to cases where the undertaker is unable to provide a piped supply and is required by a local authority to provide a supply by alternative means. It does not extend to those cases where the water undertaker is unable to maintain a piped supply and is required to provide a supply by alternative means.
As regards the point made by the noble Lord, Lord McIntosh, in relation to subsection (1)(a), the words "supply" or "maintain" are the alternatives.
Lord McIntosh of Haringey: My Lords, this argument is going from bad to worse. What Clause 55(l)(a) says is,
"to provide or maintain such a supply".
The noble Earl rests his case on the fact that subsection (2) then says:
"Where under subsection (1) above a local authority require the provision by a water undertaker of a supply of water to any premises",
and so on. What is the distinction between "provide or maintain" in subsection (1) and "provision" in subsection (2)? Is the noble Earl saying that subsection (2) relates only to a temporary matter and that it is provision only for a short time? Further, if it is for a short time, how short is that time? There is a difference in the wording but it is very difficult to work out the distinction between the words. I wonder whether the noble Earl can help us on the issue. My specific question is this: if "provision" means for a shorter time than "provide or maintain", then how short a time will that be?
The Earl of Arran: My Lords, there is provision in subsection (l)(a). It lists the alternatives as provision or maintenance.
Lord McIntosh of Haringey: My Lords, I do not think that we are getting anywhere on this issue. I

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say that because subsection (1) specifies "provide or maintain", whereas subsections (2) and (3) refer to the "provision" of supply. If subsections (2) and (3) are referring to a short-term provision and therefore the burden on the local authority and on the occupiers is limited in that way, then the Government's argument may have some force. However, if that is so, the Government should write to me between now and the next stage of the Bill's proceedings to explain the reason for the wording. In my view the wording is somewhat obscure. Perhaps the noble Earl will agree either to write to me on the matter or to discuss it with me between now and a later stage.
The Earl of Arran: My Lords, with the leave of the House, I must say that I do not think the noble Lord, Lord McIntosh, is quite correct when he talks about obscurity here. However, in the circumstances, I undertake to write to him on the matter between now and Third Reading.
Lord McIntosh of Haringey: My Lords, these are major concessions which we are extracting from the Government and we fully appreciate them. In the circumstances, without in any way claiming to understand the phraseology of the clause or in any way going back on my accusation of obscurity; and moreover, without accepting also that it would be right for the local authority and the occupiers to pay the cost of replacing piped supply which is not available because of the fault of the undertaker, I think my only option now is to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.30 p.m.
Clause 56 [General functions of local authorities in relation to water quality]:
Lord Middleton Lord Middleton moved Amendment No. 109A:
Page 65, line 34, at end insert ("; and")
(c) the matters which should be taken into account in the exercise of those powers").
The noble Lord said: My Lords, in Committee my noble friend Lord Renton moved an amendment to Clause 57 which would have required local authorities, when exercising their powers under that clause, to take account of the rights and obligations of the relevant persons under contracts or agreements regarding private water supplies. In reply my noble friend Lord Hesketh gave a sympathetic response and the amendment was withdrawn.
The purpose of this amendment is to elicit a response from the Government—if this amendment be not accepted—as to whether a direction will be given to local authorities (with which they will be required to comply under Clause 56(4)) when they exercise their remedial powers given to them under Clause 57 in cases where the private water supply is not satisfactory.
My noble friend Lord Caithness has been kind enough to write to me and to other noble Lords who voiced their concern in the matter, and I am
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encouraged to believe that a direction which may take account of that concern may be made. Therefore I look forward to hearing what the Government have in mind. I beg to move.
Lord Renton: My Lords, I should like to support the amendment. We are grateful to my noble friends for the consideration that they have given to this matter since the Committee stage, and for letting us have a letter containing their views. What was suggested in the letter was acceptable up to a point, but I should have thought that it was better to write into the Bill the words of this simple amendment, which is much shorter than the one we moved in Committee. In saying that, I ask my noble friend to bear in mind two matters in particular, without going over all the ground we covered fully in Committee.
The first point is that a departmental directive is not part of the law. It can sometimes be prayed in aid when a dispute comes to court, but it is not part of the law. It does not create in itself any obligation upon the local authority to take account of the matters which are relevant; but by writing that simple paragraph into the statute we can achieve the same as a ministerial directive, with the satisfaction of knowing that it becomes part of the law and is enforceable.
The other point is that there is provision in the Bill for an individual landowner, or other person concerned, to appeal to the Secretary of State if he is not satisfied with the way that the local authority has handled the matter. However, appeals involve administrative costs to the Government as well as to the individual, and to the extent that appeals can be saved it would be a great advantage. By making a local authority take those matters into account we may avoid the need for further appeals, so from both the public and the private point of view there would be an advantage.
The Earl of Radnor: My Lords, I support the amendment. It is a simple one which should be acceptable. If it is not acceptable, I hope that my noble friend will be able to produce something which will have the same effect.
The Earl of Caithness: My Lords, I understand my noble friends' reasons for tabling this amendment but we consider the points that they raise to be fully covered by the existing words in the subsection. Subsection (4) states that directions may be given concerning the cases and circumstances in which authorities are or are not to exercise those powers and the manner in which those powers are exercised. I am advised that that fully provides for directions to be given requiring local authorities to have regard to existing contracts, licences and agreements governing private supplies when requiring improvements to any such supplies. I have written to my noble friends, as they kindly said. I confirm my undertaking that such a direction will be given and to consult on its terms.
My noble friend Lord Renton raised two matters that he asked me to take into account. I note what he said. I ask him to take into account one matter in return. There are other provisions in the Bill

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enabling the Secretary of State to make directions, drafted in terms somewhat similar to this subsection. If the amendment were made here, it could throw doubt on the scope of those other provisions. My noble friend, with his legal training, will understand more clearly than I do the implications of that. I feel sure that the right way is to proceed as I have said. I renew my confirmation of the undertaking that a direction will be given.
Lord Middleton: My Lords, I am grateful to my noble friend for giving that undertaking. It would be an advantage and helpful if a direction were to be supplemented by a circular giving more details to local authorities. My noble friend has also said that he will consult the relevant interests about the direction and, I hope, about a circular as well. That being so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Gallacher Lord Gallacher moved Amendment No. 109AA:
Page 66, line 10, at end insert—
("(e) provide for the notification by the authority to the Secretary of State of any additional costs, to the extent that those costs are not met from revenue, arising from this section, for the purposes of the payment to the authority of an equivalent amount in grant.").
The noble Lord said: My Lords, the amendment returns to issues which were raised by my noble friends Lady White and Lord Graham of Edmonton when we were discussing the Motion that Clause 56 stand part of the Bill. The noble Lord, Lord Hesketh, was then pressed on how costs might be recovered where they had fallen on local authorities as a result of complying with requirements laid upon them in Clause 56. The noble Lord said, at col. 1344 of Hansard for 18th May, that the rate support grant levels would need to take account of extra costs on local authorities arising from the Bill, and that there would be additional revenue from testing of private supplies.
The amendment is tabled to enable the Minister to confirm that his response to questions, of which he may not have had notice, reflected the position under the clause. The amendment suggests that it would be helpful for the Bill to contain a provision whereby there is a standard notification procedure by local authorities to the Secretary of State of additional costs incurred, and that they should be calculated less any revenue arising under the section from the private supply, sampling and so forth.
The amendment assumes that, as the Minister stated, the authority would then be entitled to an equivalent amount in grant. It would be helpful if the Minister could confirm that that is the position, as is understood. His comments would be welcome on the process by which that information will be incorporated in the rate support grant calculations. I beg to move.
Lord Hesketh: My Lords, the amendment would enable the Secretary of State to make regulations requiring a local authority to notify him of any additional non-revenue costs arising from Clause 56 so that he could provide a grant to cover those costs. The noble Lord, Lord Gallacher, will not be
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surprised to hear that the Government do not support the amendment.
I should like to take issue with him on several counts. First, I question whether any such additional costs will arise as a result of this clause. Local authorities have for many years had a duty to check on the wholesomeness and sufficiency of water supplies in their area. I quote from the Public Health Act 1936:
"It shall be the duty of every local authority to take from time to time such steps as may be necessary for ascertaining the sufficiency and wholesomeness of the water supplies within their district".
That provision was re-enacted in Section 11 (1) of the Water Act 1973 and reappears in subsection (1) of this clause. The changes in wording in the Bill from the 1973 Act are solely for clarification.
Local authorities must also continue: to inform the water undertaker when the water is unwholesome or insufficient. In addition, they must notify water undertakers if there is a general deterioration in the quality of a supply. The 1973 Act power to refer disputes with the undertaker to the Secretary of State is replaced by a duty to notify the Secretary of State if they are not satisfied with the remedial action proposed. None of that will involve additional expenditure.
Indeed, local authorities will be able to exercise their duties much more easily in future because of the steps we are taking to remove vague generalities about wholesomeness and substitute very precise legal standards. If the water complies with the standards, it is wholesome. If it fails to do so, it will be unwholesome unless a special relaxation has been authorised. Water undertakers will be required by regulations to provide regular reports to each local authority on the quality of their supplies. Those will have to be set out in a prescribed form which shows clearly whether the water is wholesome and whether there has been any deterioration in quality. All this means that no longer will the local authority have any problem in knowing whether water is unwholesome. There can be no dispute about that.
Those provisions will therefore help the local authorities carry out their long-standing functions in the sphere of water quality much more easily and effectively and with consequential cost savings. It is true that some local authorities may spend slightly more time on private supplies, in monitoring and securing improvements to them. However, under Clause 56(6)(d) local authorities may recover expenses reasonably incurred on such functions in accordance with regulations made by the Secretary of State.
In the unlikely event of some future Secretary of State imposing costly new burdens on local authorities under his regulation-making powers in this clause they could collectively ask the Secretary of State for an increase in the revenue support grant for that revenue expenditure which is not recoverable by such charges or fees or from other income or grant. That would form part of the annual discussions on revenue support grant for all local authority services. I hope I have convinced noble Lords that the amendment is quite superfluous. For

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the reasons I have laid before your Lordships' House, we believe that this amendment is unnecessary.
Lord Gallacher: My Lords, I thank the noble Lord, Lord Hesketh, for that reply, dismal though it is, in response to what we regard as a fairly modest amendment. If I may say so, the reply sounds as though the discussion on Clause 56 stand part never took place, because that was the discussion which gave rise to the amendment. We were frankly seeking to put into the Bill, quite fairly, the gist of what the Minister then told the Committee. We now have a different situation in which an attempt to bring this into the Bill is resisted on the grounds that local authorities already have that duty and that the tasks which they have to undertake, as regards the Bill, are on balance lighter than the duties which they already have. Presumably if they are lighter, then the task of enforcing those lighter duties will be less costly than at present.
I think that local authorities will take note of that and will wonder, as I wonder, how it can be that at one stage of the Bill we proceed on assurances that there is a possibility of an offset against costs less income from private work. Yet at another stage of the Bill we discover that there is no possibility whatsoever. With those remarks which I think contain something of the disappointment which we feel and which local authorities will feel, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
Clause 60 [Assessors for the enforcement of water quality]:
Lord Gallacher Lord Gallacher moved Amendment No.109AB:
Page 70, leave out lines 18 to 20 and insert—
("(1) The Director shall for the purpose of this section appoint persons to act on his behalf as assessors of drinking water quality in relation to—").
The noble Lord said: My Lords, on behalf of my noble friend Lord McIntosh of Haringey I move Amendment No. 109AB and speak at the same time to Amendments Nos. 109AC and 109AD.
These amendments return to the issue of the drinking water quality inspectors. It was debated particularly in cols. 1355 and 1356 of Hansard at the Committee stage on 18th May. In that debate, the Government did not wish to go into any level of detail about the composition of what they are now calling the drinking water quality inspectorate. It is however clear that these inspectors or assessors will be under close Department of Environment control. The Minister was not able to give further details as to whether they would be based in Marsham Street or have a regional structure.
The amendments therefore attempt to fill the gap as well as postulating alternatives. Amendment No. 109AB proposes that the drinking water quality assessors will be appointed by the director rather than the Secretary of State, to give them a measure of independence and ensure professional integrity. The amendments go on to require the director to
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establish local divisions for the purposes of assessing drinking water quality. A divisional structure will be necessary for the inspectorate in any case, if only because the plcs will themselves be regional undertakings. Most important, they will give the individuals appointed the right to report directly to the director on any occurrence or on the reasonable apprehension of such an occurrence or a matter which in their opinion may lead to a breach of the drinking water quality standards.
We believe it right to divorce the enforcement function from central government so the Minister should at least accept that an independent professional team of scientifically trained assessors is the minimum which public confidence requires in the present state of uncertainty about the quality of Britain's water. I hope that the Government will accept that an independent reporting right for someone with professional scientific status is desirable. It is also hoped that the Government will be able to move some way towards this amendment, particularly since their thinking in this area appears to be still under development. I beg to move.
Lord Hesketh: My Lords, we return to the subject on which I believe the noble Lord, Lord McIntosh, at an earlier stage of the Bill questioned me as to whether a lot of gentlemen in bowler hats would be emerging on a daily basis from Marsham Street in order to inquire into matters concerning drinking water.
Lord McIntosh of Haringey: And celluloid collars.
Lord Hesketh: The noble Lord is entirely correct. These amendments would require the Director General of Water Services to appoint technical assessors of drinking water quality, instead of the Secretary of State. They would also require him to establish local divisions of assessors and enable the assessors to report to the director on any breach or likely breach of the drinking water quality standards.
I have already explained in Committee the reasons why the Secretary of State and not the director general is in our opinion the right person to have responsibility for assessing drinking water quality. The Secretary of State is responsible for the quality and monitoring regulations, for agreeing improvement programmes and for enforcing compliance under Clause 20. The director general is concerned essentially with economic regulation such as the charges an undertaker may make. To give him responsibility in this area of public health alongside the Secretary of State would greatly modify the nature of his work and lead to overlap and confusion with the Secretary of State's responsibilities.
I agree with the noble Lord, Lord Gallacher, that the technical assessors should not be lost in the vastnesses of the Department of the Environment. They do not need to have an arm's length relationship with those who exercise political responsibility, so that they can exercise their professional judgment fully. This is certainly the Government's intention and we are now considering precisely how that arm's length relationship should be formed. We have for example the options of a

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free standing agency, or an inspectorate within the department rather like Her Majesty's Inspectorate of Pollution. Whatever the decision, I can assure your Lordships' House that the body will have a definite and distinct form of its own.
As I have said, we are currently considering the constitution and composition of this body, and that includes manpower, location, and relationships with local authorities and others. But first it has been necessary to decide on its tasks and this has been partly dependent on the drafting of the water quality regulations on which a consultation paper was published in February. These regulations are being finalised and it is now possible to turn our attention to the establishment of the body which will supervise their implementation.
The inspectors' main job will be to carry out a thorough technical audit of each undertaker's compliance with the water quality regulations. They will monitor the progress of improvement programmes. They will of course check for failures to comply with standards. They will also check for deterioration in quality. They will have to assess the adequacy of the undertaker's sampling and analysis arrangements and the quality of laboratory results. If they are not satisfied on any of these counts they will obviously need to discuss corrective action with the undertaker. They will advise the Secretary of State on the use of his enforcement and prosecution powers. They will also need to produce regular published reports on their assessments. Clearly a considerable amount of information will have to be assessed by the inspectors, for which computing and statistical expertise will be required.
We have still to take decisions on the constitution and organisation of this body and that includes, as I said earlier, location, size, relationships with other bodies and extent to which work will be done by consultants.
I apologise for not being more forthcoming at this stage. I hope it will be possible to say more in the next few weeks. For the reasons that I have put before your Lordships' House, I hope that the noble Lord, Lord Gallacher, will find it possible to withdraw his amendment.
Lord Gallacher: My Lords, I thank the Minister for that reply, for the detail which it contained and the promise of a further instalment to come. This matter is of considerable importance to the function of assessing water quality in the context of the Bill.
I note that the main plank of the Minister's refusal to accept any change from the present arrangement whereby the Secretary of State will have responsibility for this service to one in which the Director General of Water Services will take it over, is that to do so would unnecessarily complicate the Bill. It would result in duplication because elsewhere in the Bill the Secretary of State has responsibilities of this kind which would be at variance with the switch of his inspectorate from his oversight to one in which they were responsible to the Director General of Water Services. That point is taken and seems to me to be reasonable.
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I welcome in particular the assurance by the Minister that the Secretary of State intends an arm's length relationship with his inspectorate. When further announcements are made concerning this matter, perhaps the Minister will make a point of telling us—and the world at large—in so far as appointments are made to this important body rather than the use of consultants, whether the appointments will be within the jurisdiction of the Civil Service Commission rather than of the Secretary of State himself. We feel that a Civil Service Commission appointment would be preferable because of the importance which is being laid on the independence of the body, even though it is under the control of the Secretary of State. I have also noted the other functions which the Minister has kindly outlined to me. On the basis of that information, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 109AC and 109AD not moved.]
Clause 62 [Regulations for preventing contamination, waste etc. and with respect to water fittings]:
The Earl of Arran The Earl of Arran moved Amendment No. 109B:
Page 72, leave out line 23 and insert ("any water at any time after it has left the pipes of a water undertaker for the purpose of being supplied by that undertaker to any premises;").
The noble Earl said: My Lords, on behalf of my noble friend Lord Caithness, I beg to move Amendment No. 109B. Clause 62 empowers the Secretary of State to make regulations for the prevention of contamination and waste of water. Amendment No. 109B is a technical amendment to make it clear that the regulations are intended to provide for the prevention of contamination and waste of water in pipes for which the consumer is responsible. I beg to move.
On Question, amendment agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No.109C:
Page 72, line 28, at end insert—
("(1A) No cost arising from the remedying of any contamination or other defect to which subsection (l)(b) above relates shall fall on the consumer except in circumstances where such contamination or other defect arises as a consequence of a defect in a pipe for which he is responsible").
The noble Lord said: My Lords, I beg to move Amendment No. 109C standing in the name of my noble friend Lord McIntosh of Haringey who dealt with this matter at an earlier stage. As the Minister is aware, there has been some correspondence between my noble friend and his department. We look upon this amendment as clarifying regulations under Clause 62 which deal with contamination in pipes. The amendment would not place any cost upon the consumer in respect of contamination of pipes, except in circumstances where the defect arose as a consequence of a problem in a pipe for which the consumer was responsible.
I am certain that in his zealousness to protect the interests of the undertakers in the early stages—a number of illustrations of that have been drawn to

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his attention—he will understand that we are equally anxious to ensure that he takes advantage of every opportunity to protect the interests of the consumer where there is evidence of unfairness and a burden of cost upon the consumer. We think that that is a possibility. Such occurrences could be costly; and in the interests of justice and Tightness we believe this amendment is justified. I beg to move.
The Earl of Caithness: My Lords, as I explained when I wrote to the noble Lord, Lord McIntosh of Haringey, recently, subsection (l)(b) of Clause 62 provides for regulations to be made to secure that water that has been supplied to any premises is not contaminated, or its quality prejudiced before it is used. For water to have been supplied by the undertaker, it has to have left the pipes of the undertaker and be in the pipes for which the consumer is responsible. I hope that provides the reassurance that the noble Lord, Lord Graham of Edmonton, seeks.
Lord Graham of Edmonton: My Lords, I am not sure whether that provides me with the reassurance I seek. I accept that the Minister believes what he has said should satisfy the point I am making. Is the Minister saying that in the case of pipes which are the responsibility of the consumer, any hurt which is suffered as a result of consuming water which went through those pipes where contamination was found, will not result in a charge on the consumer? However, if the contamination occurs in pipes which are not the responsibility of the consumer, is the Minister saying that the undertaker will have to bear any costs that arise from that situation? I hope the Minister can state that that is the case, as I cannot repeat it myself. If he can confirm that that is the general gist of what he was saying, I shall be happy to withdraw the amendment.
The Earl of Caithness: My Lords, I believe the noble Lord is correct. However I shall want to see what the Official Report states, and then I shall write to the noble Lord in case I am incorrect.
Lord Graham of Edmonton: My Lords, I am sure that we are both agreed that we shall read the Official Report and examine what we have both said. I am sure we have both meant the same thing.
Lord McIntosh of Haringey: My Lords, is my noble friend sure that he knows what he means before he reads what he has said?
Lord Graham of Edmonton: My Lords, I believe the answer is in the pipeline! I shall just have to wait until I examine the pipe. I shall pipe down and beg leave to withdraw the amendment!
Amendment, by leave, withdrawn.
Clause 67 [General Sewerage functions]:
The Earl of Shannon The Earl of Shannon moved Amendment No. 110:
Page 78, line 20, at end insert—
("(1A) It shall be the duty of a sewerage undertaker in performing its duty under subsection (1) above to have regard—

(a) to its existing and likely future obligations to allow for the discharge of trade effluent into its public sewers; and

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(b) to the need to provide for the disposal of trade effluent which is so discharged.

(1B) In subsection (1A) above "trade effluent" has the same meaning as in the Public Health (Drainage of Trade Premises) Act 1937.").
The noble Earl said: My Lords, in moving this amendment, I wish to express my gratitude to the Minister for his kind consideration in correspondence, and for his department's help in redrafting my amendment. I shall not here further dilate on my reasons for this amendment, which I gave in detail both on Second Reading and when moving an amendment to the same effect in Committee, save to say that industry—and especially those companies with no other practicable means of disposing of consented trade effluent, except through the sewerage system—could be severely handicapped by the Bill in its present form. The amendment merely seeks to preserve the present situation as provided in the Public Health (Drainage of Trade Premises) Act 1937. I beg to move.
The Earl of Cranbrook: My Lords, clearly the undertakers cannot ignore the need to provide for trade effluent. However, there could be problems with the undertakers if an industrialist can demand additional sewage treatment capacity, and if the undertakers were obliged to receive this additional effluent. Environmental protection can only be obtained by the control of emissions into the sewage system. There are certain serious contaminants that cannot be abstracted from the sewage sludge once they are present. It will be increasingly imperative for this country to meet the international obligations to which it has agreed, to be able to control the composition of sewage sludge; and in particular to eradicate pollutants from it.
It is therefore important that there should be a clear duty on the discharger to control the qualities of effluents. There should be no possibility of overwhelming a sewage system and of creating an adverse and difficult disposal of sewage sludge by giving industrialists free access to the system.
Lord Graham of Edmonton: My Lords, does the Minister understand that there are situations where industrialists could be assisted more than it appears they are at present in order to ensure that the effluent which they discharge is not likely to cause the problems that the noble Earl, Lord Shannon, is addressing? The other day I attended a conference of abattoir owners. They discharge effluent which is perhaps at times of a particularly obnoxious nature. Those abattoir owners form an essential and crucial sector of the community. They are particularly concerned about their responsibilities as they play a part in the food chain. Their concern is that grants are made available by the Ministry of Agriculture, Fisheries and Food for a range of things. They drew my attention to the grants which are available to farmers from MAFF for storage tanks, anaerobic digesters, treatment plants, manure stores, disposable facilities, safety fencing and other matters. I told the abattoir owners that I might have an opportunity to raise legitimately such concerns. That opportunity has now arisen.

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If the Government are serious about trying to guard 101 per cent. against the possibility of something going wrong, they should be able to look sympathetically at the problems of people like abattoir owners who face the problem of sewage and effluent disposal as part of their daily lives. I am sure the Minister will understand that with the regulations of the EC and with the need for abattoirs and other establishments—I speak particularly of abattoirs, however—to match up to the competition that the single market will bring, their budgets will be placed under severe pressure. It may well be that the Government could ease their problems by taking a sympathetic view of the difficulties I have outlined. I should welcome it if the Minister in replying could make some reference to those points.
9 p.m.
The Earl of Arran: My Lords, we feel that the amendment tabled in the name of the noble Earl, Lord Shannon, more clearly defines the general duties under this clause and adds to the provisions concerning trade effluents elsewhere in the Bill, in particular in Schedules 8 and 9. In the light of my noble friend's undertaking, therefore, I am pleased to commend the amendment to your Lordship's House.
Lord Graham of Edmonton: My Lords, before the noble Earl sits down, perhaps I may say that I spoke for a little longer than I might have done in order that his staff in the Box could supply the magic words. The amendment refers to,
"the need to provide for the disposal of trade effluent which is so discharged".
The point which I raised, and to which I believe the Minister has an obligation to reply, is that in the circumstances which I outlined abattoir owners and managers are under an obligation. What can the Minister say to help them to improve the manner in which effluent is discharged? That is a very real point to the farming community if to no one else. I am sure that that is a trigger word which will galvanise the Minister into responding with alacrity.
The Earl of Arran: My Lords, with the leave of the House, I can tell the noble Lord, Lord Graham of Edmonton, that in general we expect industry to bear its own costs. I cannot comment on grants by MAFF but I undertake to write to the noble Lord, Lord Graham.
Lord Graham of Edmonton: My Lords, even more importantly, will the Minister undertake not only to write to me but also to consult MAFF to see whether there is any possibility of assistance?
Baroness Carnegy of Lour: My Lords, I am not sure whether I am in order in asking the Minister before he sits down to reply to my noble friend Lord Cranbrook, who made one or two rather important points. Has the Minister anything to say about what the noble Earl said?
The Earl of Shannon: My Lords, I am grateful to the Minister for his kind commendation of my
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amendment. With regard to the question of the noble Earl, Lord Cranbrook, I believe that the noble Earl misheard one word of what I said earlier. I referred to consented discharges. Quality and quantity form part of the consent. The amendment does not in any way attempt to alter that or to give a totally free hand to industry to put anything it wants down the sewers. It relates only to consented discharges. If the noble Earl is worried about certain things finding their way into the environment it is at the consent stage that that question should be sorted out, not after consent has been given. The amendment merely provides that a sewerage undertaker cannot pick and choose among such consented discharges as he wishes to take because he may be able to make more profit on some than on others.
On Question, amendment agreed to.
Clause 68 [Standards of performance in connection with provision of sewerage services]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 110ZA:
Page 79, line 8, at end insert—
("(3A) Regulations under this section shall require an undertaker to review annually levels of performance and anticipated performance in relation to the prescribed standards, including,

(a) the physical condition of sewers in their areas, by reference to any current asset management plan;

(b) any potential danger to health in their area, whether arising from blockages, rodent infestation or other causes; and

(c) target levels of performance and investment over the following two years.")

The noble Lord said: My Lords the Minister may recall referring earlier to obligations that would be laid upon undertakers to report progress towards compliance with standards. Perhaps he is in a position to say a little more about that in relation to this amendment. We ask that an obligation should be laid upon an undertaker to review annually levels of performance and anticipated performance in relation to the prescribed standards.
We have gone out of our way to be specific about the matters which are covered by prescribed standards. We are particularly concerned with respect to the state of the sewers in certain parts of the country. I remind the House that in 1986 the Department of the Environment issued a document in which it indicated that 5,000 repairs were made to sewers as a result of collapses and blockages. That was not 5,000 repairs in the course of normal maintenance but 5,000 repairs arising from serious defects. Within the Thames Water area alone 13,000 homes are regularly flooded with raw sewage. In Greater Manchester 36,000 sewerage problems are reported every year. Those are catastrophic occurrences for the individuals involved. They are only the top of the iceberg.
It has been an impossible task for water authorities and local authority agencies over the years to maintain, let alone improve, levels of service and performance standards because of the restrictions on capital and revenue expenditure. We say that there is therefore a paramount need for tight well-defined regulation of the sewerage undertakers

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involving detailed specification of required standards of performance and monitoring and control of actual performance. Setting aside the rising standard of expectation or duty resulting from EC directives, I believe that in this enlightened age, which is due partly to the Government's determination to tackle the problem, there is an obligation to match that with legislation.
The amendment also deals in particular with the problem of rats. We ought to recognise that the situation is very serious indeed. We can anticipate a report by the Institution of Environmental Health Officers on rodent infection. The noble Lord, Lord Hesketh, who dealt with this amendment at an earlier stage, had some interesting things to say. He said at col. 1387 of Hansard for 18th May:
"It would be inappropriate to insert a specific duty within a general clause of this nature".
Perhaps the Minister or his colleague who may reply would care to define or redefine the word "inappropriate". The Minister in effect said that it is inappropriate to require provision to ensure that sewerage undertakers take seriously the matter of increasing rodent infestation. Surely he ought not to be able to leave those words unsaid.
At col. 1387 the Minister went on to say:
"It is undeniable that numbers of rats have increased following two fairly mild winters".
The last two winters have been fairly mild. Last winter was the second mildest on record since statistics began to be compiled in 1659; and I do not mean a minute to five! That was 330 years ago. Last winter was the second mildest winter during that period.
That mildness of the winter is undoubtedly a relevant factor. But my evidence is that the reduction in the amount of money that the authorities and local authorities have received has certainly been a factor too. At col. 1387 the noble Lord, Lord Hesketh, also said that,
"there is no evidence that poor control within sewers has contributed to this".
When he sees the report to be issued by the Institution of Environmental Health Officers, he may have cause to reflect upon those words. A direct relationship will be shown in that report between cuts in funding and the increase in the rodent population.
These are matters of concern. The department and the Minister are far too complacent in dealing with them. They are very worrying and can be frightening to the general public. The Minister should recognise that he is able to do a great deal. He cannot perhaps accept the amendment. But he can be much more helpful in saying what he intends to do to see that the problem is dealt with. There is a serious dereliction of duty so far as concerns sewers. There is also a dereliction of duty so far as concerns tackling the serious problem of rats. The Minister has an obligation at least to put the public's mind at rest by doing all that he can within his powers to ensure that the undertakers tackle the matter vigorously.
The amendment is an attempt to include on the face of the Bill an obligation for undertakers to
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report annually on the physical state of their sewers and what they are doing, particularly in respect of investment. The investing public will be interested to know how much the undertakers are obliged to invest in that respect. It may be that the Government are anxious not to lay too many obligations of that kind on the undertakers. However, we do not speak for the investors but for the consumers. I beg to move.
Lord Hesketh: My Lords, I always try to be as helpful as possible to the noble Lord, Lord Graham, but he will understand me when I say that I cannot be of any assistance in trying to legislate an improvement in the weather or a colder winter. The purpose of Amendment No. 110ZA is to amend the regulation-making powers set out in subsection (1) of Clause 68. Clause 68 has two purposes. The first is a reserve power enabling the Secretary of State to make regulations at the director's request establishing certain service requirements which undertakers must meet, as set out in subsection (1). If those requirements are not met, they will amount to breaches of the sewerage undertakers' general duty as set out in Clause 67. The second is to enable regulations to be made by the same procedure to prescribe standards in the day-to-day relations between sewerage undertakers and individual customers as set out in Clause 68(2). That is the guaranteed standards scheme.
Amendment No. 110ZA is intended to refer to the first category of regulations and seeks to require regulations to be made under those powers requiring the undertaker to review annually its levels of performance and its projected performance in relation to the prescribed standards. Those standards are required to include physical condition of assets, risks to health and target levels of performance and investment for the following two years.
The regime that we propose goes much wider than this and is set out in, and operates through, the model instrument of appointment with which your Lordships are familiar. Arrangements for the director general to monitor general standards of performance by the undertakers are provided for in Condition 1 of the model instrument of appointment. That condition also imposes a duty on the undertaker to advise the director general of its intended levels of service, including three key aspects: interruptions to supply, water pressure and foul flooding. Companies will report that performance to the director general each year against the target levels of service that they aim to achieve.
We expect that the undertakers will make every effort to achieve those targets. However, if the director general is not satisfied with a company's performance and agreement cannot be reached to secure improvement, the enforcement powers under Clause 38(1) or Clause 68(1) as appropriate would be invoked. Those powers enable the Secretary of State, upon written application by the director general, to make regulations on standards of performance which, if they were not achieved, would count as breaches of the undertakers' general duties under Clause 37 or 67 as appropriate. It would not be appropriate to have specific regulations to govern

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service standards in the Bill as this would reduce the flexibility that the director has to add to or amend any company's service standards, backed by the reserve powers of the present regime. The service standards have been widely publicised and we do not consider the specific regulations proposed to have any particular merit over those that we have already set out.
The physical condition of the sewers is a matter for the management of the company within its overall asset management plan, progress on which it will be required to report annually to the director under the terms of Condition K of the model instrument of appointment.
On health, Clause 67 already imposes a duty on the undertaker to provide a clean and well maintained sewerage system and it would be inappropriate to add a specific duty within a general clause of this nature.
Target levels of performance and investment are provided for within the instrument of appointment and, as I have explained, it would be inappropriate to place them on the face of the Bill.
We believe it to be more important and effective to have the undertakers' voluntary co-operation and would expect companies to achieve and maintain satisfactory levels of service. The regulation-making powers provide a reserve power for the director and the Secretary of State to act if they do not do so.
The noble Lord, Lord Graham, asked me whether I could define the word "appropriate". I should like to think that we have now defined "appropriate".
9.15 p.m.
Lord Graham of Edmonton: My Lords, I listened very carefully to the Minister, but I had to wait a long time before I could detect the premises upon which he rested his case. There were two matters which I raised. First, there is the horrendous state of the sewers of the nation. I cast no aspersions on who is responsible for it; nonetheless they are in a horrendous state. I also drew the attention of the Minister to the very disturbing situation with regard to rodent infestation. I waited to hear whether the Minister was satisfied that those two matters would be dealt with vigorously and urgently in what is a situation of emergency. The picture that I painted indeed shows an emergency situation.
The noble Lords, Lord Elliott and Lord Dormand, are both familiar with the Newcastle district. So indeed am I. However, they continue to enjoy it as I no longer can do because they continue to live in the area whereas I can only return to it. In the period 1986–1988 Newcastle saw a 50 per cent. increase in its rodent population. At Wakefield, in the same period the rat population doubled. Even in places as wide apart as Dudley, Wigan, Barnsley and Barnet there has been an increase in the rat population of 30 per cent. in the past two or three years.
The Minister may say that he has a plan and a scheme to deal with this situation and that people will be expected to take action of various kinds but will he tell the House how he will begin to tackle the situation should there be in two years' time a doubling of the rat population in any of those areas?
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Someone will say that this is unacceptable. Will the reply be that a plan is being produced and so much money is being spent, but that there is a long way to go and in the meantime the Government will do their best? Whose responsibility will it be to ensure an improvement in the situation?
Over the past seven years in Manchester the responsible authority has undertaken a colossal capital investment programme in an attempt to stop the collapse of sewers in the Manchester area. After seven years it is still only 50 per cent. of the way toward achieving that target.
Will the Minister say something not about his concern, because I am sure he must be concerned, but about the action that he knows can be taken by the Government to make sure that money is spent on this matter. I hope that he will not tell the House that a plan will be produced but that it is so flexible that it is possible for the money to be spent otherwise than on improving the sewers and getting rid of the rats so that we are left with the worries of the public.
Lord Hesketh: My Lords, with the leave of the House, perhaps I may say that the problem of rats as a result of two warm winters goes far beyond the reach of the sewers and the water industry. There has been a huge increase in the rat population in the countryside. At the end of the day the fact of the matter is that wherever that has occurred, good management is required to curb the population.
The asset management plans provide for orderly planning in the improvement of quality of service, which of course includes controlling rats. The noble Lord, Lord Graham, spoke of disaster in the North-West and North-East with collapsing sewers. All I can say to him is that on my last visit to the North West Water Authority I was told that the authority was finding it harder and harder to find a hole to let the ministerial car to fall into, which the authority was able to do with great ease years ago.
Lord Graham of Edmonton: My Lords, perhaps members of the authority ought to visit this Chamber more often to see the holes that the Minister digs for himself! If the Minister is telling me that the North West Water Authority informs him that there is a shortage of holes into which the ministerial car can go—I think that that is what he said—then it flies in the face of the evidence that I have. It may have been a flippant remark. However, perhaps I may inform whoever made it to the Minister that I have the evidence which I shall send to him. In the centre of Manchester buses have collapsed into large holes; That was four or five years ago. Perhaps the authority has solved the problem as the Minister has implied. However, the evidence that I have received from the AMA this week is that its survey indicates that 50 per cent. of the aim has been achieved. One may have to be very careful where one looks for a hole in Manchester. I am told that there are still some there.
The Minister has been as helpful as he can to the House tonight. I shall read very carefully what he has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Shannon The Earl of Shannon moved Amendment No. 110A:
Page 218, line 18, leave out paragraph (c) and insert—
("(c) in subsection (5), for the words from "the occupier" to the end of that subsection there shall be substituted the words "such contravention shall be actionable as a breach of contract between the discharger and the sewerage undertaker." ").
The noble Earl said: My Lords, this amendment relates to a most important point to which I referred in detail on Second Reading and when moving a similar amendment during the Committee stage. Essentially it refers to the fact that one limited company should not have the right or power of criminal prosecution against another limited company. This is clearly wrong and although I was reminded at Committee stage that Associated British Ports, Sealink Ltd., and the Felixstowe Dock and Railway Company have such powers, this can hardly be relevant because a customer of those companies can always use another port or travel by another ferry company. We have here a private monopoly. In such an atmosphere it is essential that industrial discharges to sewers should be covered by normal commercial contractual arrangements, with damages payable should there be any transgression on the part of the discharger.
I accept what I was previously told during Committee: there was no intention on the part of Government to give the new undertaker plcs an unfair commercial advantage by means of this Bill. However, that is exactly what it does. It does not require much imagination to see that an undertaker plc, out of duty to its shareholders, will use its unique expertise to enter the pollution abatement equipment market. With their powers of criminal prosecution, how will this not affect adversely those already in the market? Of course it is unintentional; but inevitably purchasers will feel that to obtain their equipment from the company which has the power to prosecute them will have great, if very much unadvertised, advantages, almost equal to the payment of protection money.
If the water and sewerage plcs are to divert into other areas of commerce, even to the taking over of other companies, they must be seen to do so under fair and not advantageous conditions. This Bill is to privatise the sewerage services and put them into the private sector. Therefore let us do it properly and let them perform in the usual way in the private sector; namely, by contracted arrangement.
If the Minister declines to accept this view, perhaps I may invite him to rehearse the reply that he or his successor will have to give from the Dispatch Box to questions of advantageous trading position which will inevitably arise if the chief executives of the new plcs are doing their jobs properly and making the best use of the facilities at their disposal in the interests of their shareholders.
As the Bill stands—again I say albeit unintentionally—these situations are bound to happen. The Minister might like to take the opportunity of avoiding difficulties for himself and his successors in office when they have to explain
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away or excuse the potential lamentable results occasioned by this fault in the Bill. I beg to move.
Lord Stanley of Alderley: My Lords, I support the amendment. It concerns a similar problem to that debated at considerable length earlier. Now that the water authorities are to be public liability companies, the old existing practices that worked well enough in the past need careful consideration where the new authority is to be a public liability company, driven by profit and competitiveness, as the noble Earl said, with other commercial bodies. The whole matter needs careful consideration by my noble friend because it is in line with a problem that comes up time and again. I hope that my noble friend accepts that.
Lord Renton: My Lords, perhaps on one point it is possible to set at rest the mind of the noble Earl. There is no need to put provision for breach of contract in the Bill. All breaches of contract are actionable at common law whether put in a statute or not. We do not need anything in the Bill in terms of this amendment so far as it affects the right of breach of contract. But the noble Earl's amendment does more than that. By leaving out the newly written Section 3(1)(c) of the 1937 Act, he abolishes the power to prosecute for a criminal offence.
I can well understand the noble Earl's desire that two trade competitors or people in contractual relationships with each other should normally resort to civil remedies rather than to criminal remedies. However, by abolishing the contravention he removes the penal sanction—which in the public interest there really must be—in the circumstances envisaged in the amendment to the 1937 Act. Therefore I should have thought that my noble friend on the Front Bench would be in great difficulty about accepting the proposal.
Lord Hesketh: My Lords, the noble Earl, Lord Shannon, moved a similar amendment in Committee. Its effect is to amend paragraph 3(c) of Schedule 8 concerning legislation governing the discharge of trade effluents into public sewers so that where such discharges are made without the consent of the sewerage undertaker, or in breach of the terms of a consent, there would no longer be a criminal offence as there has been for over 50 years, as my noble friend Lord Renton pointed out. Instead the only control over what effluents from trade processes may go into a public sewer would be civil action for damages against the persons responsible.
The central proposition which has led the noble Earl to pursue his amendment is that it is wrong in principle for the sewerage undertakers to be able to prosecute their customers. That is a somewhat narrow description of the effect of the Bill's provisions in several respects which I shall come to but because of the importance he attaches to this central point I should also like once more to attempt to allay his concerns by exploring why we believe sewerage undertakers, or any other person, should be able to prosecute breaches of the trade effluent requirements.
The reception, treatment and disposal of trade effluents by the sewerage undertakers is in some

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respects like the normal commercial business of any company. However, there are important differences. One of these is the monopoly position held by an appointed undertaker and this has led us to continue to provide for appeals where a discharger cannot secure a consent which he regards as satisfactory. Such appeals to the director general mean that it is not ultimately for sewerage undertakers to say what shall or shall not be discharged into public sewers. That is not a normal contractual relationship.
Secondly, as we have emphasised in earlier debates—and I do not propose therefore to dwell on the point—the consequences of making discharges into public sewers with which the sewerage system cannot cope potentially go much wider than harm to the undertakers' business. If sewers or treatment works are overloaded, or if dangerous substances are present, various forms of nuisance, damage and environmental harm could occur affecting the environment, the public or employees of the undertakers. There is a public interest in effective enforcement of the requirement that only acceptable discharges are to be made.
The noble Earl has suggested that we should focus on a contractual relationship between discharger and undertaker. In the case of discharges made without a consent there is in fact no relationship established between them. If there is no criminal offence why would any discharger then think it worth his while to bother applying for a consent to discharge? Even if consent is obtained why would the discharger bother, for example, to comply with any monitoring requirements? Relying upon civil remedies would rapidly lead to the consent requirements becoming ignored and unenforceable.
Finally, on the question of prosecutions of customers who refuse to comply with their consents, let me remind your Lordships that non-customers without consents would also face prosecution. However, there is no reason to deny sewerage undertakers (who will be required by law to discharge their sewerage functions and to observe the trade effluent duty clarified in Clause 69 at the noble Earl's instigation) the protection of criminal sanctions against those who are willing to risk damage to the assets needed to discharge those functions. For that is what breaches of the requirements included in a consent amount to. There is no reason for dischargers to break the law and if they comply with it they will find we have provided ample safeguards for their interests in the regulatory framework.
I should add that powers for private companies which operate statutory undertakings to be protected by criminal sanctions are well precedented; for example, controls over oil discharges by vessels using harbours. It is a principle of English law that unless an offence is an individual grievance and is a matter of public policy and utility and concerns public morals, any person (which can include a company) has a general power to prosecute unless the statute creating the offence contains some restriction of this right. We consider that it would be quite wrong to exclude the appointed undertaker from prosecuting breaches under legislation which requires that undertaker to discharge statutory functions.
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For those reasons I urge the noble Earl to withdraw his amendment.
The Earl of Shannon: My Lords, I thank the Minister for that long and helpful reply. Although this is the second time on which I have raised the issue it is the first time I have been told that I am totally removing the right of prosecution. In Committee I said that prosecution should be in the hands of authorities and not public companies. Therefore, I did not believe that I was removing prosecution entirely. Much of the Minister's response was related to the fact that I was suggesting that there should be no prosecution. That is not so. I was merely suggesting that prosecution should be in the hands of authorities and not commercial companies. I am grateful to the noble Lord, Lord Renton, for searching that out.
It appears that I shall not get much further with the issue. However, Ministers should be forewarned that when questions of commercial advantage arise, I, as a Cross-Bencher, shall never be in the unfortunate position of having to stand at that Dispatch Box to answer them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 71 [Requisitioning of sewers]:
[Amendment No. Ill had been withdrawn from the Marshalled List]
Clause 72 [Financial conditions of sewers requisition]:
The Earl of Cranbrook The Earl of Cranbrook moved Amendment No. 111A:
Page 83, line 19, at beginning insert—
("Subject to subsection (3A) below").
The noble Earl said: My Lords, I beg leave to move the amendment standing in the name of my noble friend Lady Blatch. This amendment covers a new issue which has arisen from an increasingly close examination of the terms of the Bill by the water authority.
Section 16 of the Water Act 1973 provides for the requisitioning of a sewer to be used for domestic purposes in the following terms:
"A sewer shall be treated for the purpose of this section as used for domestic purposes if it is used for removing the contents of a lavatory or removing water used for cooking or washing other than water used for the business of a laundry or a business of preparing food or beverages for consumption otherwise than on the premises".
Under the existing Act, therefore, a surface water sewer cannot be requisitioned. The new Bill introduces an additional facility by which under Clause 71 sewers can be requisitioned both for the purposes given above and in Clause 71(2)(a)(iii) also for the removal of surface waters.
When this Bill comes into force Clause 72 will cover the financial conditions of sewer requisitioning. Clause 72(2), (3) and (7) contains the complicated formula by which the sum is payable by the person making the requisition to the sewerage undertaker and is calculated in terms of a relevant deficit in relation to a drainage charge. The

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particular problem which has prompted the tabling of this amendment is how this formula would apply to properties which have existing foul water sewerage and where a surface water sewer is requisitioned, and vice versa—properties having a surface water sewer for which a foul water sewer is requisitioned.
Anglia Water Authority and, I understand, other water authorities make the same sewerage charge regardless of whether a person has foul water sewerage, surface water sewerage or mixed sewerage. Obviously, the lower the drainage charge for the purpose of Clause 72(3), the larger will be the difference between the drainage charges and the annual borrowing costs, and thus the larger the sum paid by the person who is making the requisition.
It is not clear from the words of the Bill how the formula will apply to a person whose property is already served by a foul water sewer but who requisitions a surface water sewer, or a person who already has a surface water sewer but who requisitions a foul water sewer. The amendment suggests one means of tackling that problem. The amendment does not cover a third eventuality which arises when separate sewers are provided for surface foul waters and are subject to a requisition.
I look forward to hearing the comments of the Minister and I hope that he will agree that this is a problem that needs tackling.
Lord Ross of Newport: My Lords, I hope that I have understood this amendment properly. I have listened very carefully. I can say, from the point of view of someone who pays sewerage and water charges, that it has always annoyed me intensely that on a building in which I have no water connection and no sewerage I pay a charge to the water authority for taking my rainwater.
I do not know whether the noble Earl is saying that there is a difference in the way the charges should be made. Anglia Water may have a different method of charging from Southern Water. It seems very hard that one pays a substantial sum because the rain from the gutters and roofs goes into the sewer. I suppose that the ideal situation would be for it to go into separate sewers.
It will be interesting to hear the response of the Government. Have they any intention of bringing in a separate basis upon which charges are made either for foul water sewerage or for purely rainwater? Can the subsequent plcs make these charges legally? I think it is wrong that I have had to pay that figure for so many years.
The Earl of Caithness: My Lords, Clause 72 sets out the financial conditions that have to be satisfied before a sewerage undertaker is required to respond to a requisition for a public sewer under Clause 71. The person requisitioning the sewer has to undertake to pay the relevant deficit on the sewer for each of the 12 years following the provision of the sewer. The relevant deficit is the difference between the income to the undertaker each year from certain charges for the use of the sewer and the annual borrowing cost of a loan equivalent to the costs incurred by the undertaker in providing the sewer.
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I am grateful that my noble friend has raised this point. As he said, it is a new point. I ask my noble friend to turn to Clause 72(3) which provides that the drainage charges taken into account in the relevant deficit calculation are those payable for the use during the year of the requisitioned sewer. It will therefore be only those charges directly attributable to the requisitioned sewer that are taken into account in the relevant deficit calculation. The circumstances included in the amendment would involve premises served by separate foul and surface water sewers. In these cases, the undertaker would be required to break down the sewerage charges between those in respect of foul and surface water to enable him to determine the element to be taken into account in the relevant deficit calculations.
I tried to follow with care my noble friend's argument. As your Lordships will be aware, these amendments were seen by my department only this morning and if I have missed a point my noble friend can rest assured that I will write to him between now and the next stage of the Bill.
The Earl of Cranbrook: My Lords, it seems clear from my noble friend's reply that any sewer can be treated as a separate exercise and, whether or not there was an existing sewer, the new sewer would require a separate charge and a separate calculation. As I said earlier, this is different from the present custom of existing water authorities but no doubt they could accommodate it.
I should point out to the noble Lord, Lord Ross, that the circumstances are such that if these clauses were to be in operation he could have required the undertaker to provide the sewerage that he wants. It would not be an imposition but a way by which he would finance the requisition. However, having heard what my noble friend on the Front Bench said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 11IB not moved.]
Clause 73 [Performance of sewerage functions by local authorities etc.]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 111C:
Page 85, line 19, at end insert—
("(2A) Any termination of arrangements under this section shall be made in accordance with paragraph 15 of Schedule 26 below.").
The noble Lord said: My Lords, I move this amendment on behalf of my noble friend Lord McIntosh of Haringey. The amendment deals with Clause 73, which is headed:
"Performance of sewerage functions by local authorities etc.".
Subsection (2) refers to arrangements that are made by a sewerage undertaker and a local authority. We seek to insert a new subsection (2A) which reads:
"Any termination of arrangements under this section shall be made in accordance with paragraph 15 of Schedule 26 below".
The noble Lord, Lord Hesketh, said in Committee:
"I should say, by way of introduction, that we do not differ at all… in wishing to see a continuing role for local authorities in this field where they provide a cost-effective service".
He went on to say:
"We accept—and I must stress this—that there is a good case for local authorities carrying out sewerage work by arrangement with sewerage undertakers if both parties are agreeable".—[Official Report, 22/5/89; col. 13.]
Clearly, there is no basic disagreement on the point of principle. It is common ground that there are obvious advantages to the undertaker, which I do not need to reiterate, in retaining the skill and expertise of the local authorities in this vital service—an important area of public health. I remind the noble Lord, Lord Hesketh, that his ministerial colleagues in another place are on record as endorsing those opinions. Therefore, I assume that there is no objection to having the words of my amendment on the face of the Bill.
Government Ministers have been entirely consistent in wishing to give the greatest degree of flexibility to any parties joined in sewerage arrangements. The Bill as it stands enables sewerage undertakers to adopt any appropriate arrangements in the interests of providing sewerage services in their respective areas. The main point is that this amendment does not seek to change that position. It simply restores the right of appeal to local authorities, and that is a right currently available to them as sewerage agents under the provisions of the Water Act 1973. That is a right that this Bill has omitted to provide.
It is widely believed by Government Ministers that there will be a continued involvement by local authorities. Therefore there should be a ready appreciation of this amendment to avoid what would otherwise become the unilateral termination of agency agreements. In keeping with the spirit of the Bill that is a situation that should not arise. The noble Lord, Lord Nugent, said on 22nd May at col. 15 of the Official Report concerning the matter of appointment:
"the sewerage undertaker must be the ultimately responsible body which has the final decision".
I simply say that cannot be acceptable where there is a potential risk of arbitrary and unilateral termination. It is agreed that the sewerage undertaker must always be in control but it must be a control that is fairly exercised.
Many local authorities are aware that cost comparisons of the performance of themselves as sewerage agents are not made from the same common base, thereby favouring some at the expense of others. The present arrangements provide the right of appeal under the provisions of the Water Act 1973 for an industry operated within the public sector. We can see no harm in applying the same provisions to a privatised water industry. I beg to move.
9.45 p.m.
Lord Ross of Newport: My Lords, I shall speak very briefly before the Minister replies. He will be delighted to know that I do not intend to move Amendment No. 112 but to withdraw it because I believe it is defective. In that amendment we thought very much on the same lines as the noble Lord, Lord Graham, except that we considered the appeal should be to the director of water services and not
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to the Secretary of State. Where there is a dispute as regards an agency contract between an undertaker and the authority which is cancelled and the undertaker decides either to put it out elsewhere or to do it himself, we feel that the appeal should be to the director. In 99 cases out of 100 the local authority would normally be the authority involved and it should at least have a chance to state its case to the Director of Water Services. If he thinks that the scheme or the quality of work is not up to standard and comes down in favour of the undertaker, that is fair enough. But there should be that reference. My amendment suggests that it might go to the director of water services rather than to the Secretary of State.
Lord Hesketh: My Lords, these amendments would maintain a right of appeal to the Secretary of State for local authorities virtually identical to that of the Water Act 1983, following notice of termination of existing sewerage arrangements from an undertaker. The Secretary of State would then have the power to confirm, vary or terminate arrangements as he saw fit. This amendment is based on a refusal to recognise two guiding principles of the Bill.
First, the undertaker will have to meet specific standards of service, which will be monitored by the director general, within a strict limit on the charges which he can raise. Secondly, within these constraints the undertaker should have the maximum commercial freedom to manage his business efficiently, in the interests of both shareholders and customers. We believe that the proposed amendment is quite inconsistent with these principles. We are not insensitive, however, to the need for a transitional period during which all parties can adjust to the changed circumstances brought about by the Bill. Consequently, reasonable notice has to be given of termination, and undertakers will be unable to give notice which expires before 1st April 1992.
That is not arbitrary or unilateral. I stand entirely by the words that the noble Lord, Lord Graham, repeated to me from the other side of the Dispatch Box at an earlier stage of this Bill. But there is a different approach from the two sides of the Dispatch Box on this point. I have put the Government's position and that is why we do not accept the amendment moved by the noble Lord, Lord Graham of Edmonton.
Lord Graham of Edmonton: My Lords, the 1973 Act provides a right of appeal in the event of a proposed termination. Can the Minister explain why that provision is not considered appropriate to be included in this Bill? The noble Lord put this against the two imperatives which he set out at the beginning of his short speech. Surely, in common justice, never mind business or financial imperatives, an authority which has satisfactorily undertaken a function is at least entitled to a period of grace when it is told that somebody else will undertake it.
Local authorities have a good record. They are entitled to what I call common justice. While it is in the gift of the undertaker to decide who shall

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undertake these functions, why does the noble Lord resist an amendment which asks only for fair play and common justice?
Lord Hesketh: My Lords, the noble Lord, Lord Graham, will be aware of our position. We believe that the companies should be allowed to make arrangements which they consider to be entirely satisfactory. We believe that a great number of local authorities will continue to carry out the job which they have done satisfactorily to date. We do not believe, however, that the undertakers should be shackled. The noble Lord referred to the 1973 Act. It was drawn up when there was no concept of water privatisation. That is why it is not entirely relevant to this debate.
Lord Graham of Edmonton: My Lords, the noble Lord is saying that for the Secretary of State to have drawn to his attention by an appeal the breaking of an arrangement, which in the eyes of the authority might be damaging to the public and to the consumer, will shackle the new plcs. That is a strange concept. We do not envisage the new privatised companies not being able to do what they want. However, in equity and justice, local authorities should be able to draw attention to the breaking of an arrangement so that the Secretary of State is able to take a view. He may well decide that he does not want to be involved. In that case, should there be a tragedy under the new arrangements, he will have washed his hands of it before it happens. However, there could be circumstances in which the Secretary of State will ask the plc to reflect on what it wants to do. Can the Minister say anything more helpful?
Lord Hesketh: My Lords, with the leave of the House, as I made clear in my first reply, nothing will happen before 1st April 1992. If a water undertaker is not happy it will discuss the matter with the agent which may be a local authority. It may not be fulfilling the job which the undertaker wants doing at the price it wants it done. All the mechanism is there for allowing the local authority to agree to a new set of arrangements. Nowhere else in the kingdom does one find a commercial company having to comply with a reference to the Secretary of State if the authority is not happy with a commercial undertaking. That is why we are resisting the amendment.
Lord Graham of Edmonton: My Lords, the noble Lord has said enough. Water and sewerage are unique. Public health is unique. The noble Lord indicated that the period of grace could be used by a plc to lay down what it was prepared to pay, which could be far less than would be economical. It could then say that if the authority was not prepared to provide a service—whatever that might mean and however many corners might have to be cut—it would voluntarily put itself outside the tendering arrangement. The Minister has said sufficient to indicate the genesis of this matter, which is that the services will be provided as cheaply as possible and that on the margin public health will be at risk. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 112 not moved.]
Clause 76 [Charges schemes]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 113:
Page 88, line 6, at beginning insert ("subject to charges for domestic consumers being at the same level for the same level of service throughout the area supplied or serviced by the undertaker,")
The noble Lord said: My Lords, we debated this amendment at some considerable length when we discussed Amendment No. 108ZC, which was moved by the noble Lord, Lord McIntosh of Haringey. Since then I have had "tea" with my noble friend Lord Caithness, except that we did not in fact have any tea. I must say that he has been most helpful in this connection.
However, I should like to ask my noble friend first whether the Government agree with the principle that rural consumers should not be discriminated against. This non-discrimination has, as he and I both know, long been the practice of water authorities in the past. Secondly, although I am not sure which word to use here—for example, whether to use the word "rules" or the word "game"—do the Government accept that things have now changed because of privatisation and that the new public liability companies could in theory—although it sounds awful—discriminate against rural areas?
My noble friend was kind enough to say in relation to the last amendment that he would look at the problem. I wonder whether he could now give me an assurance that it is his hope to be able to put some provision on to the face of the Bill which would meet the concerns which were so forcefully expressed by Members on all sides of the House when we discussed this amendment earlier today. I beg to move.
Lord McIntosh of Haringey: My Lords, I intervene not to repeat the arguments which were, as the noble Lord, said, rehearsed at some length earlier this afternoon, but to make clear that in our view this is not a private discussion between the Front and Back-Benches of the Conservative Party; this is something about which we on these Benches feel most strongly. We feel that the protection of those who happen to live in areas where the cost of supply may be greater should not be taken away simply as a result of privatisation. The principle of an equal basis of charging throughout the country in all localities is most important. It is one which exists in the public utilities and one which should be carried over even after privatisation.
The Earl of Caithness: My Lords, although I did not have time to take tea with my noble friend, I hope that he has found an opportunity to refresh himself both with food and liquid since we spoke.
Perhaps I may first deal with his last point. I have said that I shall be prepared to meet my noble friend to discuss the matter. As he well knows, I should not

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have agreed to do so unless I thought that such a meeting would be constructive. I do not rule out the possibility that we may be able to clarify the Bill in some way so as to satisfy your Lordships on this point. However, I cannot give any guarantee on the matter because we would not want to risk disadvantaging some other equally worthy classes of customer; but I can say that we are at one on principle.
The Bill and the licence will continue to provide that there shall be no undue discrimination. In that way I can agree with my noble friend's first point that rural customers should not be unduly discriminated against in future any more than they are now. Certainly the contents of Clause 7(2) will not alter the position with relation to rural consumers. I think that perhaps we should go no further on the issue today and that we should defer our debate until another occasion.
Lord Stanley of Alderley: My Lords, I thank my noble friend for that assurance. I fully understand that he cannot say precisely what he will put in the Bill because neiher he nor I know exactly what he could put forward. However, I must remind him that like the noble Lord, Lord McIntosh, I feel most strongly about this matter; indeed, the whole House feels strongly about it and I know that my noble friend is aware of that fact. I am not threatening him in anyway; but if he is unable to put something on the face of the Bill, then I shall have to return to the matter on Third Reading. I have checked with the Clerk of the Parliaments to ascertain whether that would be in order because I cannot let down those who have supported me so loyally. I thank my noble friend, and I hope that we can see our way to putting something in the Bill. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Clause 77 [Liability of occupiers etc. for charges]:
Lord Renton Lord Renton moved Amendment No. 113A:
Page 89, line 25, leave out subsections (5) and (6).
The noble Lord said: My Lords, Clause 77, which deals with the liability of occupiers etc. for charges, follows the General Rates Act 1967. That Act places the interest of the public purse above justice to the individual, however humble the individual may be and however unjust it may be to pursue him for debts incurred by somebody else.
It is in Clause 77(5) and (6) that that rather unattractive anti-social principle is repeated. Perhaps I may give one or two examples of how it operates. Where a tenant is not responsible for rates, but under his agreement with the landlord the landlord is responsible for the rates, if the landlord, having been paid by the tenant, fails to pass them on to the water undertaker, formerly the water company, or whatever it might be, then the water company can sue the unfortunate tenant. That is only one example. It gets worse, because owing to the reference to "any occupier" it could mean that a new tenant, who did not enjoy the water in respect of which the charges are made, could be sued under the provision.
Indeed, the provision means that the original landlord could be sued; the new landlord could be sued; the original tenant could be sued, even though he was not obliged to pay the rates; or the new tenant could be sued—any occupier or any landlord. That is not justice. We ought to do better than that.
I believe that it is relevant also to point out that since the General Rates Act was passed—of course it is still in operation and will remain so until we have the community charge in force—we shall have abolished the system of general rates and we shall have replaced them with the community charge plus water charges. There is a change of circumstance which would make it wrong to continue with the previous law.
There is another factor. Under the Housing Act 1988, security of tenure has changed. Particular landlords of tenancies and assured shorthold tenancies—for example, six-month tenancies—can review the tenancy every six months and may end it for any reason. That intensifies the possibility of injustice under these provisions. At this late hour, I do not wish to deploy as full a case as one could. I think I have said enough to make it clear that the Government should reconsider this matter and replace subsections (5) and (6) with something which is more up to date and fairer and which will avoid causing the kinds of injustices I have mentioned. I beg to move.
Lord Wise: My Lords, I wish to speak briefly in support of my noble friend's amendment. Surely all commercial businesses have to rely upon the courts for the collection and enforcement of all outstanding debts. I cannot see any reason why the water and sewerage businesses should be an exception to this
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rule. If a retailer is in debt to a wholesaler, then the wholesaler is not entitled to try to collect the debt from the customers of the retailer. This seems a similar situation.
I can see many difficulties arising. For instance, what would happen in the case of multiplicity of bedsits in one establishment if the landlord defaulted? Who would have to pay? How would the water authorities and water companies charge the tenants then? I do not see why they should be harassed at all by the water companies, if, as my noble friend Lord Renton says, it is possible that the debt was incurred long before they became tenants. I think that these amendments will remove the power of undertakers to hold occupiers liable for charges where another person has agreed with the undertaker to meet those charges. I hope that the Government will look favourably upon my noble friend's amendments.
Lord McIntosh of Haringey: My Lords, in the short version of his speech it seemed to me that the noble Lord, Lord Renton, deployed his arguments to great effect. I wish to add my support to them and to say also that it seems that those who are already worse off—that is the tenants, the people who are in the least favourable economic and financial situation—are most likely to suffer from the provisions. They pay their water bills as part of their rent. They fulfil their contract with their landlords. So far as they are concerned, it is undoubtedly difficult enough to achieve that. For them then to find that the law provides that they can be pursued simply because the landlords have not handed over the money to the water companies, or because some other tenant or some other landlord at some other period of time has not handed over the money, seems to us to be grotesquely unfair. I hope that the Government will be able to respond sympathetically to the amendments.
The noble Lord, Lord Renton, suggested that if the two subsections were taken out, other subsections might have to be substituted. I assume that on that basis this is a probing amendment which will require further thought before Third Reading. If that is the case, we wish to be associated with any further thought that is possible or necessary.
Lord Trafford: My Lords, I support my noble friend Lord Renton in putting the amendment forward if the argument he has deployed with regard to what we might call secondary charging is valid under subsections (5) and (6).
The wording of these two subsections is extremely obscure. It does not necessarily seem to me to bear the full interpretation which my noble friend and all noble Lords have put upon it. If I am wrong and that interpretation is correct, then one should support the amendment. However, I wish to hear from my noble friend on the Front Bench whether I am right in believing that there are covering points which may not totally support my noble friend's argument. I am hesitant in saying that because my noble friend Lord Renton is usually so accurate on these matters.
Lord Renton: My Lords, I have it right on this occasion too.
Lord Trafford: My Lords, my noble friend assures me that he has it right on this occasion too.
Lord McIntosh of Haringey: My Lords, surely the obscurity of subsections (5) and (6) is an additional reason for removing them. It is rather like Groucho Marx's contract.
Lord Trafford: My Lords, it is a perfectly valid point that improvement of the verbiage of these particular subsections may be possible. However, Groucho Marx also said that he would not be prepared to belong to any club that would accept him as a member.
The Earl of Caithness: My Lords, I have listened with care to my noble friends. I believe they have a very good point. I accept that the issue of such notices on tenants under subsections (5) and (6) might cause considerable distress to the more vulnerable members of the community. I also accept that the water undertaker will always have the option of seeking to recover bad debts from previous landlords through the courts, and that risk of disconnection has been substantially reduced now that in virtually all cases the customer in arrears will have the protection of county court scrutiny of his circumstances before disconnection can take place.
I say to my noble friend Lord Renton that I am happy to consider this amendment with a view to seeing whether we can amend the Bill at another stage. I shall be happy to enter into discussions with him before then.
Lord Renton: My Lords, I am sure that all noble Lords will greatly appreciate the undertaking which my noble friend has given, and for which we are deeply grateful. I am sure that the National Consumer Council, which inspired my noble friend Lord Wise and myself to move this amendment, will also be appreciative. I look forward to Third Reading. If my noble friend wishes to discuss the matter with me and the noble Lord, Lord McIntosh, between now and then, I am sure we are at his disposal. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 113B:
After Clause 78, insert the following new clause:

("Prohibition on unlicensed supply.

.—(1) A person who—

(a) supplies water or sewerage services to any premises, house or building; or

(b) charges for water or sewerage services supplied to any premises, house or building;

shall be guilty of an offence unless he is authorised to do so by an appointment made under section 11 of this Act, or an exemption.").

The noble Lord said: My Lords, in moving this amendment, I wish also to speak to Amendment No. 113C. Indeed, it is essential that I do so, because Amendment No. 113B appears to introduce a
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prohibition on unlicensed supply. That is by no means our intention with these amendments. The meat of the amendments, as it were, is contained in Amendment No. 113C which concerns the exemptions from the prohibition on unlicensed supply. Let me make it clear that it is not in any way our intention to interfere with the many small cases of private supply, for example, from wells, particularly in rural areas. We do not wish to interfere with someone who happens to have a well and who happens to supply his neighbours, tenants or anybody else in the vicinity.
This amendment was, like the previous amendment, originally envisaged by the National Consumer Council. We are concerned at the lack of regulation for supply, other than by appointed undertakers. I am not saying that it is not deliberate, but the Bill has the curious effect that there is a definition of private supply in Clause 66, and there is some regulation of private supply by local authorities in Clauses 56 and 57. They are responsible, for example, for ensuring the wholesomeness and sufficiency of water that is supplied privately. However, private supply in general is not covered by any of the redress provisions for consumers which exist for appointed undertakers. The examples I would give of this are Clause 22(5), Clause 38(2), Clause 40(6), Clause 44(1), Clause 45(7), Clause 49(3), Clause 51(7), Clause 68(2), Clause 71(7) and Clause 78(3)(f). It will be seen that there is substantial protection and substantial redress for those who are badly treated by companies holding an appointment. However, no such protection and no such redress exists for those who receive a private supply.
As I have already said, it is not our intention that small, local, private supplies should be covered by this provision. It is perfectly possible for such supplies to be granted either in a particular case or by a class protection by the Secretary of State under subsection (2) of Amendment No. 113C. We are concerned about the risk that the appointed water undertakings could have subsidiaries which are not themselves appointed and which therefore do not provide the redress and the protection for the consumer which is a feature of the Bill—and of which the Government are very proud.
In other words, it is when supply other than by appointed undertakers is a commercial business or is a device by appointed undertakers that we start to be concerned, and we feel that consumers need the protection which is afforded elsewhere in the Bill. Therefore Amendment No. 113C requires that there should be exemption from the prohibition on unlicensed supply but that that exemption should be in accordance with any terms contained in the exemption and should continue in force for such period as may be specified in, or determined by or under the exemption.
That may seem a curious way to attack what appears to us to be a gap in consumer protection. I hope that we have formulated it correctly, that the Government recognise the justice of the case and will feel able to support the two amendments. I beg to move.
The Earl of Balfour: My Lords, perhaps I may comment because I am very concerned by what has been said. Although I sympathise with the principle behind the amendment of the noble Lord, Lord McIntosh, and recognise that people who receive water from private supplies need protection, it is worth pointing out that under the provisions of this Bill local authorities have a distinct responsibility to check private supplies with regard to both wholesomeness and quantity of water. That is clearly made out and I feel that in that respect much of the noble Lord's concern is covered by the functions of the environmental health department of a district council. I think that that applies to both England and Scotland.
I should like to quote a personal example to illustrate my concern. At my home most of the estate is served by a private water supply from a very good spring. It supplies one farm and about 40 houses, so it is not exactly small. My next door neighbour—by which I mean someone who lives two miles away—has a similar system. At present I am having the system analysed by the local authority to ascertain the quality of the supply. The last time that was done was 20 years ago.
The amendment states that a person who supplies water to any house or charges for water shall be guilty of an offence unless he is authorised to do so by an appointment or an exemption.
Normally, I have never charged for water, but the pipe goes off into three branches. Just a year ago, I took advantage of a Government grant to replace lead pipes with pipes of other materials. It was a 75 per cent. grant which is available to anyone. For the nine houses involved—of which only one belonged to me; that was house No. 9, the last one—it worked out at about £1,000 per house. The grant covered three-quarters of the cost, but that was the first and, I hope, will be the only occasion when I have had to charge the occupiers of the other eight houses approximately £250.
Under the wording of the proposed new clause, if I made that charge, I should be guilty of an offence unless I was licensed to make such a charge. That is where the second new clause to be considered comes into effect. It states:
"The Secretary of State may … grant exemption from [the] section…above, but subject to compliance with such conditions as appear to the Secretary of State to be appropriate".
Let us suppose that the Secretary of State decides that one may charge for the water, but that the cost will be spread over 10 years. In that case, not only would I want to register as a water supplier, but I should have to bring in the question of interest. If I had to spread that cost over 10 years, I would charge not £25 a year but £29 a year to cover my costs. If the amendments were accepted, and I were involved in such matters, it would pay me to make certain that in future I charged for water and was licensed. I do not think that the amendment will have the desired effect.
The Earl of Caithness: My Lords, I have listened with care both to the noble Lord, Lord McIntosh, and to my noble friend Lord Balfour. What my noble friend has said reinforces me in my contention that
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the amendments would introduce heavy-handed regulatory powers which are not needed.
Clause 11 requires the Secretary of State to ensure that there is at all times after the transfer date an appointed water undertaker and an appointed sewerage undertaker for every area of England and Wales. Those undertakers will thus have a monopoly over the powers given to undertakers under the terms of Clause 11. Similarly, they will be uniquely obliged to meet all the obligations of water and sewerage undertakers. The powers of undertakers include all the powers needed to discharge their functions, for example, concerning laying mains and sewers in streets or fixing water charges in charges schemes. Their obligations include providing services to customers connecting to the public mains and sewer networks and extending those networks to serve new customers. Private services are numerous for both water supply and sewerage. Although a high proportion of households is connected to the mains and sewers of the undertakers, there are still a large number who are not. It would be quite wrong at this stage of the Bill to introduce unlimited powers for the Secretary of State to ban or regulate the continued provision of services to those customers.
So far as concerns new customers, we have not intended to prevent the occasional case in which private services may also be provided by someone other than the appointed undertaker in the future. Clause 12(2)(c) provides for variation of appointments in areas where the undertakers currently serve no customers so that a different company could be appointed as the undertaker. In such areas, it is likely that the existing, or a new, undertaker would become the supplier of new customers both because the powers of undertakers will be needed to provide the necessary infrastructure and because customers will expect the certainty that goes with requiring services from the appointed undertaker.
However, it is possible for new appointees to take on appointments in such areas. Also, in marginal cases, it is possible, for example, for a company to obtain an extraction licence and to provide water for a group of industrial users on an industrial estate on a wholly commercial basis. We have no reason to prevent that taking place. Providers of services other than appointed undertakers will be subject to abstraction licensing, a requirement to provide wholesome drinking water and to obtain consents for any discharges that they make to the environment. We do not believe that there is a need for another tier of regulation.
Lord McIntosh of Haringey: My Lords, in responding, let me start by putting at rest the mind of the noble Earl, Lord Balfour. Even the first amendment does not make any distinction between anybody who supplies without charging and anybody who supplies and makes a charge. It says:
"(a)… or (b)".
The exemption or regulation provisions of Amendment No. 113C apply in either case. So it does not matter from the point of view of these amendments whether or not he makes a charge.

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In introducing the amendments, I did not make clear that it was not our intention in any way to ban private supplies; but it was our intention to ensure that those water users who are under private supply have the same means of redress against their suppliers as those who are not. That is the purport of Amendment No. 113C.
It is difficult—in fact impossible—for us approaching this matter at a late stage in this Bill to do anything other than say that the Secretary of State shall have the responsibility of granting exemptions under such conditions as he thinks fit. We are certainly not in any position to rewrite the whole Bill in order to ensure that the consumer protection that is written into it so far as concerns the appointed undertakers applies to all consumers.
However, I think that it is not too difficult to see that there is a problem in this respect. There are some consumers who are losing the protection or failing to gain advantage from the protection which is provided to all the other consumers. They may not comprise a very large number and it may be that the regulatory system will have to be simplified because of the small number of people concerned. Certainly it is highly likely that local supplies such as those to which the noble Earl, Lord Balfour, referred on his own estate would be automatically exempt from the provisions of these new clauses simply on the grounds that the number of people concerned was too small.
There are protections. They ought to be available to all consumers but they are not available to all consumers. If we have inadvertently proposed a regulatory regime which, as the Minister said, is too harsh, we shall have to think again about this matter. These are not amendments that I wish to press to a Division. However, I hope that as the Minister reads the Official Report he will recognise that, however defective the wording, behind it is a real concern for people who would otherwise not be adequately protected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 113C not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 113D:
After Clause 78, insert the following new clause:

("Re-sale of water and sewerage services.

—(1) This section applies to water and sewerage services supplied to a consumer's premises by a person who is authorised by an appointment or exemption to supply water or sewerage services.
(2) The Director may from time to time fix maximum prices at which water and sewerage services to which this section applies, may be resold, and may publish the prices so fixed in such manner as in his opinion will secure adequate publicity for them.
(3) The Secretary of State may by regulation make such provision concerning the re-sale of and charging for water and sewerage services as he considers appropriate.
(4) If any person resells water to which this section applies at a price exceeding the maximum price fixed under this section and applicable thereto, the amount of the excess shall be recoverable by the person to whom the water was resold.").
The noble Lord said: My Lords, in moving Amendment No. 113D, with the leave of the House, I should also like to speak to Amendment No. 118A tabled in the name of the noble Baroness, Lady Blatch. That amendment appears to overlap our amendment, if I may put it that way, in that two of the subsections are the same. There is some variation for reasons of which I am unaware.
Again let me make it clear that the purpose of this amendment is not to prohibit the resale of water. That would be absurd and impossible. It is to ensure that there is adequate control of the prices at which water and sewerage services are resold in order to avoid exploitation. This is not a completely new or surprising provision. The Electricity Bill that is under consideration in Committee in your Lordships' House includes in Clause 40, provisions for setting maximum resale prices. Section 37 of the recent Gas Act provides similarly that there should be powers to fix maximum retail prices.
As with the amendment moved by the noble Lord, Lord Renton, we are concerned principally with tenants, with those who are likely to be less advantaged people in our society. One can think of tenants of caravan sites, of hostels; and possibly of people who may not be less advantaged such as those in new housing estates whose landlords or developers decide to take on the prime responsibility for the provision of water and sewerage services on a resale basis from the appointed undertaker.
I confess that I am not much of a supporter of the resale of water for profit. It does not strike me as a very attractive proposition. However, that is not what the amendment states. We are not trying to ban resale. We are saying that the director general should have the power to fix a maximum price which would be comparable to the rights of tenants to which the noble Lord, Lord Renton, referred in a previous amendment.
The people who are likely to be affected by this amendment are those who suffer from many other disadvantages. They are likely to be in less satisfactory accommodation and to have less security of tenure. The Gas Act goes some way to providing that their landlords should not cheat them on the gas meter. The Electricity Bill contains comparable provisions. We are asking for the same rights to be conferred on them in the Water Bill with regard to their water supply. I beg to move.
10.30 p.m.
The Earl of Cranbrook: My Lords, Amendment No. 118A, put forward by my noble friend Lady Blatch and myself, deals, as the noble Lord, Lord McIntosh said, with very much the same subject. Perhaps I can bring it down to ground level by saying that there has been a problem in the Anglian Water Authority area where a few weeks ago a trading standards officer received a query from a mobile home owner who felt that he had been overcharged for supply of water. This amendment refers to tenants who have sub-meters. It will be a more frequent occurrence as metering becomes more widespread in the country. It applies to any caravan site and no doubt also to marinas.

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As the noble Lord, Lord McIntosh, has pointed out, there are provisions in Section 37 of the Gas Act, and in the Electricity Bill at present going through this House, for controlling the resale. There is no animadversion whatever to those who sell on water. In many cases, such as caravan sites, it may be an essential part of the administration of the site. However, our proposal—which is identical in intent—is that there should be restrictions on the maximum prices that can be charged.
The Earl of Caithness: My Lords, I am beginning to be concerned about the similarity of the amendments of the noble Lord, Lord McIntosh of Haringey, and those of my noble friends Lady Blatch and Lord Cranbrook. I hope that this will not continue for too long. However, I am glad to note that it is the noble Lord, Lord McIntosh, who on this occasion has a starred amendment. He has obviously been influenced by my noble friend Lady Blatch. I think that gives me greater comfort than a moment ago.
Although the Government have very little evidence to suggest that the resale of water by unscrupulous landlords is a problem—notwithstanding what my noble friend Lord Cranbrook has just said—I agree that in order to prevent such a problem occurring in the future it would be useful to give the director general powers to fix the maximum price of water and sewerage services that may be resold. I am happy therefore to give an undertaking that the Government will consider the points made by the noble Lord, Lord McIntosh, and my noble friend Lord Cranbrook about the resale of water by landlords with a view to coming forward with an amendment at a later stage.
Lord McIntosh of Haringey: My Lords, I am entirely happy with that assurance, although I am conscious that there is only one later stage at which the Minister can come back. I am grateful to the Minister and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 79 [Restrictions on power to make connection and certain other charges]:
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 114:
Page 91, line 14, at end insert ("; or(c) the person providing any recreational facility or service.").
The noble Lord said: My Lords, Clause 79 provides that the water or sewerage undertaker should not,
"demand or recover an initial charge for its becoming, or for its taking steps for the purpose of becoming the person who provides a supply of water for domestic purposes or the person who provides sewerage services".
Presumably that means that the undertaker shall not charge a premium or anything of that kind for taking over the provision of these services. The amendment seeks to add that it should not charge an extra sum of money for taking over any recreational facility
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or service. I have in mind particularly fishing and possibly also boating and water-skiing.
There is no attempt to tie down the water or sewerage undertaker to keep the same charges for ever more. Nobody is suggesting that. But there should not be some kind of premium charge for taking over provision of these services. I hope that the Government will take this on board. The authorities have been very forward looking and co-operative in their provision of these services, certainly boating, water-skiing and fishing. They have been receptive—especially to myself when I was in the other place—to pleas on behalf of constituents to provide fishing facilities. And they certainly did not overcharge. That is good and we want it to continue. I beg to move.
Lord Hesketh: My Lords, the effect of the amendment is to prevent a water or sewerage undertaker levying an initial charge on a person for whom the undertaker is becoming the provider of recreational facilities or services. I expect many of your Lordships will find my account of the effect of the amendment rather obscure. The obscurity we believe is unavoidable. The amendment deals with charging for recreation, while Clause 79, to which it applies, is about charging for connecting premises to water and sewerage services. Undertakers will not be connecting anyone to their recreational facilities.
I suppose the nearest analogy to a recreational connection charge is a membership fee levied on joining a boating club run by an undertaker. However, I do not think this analogy is worth pursuing. The fault behind the amendment is hardly to outlaw the levying of fees for joining boating clubs.
The amendment should not be accepted, not just because it is difficult to attribute any clear meaning to it, but also because the thought behind it—that the right of the undertakers to charge for the provision of recreational facilities and services should be controlled—is something we discussed and rejected when considering Clause 8(6) which permits undertakers to charge for recreational facilities. If any undertaker cannot recover its costs for connecting a person to recreational facilities from the person so connected—I am not sure what that means—then the public at large will have to meet the costs through higher water charges.
We do not believe that the amendment should be accepted.
Lord Ross of Newport: My Lords, I am afraid I do not see the word "connection" in this first part of Clause 79. There is no mention of connection. The clause reads,
"shall entitle any water undertaker or sewerage undertaker to fix, demand or recover an initial charge for its becoming, or for its taking steps for the purpose of becoming".
That could be read as meaning that when the undertaker takes over, as a plc, those services, it could say to us, the customers and consumers, "We are not going to provide them until you pay us an initial cost for taking over". That may be far-fetched, but the Bill does not actually say "connection". That is why the amendment has been tabled.

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I wish that the Minister would say more to reassure the people dependent on water authorities for fishing and other recreational purposes that it is not in the mind of the Government that any initial charge should be made for carrying on those facilities when the privatisation of water takes place. Certainly, in the longer term, the charge for the provision of fishing facilities should go up with inflation. But a fishing organisation should not be told. "We cancel that contract and if you wish to take it on you have to pay us a premium." Premiums involving enormous sums of money have been paid in the commercial field over the past few years.
Lord Hesketh: My Lords, with the leave of the House, I have not fully understood the point made by the noble Lord, Lord Ross. It would be best if I read the Official Report. If I see that we are diverging on to two different tracks I shall write to him in order that we can return to the same track.
Lord Ross of Newport: My Lords, I am grateful to the Minister and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81 [Exemption from charges for water for fire fighting]:
Lord Gallacher Lord Gallacher moved Amendment No. 115:
Page 92, line 28, leave out from ("or") to end of line 30 and insert—
("taken by a fire authority for any other emergency purposes;

(b) water taken for the purpose of testing apparatus installed or equipment used for extinguishing fires or for the purpose of training persons for fire-fighting; or

(c) the availability of water for any purpose mentioned in paragraph (a) or (b) above.").

The noble Lord said: My Lords, I should like to speak also to Amendments Nos. 116, 117 and 118. The amendments reopen a matter which was discussed briefly in Committee. It concerned the charging arrangements for water supplied for fire services.
At present the legislation in the Bill exempts from charging arrangements water supplied not only for extinguishing fires but also for testing apparatus. When the legislation was originally drafted, firemen did little more than hold a hose from which water was emitted. We are told that the situation is now quite different. Different types of fires require different treatment. While they are all water based there are many different methods of mixing chemicals with the water and applying the resultant mixture to the fire in question.
That has meant that recently fire services have had to undergo a much higher level of training. Following the analogy that has always been accepted—that it is acceptable for water to be supplied free of charge for the testing of equipment—it seems to us that there can be little argument against a similar activity of training or testing the firemen who must operate the equipment. In any case, the water so used is almost immediately
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returned via the drainage system to the water authority. We submit that it is wasteful of public money to require the additional equipment and administration necessary to raise charges for this insignificant field of activity. I beg to move.
The Earl of Arran: My Lords, I am pleased to say that, following the undertaking given by my noble friend Lord Hesketh during the Committee stage of this Bill, the Government accept these amendments which extend the prohibition on charging for water for fire-fighting to include that taken for fire-fighting training and for other emergency purposes provided by a fire authority.
Noble Lords will be pleased to note that the prohibition on charging will also cover water used for fire-fighting training purposes by the owners of private fire-fighting equipment as well as that used by fire authorities. In consequence, the amendment goes rather wider than that originally proposed by the noble Lord, Lord Graham, on behalf of the noble Lord, Lord McIntosh, during the Committee stage of the Bill. We commend the amendments to your Lordships.
Lord Gallacher: My Lords, I am extremely grateful to the Minister for not merely accepting the amendments but for extending their scope. The hour is late and I do not know in what fashion I can celebrate. A cold shower is the best I can think of at this point.
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 116 to 118:
Page 92, line 33, after ("(a)") insert ("or (b)").
Page 92, line 36, after ("(a)") insert ("or (b)").
Page 92, line 39, at end insert—
("() In this section "fire authority" has the same meaning as in the Fire Services Act 1947.").
On Question, amendments agreed to.
Baroness Blatch Baroness Blatch had given notice of her intention to move Amendment No. 118A:
After Clause 81, insert the following new clause:

("Fixing of maximum charges for reselling water.

.—(1) The Director may from time to time fix maximum prices at which water supplied by water undertakers may be resold, and may publish the prices so fixed in such manner as in his opinion will secure adequate publicity for them.
(2) Different prices may be fixed under this section in different classes of cases which may be defined by reference to areas or any other relevant circumstances.
(3) If any person resells any water supplied by a water undertaker at a price exceeding the maximum price fixed under this section and applicable thereto, the amount of the excess shall be recoverable by the person to whom the water was resold.").
The noble Baroness said: My Lords, I should like to admit to my old friend the Minister that there was no collaboration between the noble Lord, Lord McIntosh, and myself in respect of Amendments Nos. 113D and 118A. Perhaps the noble Lord could have added his name to my amendment, but I shall not move it.
[Amendment No. 118A not moved.]
Clause 82 [Initial Government holdings]:
10.45 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 118B:
Page 93, line 24, leave out ("and on such terms").
The noble Lord said: My Lords, I should like to speak also to Amendment No. 118C. This is the wrong time of night to be dealing with a matter of this kind. I hope that the amendment will be treated with the seriousness that it deserves.
The background of this matter is the history of privatisation over the past few years. Although all the privatisation initiatives of this Government have, taking the most narrow definition, succeeded in the sense that everything has been privatised, there has been a full gamut of types of success, if one may put it in that way. There have been those which have been grotesquely underpriced and those which have been so heavily priced that it has been necessary for them to be taken up by the undertakers rather than by the investors.
With regard to water, the risks of getting the flotation price wrong are not only very great but they virtually become certainties. We have discussed the question of the net asset value of the water and sewerage undertakings. It is well recognised that the figure is of the order of £27 billion. Even on a historic cost basis it is likely to be £8 billion. However, the best estimates available for the proceeds from privatisation are between £5 billion and £7 billion. On whatever basis it is taken, the privatisation of water will be an enormous give-away of public assets. The figures do not allow of any other interpretation.
That deals only with the privatisation itself. We do not yet know, and the Government refuse to say, how much of the existing debt of the water authorities, which accounts for more than £5 billion, will be written off. If the whole amount were to be written off, the loss in debt would nearly equal the receipts from the flotation, and the give-away would be complete. At best it is unlikely that the taxpayers will get more than £3 billion or £4 billion for assets which are valued at approximately £27 million. The case of water privatisation is the worst possible case for taxpayers getting a good return on a privatisation venture.
What we propose is something very simple, although one can see that its implementation might not be all that simple. Instead of being allotted under the traditional formula, there should be a tendering procedure. I have no doubt that the Minister will find many practical difficulties in that proposition. It has never been done before, and I have no doubt that it would cause great difficulty in the City, not least because many of the enormous fees which go to financial institutions for underwriting and supporting the privatisation would no longer be available in the same terms. I am sure that they will find very good reason for saying that it cannot be done because it has never been done before.
The amounts of money involved are so great that a serious effort must be made to avoid privatisation being the fiasco which we can confidently predict that it will be for the taxpayer. It will not be a fiasco
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for the financial advisers. It may not even be a fiasco for the investors, although that is a very fine line. The one group of people who we know will lose from privatisation will be the taxpayers and the water consumers.
This is a serious attempt to remedy part of that situation. It does not mean that we are converted to privatisation or that we are in favour of what the Government propose. It means that we show a serious determination to protect the taxpayer from some of the worst effects of privatisation. I beg to move.
The Earl of Caithness: My Lords, I offer my congratulations to the noble Lord, Lord McIntosh of Haringey. As your Lordships know, he has an unrivalled ability either to bring forward a debate or introduce a further debate at a later stage in the Bill, and he has done so again tonight. Tribute is due to him as it keeps us all very much on our toes.
Before I reply to the amendment perhaps I might point out what I believe is an error in Amendment No. 118C. I think that the reference to "subsection (1)" should read "subsection (2)". While the noble Lord considers that, I shall answer the amendment.
Contrary to what the noble Lord said, in the past on such occasions the Government have chosen to sell businesses by tender where it was felt that that would ensure the best price. However, tenders are sensitive to market conditions. Before the noble Lord jumps up to ask me what we have sold by tender, let me add that part of the British Airports Authority was for sale by tender. It was a Bill that I had the pleasure of taking through your Lordships' House and I am glad to see the effect of that has been so productive.
While not ruling out the possibility of such an approach in the privatisation of water, my concern with these amendments is that they seek to write on the face of the Bill an obligation to sell by tender. A decision on the best method of sale will be taken closer to the date of flotation, in the light of market conditions likely to be prevailing at the time of sale, to ensure a proper return to the Exchequer. Tenders may or may not prove to be the most effective means of doing that, as there is no certainty that sale by tender would lead to higher proceeds than other methods. In short, it would not be appropriate to legislate the means by which the sale should proceed as flexibility is necessary on these issues.
That is perhaps not quite the reply that the noble Lord, Lord McIntosh, was expecting; but I hope I have dealt with the amendment with the due seriousness he would expect from me.
Lord McIntosh of Haringey: My Lords, I can certainly confirm that the Minister treated the amendment with seriousness, though I do not think he appreciated the full significance of what is being said.
I have looked at whether the amendment should refer to "subsection (1)" or "subsection (2)". This is a multi-stage process and it looks as though the Minister is right that it is the second stage of the allotment of shares with which we should be

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concerned rather than the first stage. I am grateful to the noble Earl for that correction. That alone, apart from the lateness of the hour, would be enough to convince me not to press the amendment.
However, what the noble Earl says about previous flotations—excepting the British Airports Authority—does not give us confidence that water privatisation will produce the best value for taxpayers. Time after time the short-term gains on privatisations have been the result of the flotation price being set too low and substantial short-term gains being made by speculators. In this case I use "speculators" rather than "investors" advisedly.
Those gains were made at the expense of the taxpayer. When Amersham was floated, the price at the end of the first day represented a gain for speculators of 32 per cent. The figure for Associated British Ports was 23 per cent.; for British Aerospace, 14 per cent.; British Airways, 68 per cent.; British Gas, 25 per cent.; British Telecom, 86 per cent.; Cable and Wireless, 17 per cent.; Jaguar, 8 per cent.; and Rolls-Royce, 68 per cent. Some of these, I hasten to say, were on a part-paid shares basis. The only example of the Government not enriching the speculators was the selling off of the state-owned oil companies.
The history of privatisations from the point of view of the profit for the taxpayers' pocket is not a happy one. Many billions of pounds have been put directly from the taxpayers' pockets into the pockets of speculators. We have proposed a way of avoiding that. I suppose that it is encouraging even at this stage to learn that the Government have not set their face against sale by tender and that this may still be considered. I do not believe in his response to the amendment that the Minister has given full recognition to the dangers that exist in the privatisation proposals as they stand. I do not believe that taxpayers are going to be very reassured by the argument that the details should not find their way on to the face of the Bill. Because of the defect in the amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 118C not moved.]
Clause 85 [Conversion of certain loans]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 118E:
Page 95, line 17, at end insert—
("(1A) No order under subsection (1) above shall have the effect of so increasing the projected yield on any shares at issue beyond that projected from financial capital anticipated in accordance with the requirements of section 7(2Xb) above.").
The noble Lord said: My Lords, I beg to move the amendment standing in the name of my noble friend Lord McIntosh of Haringey. As the Minister will appreciate, we are on the same theme, but approaching it from a different angle. The effect of this amendment is to limit the yield in general terms rather than in the technical sense, on shares in water supply plcs after privatisation in such a way as to determine ex post facto that the net receipts of the flotation to the Treasury were maximised.
Its purpose is to prevent a repetition of using debt write-offs to produce the massive giveaways to investors that have been a feature of many previous privatisations. In this way it shall be possible to ensure that the flotation is not a vehicle whereby the taxpayer can be expected to further contribute to making the industry saleable. Only if this is done can fears be allayed that this privatisation is not to do with improving the standards and quality of water and sewerage services, but in fact refers to selling off public assets to allow private investors to make substantial speculative gains.
Much has been said about the proposed level and purpose of the intended write-off of loans to the water industry. For the moment it is accepted that the Government do not yet know what that level of write-off will be. There has thus far been little debate concerning the share price at which the water industry will be sold off. That is not wholly surprising since the Government have not even decided how many of the shares to sell off let alone at what price to do so. Doubtless the Government will say that it is too early to decide what price to put on the shares and that, even if they had done so, it would not have been within keeping of the normal practice to tell Parliament what that share price was to be.
As much was said to a Standing Committee in the other place by Mr. Michael Howard who claimed that while Parliament could decide on the principle of privatisation, it was for the Government to decide the mechanics and deal with matters of financial detail. That may well have been true of previous privatisations, but the Government should no longer be given such a free hand in the matter. Their record of privatisations and particularly as regards debt write-offs and pricing privatisation shares, is such as to warrant increased accountability to Parliament in relation to matters of mechanical and financial detail.
My noble friend Lord McIntosh has just given to the House a record that is absolutely lamentable. It is a record of substantially underpricing the flotation issues to the detriment of the taxpayer. In many cases there has been the write-off of substantial debts. My noble friend referred to a series of privatisations and indicated the percentage at which the shares had been sold at less than the public valued them. He mentioned Amersham and he gave the figure in percentage terms. The figure was £23 million; Associated British Ports, £5 million; British Aerospace, £21 million; British Airways, £317 million; British Gas, £503 million; British Telecom, £973 million; Cable and Wireless, £39 million; Jaguar, £24 million; Rolls-Royce, £465 million. That is a total of almost £2,400 million that the Treasury was gainsaid by the manner in which the shares were disposed of.
I remind the House that it is not only by adopting that method that money can be given away. I live in Enfield, and the Royal Small Arms factory there was the subject of a global sale by the Government of the ordnance factories to British Aerospace. The valuation put on the Enfield small arms factory and the explosives unit at Waltham Abbey was £1.5 million. The factories stand in hundreds of acres of land with a development potential. British

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Aerospace has now closed down those factories and is seeking planning permission which if granted—that is a matter for the local council—will make the land worth anything up to £100 million. It may come as a surprise to the Minister and his colleagues, but that valuation was made by Jack Dromey on behalf of the shop stewards and the workers. All that has come to pass was predicted.
The sale was stoutly defended by the noble Lord, Lord Trefgarne, when I raised the matter at that time. At the end of the day the taxpayer will receive £1.5 million for assets which will eventually be seen to be worth £100 million. British Aerospace will recoup what it paid for 12 factories from the sale of one. My noble friend Lord McIntosh has pointed out who gains—the financial advisers, the investment brokers and the public relations firms. The shareholders who buy may very well gain. But the taxpayer whose assets are being sold will be the prime loser.
The Minister will tell us that what we propose is not technically possible or that the amendment is in some other way defective. The noble Earl must explain how he will stop the haemorrhaging of money from the public purse. The investing public may make a killing or the company itself may make a killing. We say that public assets which are being sold against our will should be sold at a fair and proper price. I beg to move.
11 p.m.
The Earl of Caithness: My Lords, it is essential that the Government have the flexibility to create a capital structure which best suits the requirements of a successful flotation and reflects the market conditions at the time. In exercising the powers provided by the Bill to create an appropriate capital structure Ministers will act properly and they will be accountable to Parliament for the results. One dimension of this will be assessing the appropriate level of debt in the opening balance sheet.
I make these points generally because, although the noble Lord's words were helpful in explaining his intention, I still do not feel it is certain what effect the amendment would have. It seems to make it impossible to privatise the water plcs because it would appear to limit the extent of writing off debts owed to the National Loans Fund. The noble Lord did not comment on that but that is how I interpret the amendment.
All such debts must be extinguished before the water industry passes into the public sector. That does not mean that all the £5·5 billion of debts will be substantively written off, because we will create new securities in the form of shares and debentures which will take the place of national loans fund lendings. But as I have said before, all NLF debt must be extinguished and any provision which seeks to constrain that operation puts the flotation at risk.
In summary, I return to the assurances we have given before. In making what will undoubtedly be difficult judgments about capital structure we shall strike a balance which protects the interests of investors, water users, the taxpayer and the company
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managements. We shall have to justify our decisions to Parliament but the restriction proposed here would not help us to get that decision right.
Lord Graham of Edmonton: My Lords, I know that the Minister will rest his case on the fact that he has taken the best available advice. He will be advised to do things in a certain way. I simply draw to his attention the fact that the advice which the Government sought in the case of Amersham, the British Airports Authority, British Aerospace, and so on, resulted in the taxpayer being denied more than £2 billion which went into the pockets of investors.
In the political philosophy of the Minister, he may think that it is not unreasonable for those who are prepared to risk a little of their own money to receive a great deal of public money for so doing. But it is anathema to those on this side of the House. Moreover, the Minister may think that it is reasonable in the case of the sale of the ordnance factories, to which I referred, that the authorities were advised that the value they should place on the sale of the Enfield and Waltham Abbey factories was £1.5 million.
I turn now to the Government's record in connection with the £2.5 billion received from the privatisations and also in connection with the potential sale of a site in Enfield which they sold for £1.5 million and which now turns out to be worth £100 million. Can the Minister say what action the Government intend to take, or the kind of apology they will make to the House and to the taxpayer, if comparable circumstances emerge on the sale of water?
By his eloquent silence the Minister has expressed more than perhaps any words could convey. In fact, there will be no explanation and no apology; the public is being invited to read that the Minister said it would be most difficult to stop the haemorrhaging of public assets into private pockets—some of them individual, some of them companies—and in fact it will be impossible to do so. In other words, the picture which my noble friend and I have painted reflects the facts of life which cannot be changed.
I think that it is a disgraceful defence of the public interest in these matters; but that is the justification by the Minister for rejecting the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hooson Lord Hooson moved Amendment No. 118D:
After Clause 99, insert the following new clause:

("Local access to fishing.

It shall be the duty of all water companies when disposing of land adjoining lakes, reservoirs, rivers, streams or otherwise, or when disposing of fishing rights themselves, to take proper and reasonable steps to ensure that they safeguard customary local access to fishing along the lines practised by the water authorities themselves hitherto.").
The noble Lord said: My Lords, I beg to move this amendment standing in my name and that of my noble friend Lord Ross of Newport. I know that the question of fishing rights was raised in Committee, but I am anxious to discover what the Government's

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attitude is towards safeguarding what may be described as the customary rights of access of local people to fishing.
It so happens that the water supplies of this country are situated largely in sparsely populated areas. The reservoirs which were built in the last century, and some in this century, were of necessity in country areas where among the few enjoyments which people had were the customary rights of fishing. Such rights were dealt with in various ways; indeed, different public authorities dealt with them in different ways. Some dealt with them sensitively and in a most civilised way, while others did not.
However, by and large throughout the country there was a general recognition that customary rights of local people to fishing access should be safeguarded, otherwise fishing was in danger of becoming the simple prerogative of the rich—or, at least, of the very rich suburban and urban angling clubs. Therefore, this is a matter of great importance to those areas where most of our water comes from.
It was about 27 years ago now that I moved an amendment in another place to the Clywedog Reservoir Bill. I believe that the noble Lord, Lord Harmar-Nicholls, was there and, indeed, I see that a few more of my present colleagues were also there. The amendment was to provide the local people with preferential rights regarding fishing. That was dealt with by the then river authority, and was subsequently continued by the Severn Trent authority, by granting fishing rights in that particular instance to the local angling association. Therefore people who wanted to fish simply joined the local angling association and achieved access in that way. There was a differential fee as between local people and visitors.
In other authority areas it was done by having one fee for local people and a different one for visitors. It is an important amenity in country areas. If one is merely to maximise the profit from the sale of water rights in that way on privatisation, it could be argued that because fishing rights are an important amenity they should go to the highest bidder. That would not be the desire of most citizens in this country. Generally a sense of fair play and civilised behaviour would dictate that it is desirable to continue what has been the practice, manifested in a variety of different ways, which is why I have couched the amendment in the way that I have. It will ensure that those rights are safeguarded.
The purpose of moving the amendment is to probe the Government's mind on this matter. I have looked carefully at Clauses 7 to 11 inclusive. They lay general duties on the Secretary of State and other people in respect of various rights. A good deal of time has rightly been spent on safeguarding environmental rights, flora and fauna and so on, but there is no provision to deal with fishing rights. It is an important human right in those areas.
I happen to come from an area which supplies a great deal of water through the Welsh Water Authority and the Severn Trent Authority. My old constituency had two of the largest reservoirs in the country, and I border the constituency that contains the Elan Valley which has many more reservoirs. It
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is a matter of great public concern. I am seeking to direct the Government's mind to a problem which needs to be dealt with sensitively and in a civilised way. I hope that the Government can give an indication that they regard the way in which the amendment is drafted as providing at least a desirable code of practice for the future authorities that will control the water. I beg to move.
Lord Hesketh: My Lords, the purpose of the new clause moved by the noble Lord, Lord Hooson, is to ensure that the successor companies of the water authorities, when disposing of land adjoining water or when disposing of fishing rights, give the same importance to preserving local access to fishing as the water authorities do now. It is the Government's policy that the Bill must contain sufficient safeguards to ensure that recreation is in no way adversely affected by privatisation. Hence the provisions in Clause 8 which impose on the privatised water industry the existing statutory obligations of the water authorities to provide for recreation.
It is, however, our view that the amendment should not be accepted. There are two reasons for this. First, the requirement in the amendment that the companies
"take proper and reasonable steps . . . along the lines practised by the water authorities themselves hitherto"
is too loose to have any impact in practice. I may say that I fully understand the difficulty confronting anyone trying to enshrine in legislation rules designed to perpetuate existing practices.
The second reason why the amendment should not be accepted is that what it attempts to achieve will in fact be more adequately provided for through the new clause inserted on Thursday after Clause 150 as a consequence of a government amendment. Because of this clause the companies will have to secure the Secretary of State's consent before disposing of any lands, including fishing rights, which they inherit from the water authorities. Furthermore, in the case of lands of special amenity value—that is, land in national parks, areas of outstanding natural beauty, the Broads and other areas designated by the Secretary of State—any consent by the Secretary of State may be subjected to conditions designed to protect the amenity value to the public of the lands and waters.
However, we shall consider whether in a code of practice on recreation and conservation we can say anything helpful about the preference for local people in respect of fishing rights. I hope that with those remarks the noble Lord, Lord Hooson, will consider withdrawing his amendment.
Lord Hooson: My Lords, I am grateful to the noble Lord for the indications he has given. It was not my intention to press the amendment; it was really a probing amendment. It is, however, important that in their code of practice the Government should give a clear indication. I do not believe that anything less would suffice. It is not enough to rely upon the reservoirs being in the national parks. It so happens that the areas I have mentioned, although beautiful, are not national parks.

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It is not a simply a question of safeguarding the amenity but of safeguarding local rights. I can see that the noble Lord has taken the point on board. I hope that mature thought will result in clear guidance in the code of practice or through whatever means the Government decide for dealing with the matter. On the basis of the reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.15 p.m.
Clause 100 [Registration of statutory water companies under the Companies Act 1985]:
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No. 118F:
Page 108, line 6, after ("being") insert ("or will be, subject to the issue of a certificate under section 688 of the said Act of 1985").
The noble Lord said: My Lords, in moving this amendment, I wish also to speak to Amendments Nos. 118G, 119, 120 and 120A. The purpose of the amendment is to ensure that a statutory water company can make a decision to convert to a plc, adopt a memorandum and articles of association and seek the Secretary of State's approval to that adoption at one and the same time. I believe that that was the original intention of Clause 100, but as drafted it could be interpreted as requiring a statutory water company to convert to plc. In so doing it would become a company governed by the Companies Act 1985 before it was able to propose the adoption of a memorandum and articles and seek the Secretary of State's approval to them.
In certain circumstances, that could leave the statutory water company in an unsatisfactory constitutional position if the proposed memorandum and articles were not then adopted for any reason. The subsequent amendments are of a technical and drafting nature. I believe the amendments are sensible. I commend them to the House. I beg to move.
The Earl of Caithness: My Lords, my noble friend is absolutely right in drawing to the attention of the House the undoubted practical advantages envisaged from these amendments. I have to say that I am taking advice on them because they are quite complicated and raise drafting and procedural problems. It is for that reason that I fear that I cannot accept them as they stand. I have to say to my noble friend that it is not clear that the complexities arising from a concept of a conditional resolution can be overcome.
Notwithstanding that, perhaps I may say to my noble friend that I shall look carefully at the arguments which he has adduced in support of the amendment. I should be happy to meet him between now and the next stage to see whether we can overcome the difficulties. There are legal problems, so I cannot give him too much hope that we shall be able to meet his concerns. We register them and I hope that he will take the opportunity of meeting me between now and another stage.
Lord Elliott of Morpeth: My Lords, I am most grateful to my noble friend for his response, although somewhat disappointed. I am grateful for his assurance that he will give further consideration to these important points. In consequence, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 118G, 119, 120 and 120A not moved.]
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No. 120B:
After Clause 100, insert the following new clause:
("Replacement of borrowing powers of registered water companies.
.—(1) Where—

(a) provision relating to borrowed monies of a registered water company is for the time being contained in local statutory provisions; and

(b) the company for the time being holds an appointment under Chapter 1 of this Part,

that company may subject to the following provisions of this section by special resolution propose that those local statutory provisions shall cease to have effect and that other provisions shall have effect in substitution for them.
(2) If the Secretary of State by order approves proposals by a registered water company in accordance with subsection (1) above, the local statutory provisions in question shall cease to have effect and any provision to be substituted therefore shall have effect on such date as may be specified in the order.
(3) The Secretary of State shall not make an order under subsection (2) above in relation to a registered water company unless it appears to him—

(a) that neither an application under section (procedure for replacing borrowing powers) below with respect to the company's proposals nor an appeal with respect to the subject-matter of such an application is pending and that the time within which any such application or appeal may be made or brought has expired; and

(b) where there is—

(i) a division of the mortgages, debentures or debenture stock of the company into different classes; and

(ii) that the local statutory provisions which are to cease to have effect will be replaced by other provisions which will replace, vary, modify, compromise or release the rights attached to any such class or by obligations to repay or redeem the said mortgages,debentures or debenture stock,

that a consent to or approval to such proposals has been given under subsection (4) below in respect of each class the rights attached to which would be so replaced, varied, modified, compromised or released if the order were made.
(4) A consent or approval of a proposal is given for the purposes of subsection (3Xb) above in respect of a class of mortgages, debentures or debenture stock if—

(a) consent in writing to the proposal has been given by the holders of not less than three-quarters, in nominal value, of the issued mortgages, debentures or debenture stock of that class; or

(b) an extraordinary resolution approving the proposal is passed at a separate general meeting of the holders of mortgages, debentures or debenture stock of that class;

and for the purpose of determining whether the requirements specified in subsection (3)(b) above are satisfied in relation to any two or more classes of mortgages, debentures or debenture stock in a registered water company, it shall be immaterial that consents and approvals have been given in respect of different classes in accordance with different paragraphs of this subsection.
(5) The provisions of the company's registered memorandum and articles (in the case of a registered water company) or the provisions of Table A as prescribed by regulations having effect under section 8 of the Companies Act 1985 (in the case of a

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statutory water company not registered under Chapter II of Part XXII of the said Act of 1985) shall extend mutatis mutandis for the purpose of convening and regulating separate general meetings of holders of mortgages, debentures or debenture stock and the passing of extraordinary resolutions thereat as if the said holders were members of the company and the meetings were meetings of the company.
(6) Where the Secretary of State makes an order under subsection (2) above in relation to any company and it appears to him to be appropriate to do so for the purposes of, or in consequence of, the approval contained in the order, he may by order repeal or amend any local statutory provision.
(7) The power to make an order under subsection (2) or (6) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and an order under subsection (6) above may—

(a) make different provision for different cases, including different provision in relation to different persons or circumstances; and

(b) contain such supplemental, consequential and transitional provision as the Secretary of State considers appropriate.

(8) Sections 239 and 245 of the Insolvency Act 1986 shall not apply to anything done in connection with or pursuant to the provisions of this section.
(9) In this section and section (procedure for replacing borrowing powers) below—
"debenture" and "extraordinary resolution" have the same respective meanings as in the Companies Act 1985;
"registered water company" means any statutory water company to which a certificate under section 688 of that Act has been issued (whether before or after the transfer date).").
The noble Lord said: My Lords, in speaking to this amendment I should like also to speak to Amendment No. 120C. It may be recalled that during the Committee stage I moved clauses similar to these. My noble friend Lord Hesketh expressed at that time general sympathy with the aims of the clauses but had some reservations. In the light of those reservations I have since carefully examined the clauses with the assistance of advisers to the Water Companies' Association. The result is now before your Lordships.
I am advised that, as presently drafted, the Bill could leave a statutory water company which converts to a plc in an impossible constitutional position. The Bill provides procedures for a statutory water company to move away from its present constitution based on local acts and orders to a plc structure under the Companies Act 1985. Notwithstanding this, the new plc would still be subject to local statutory provisions governing its borrowings and borrowing powers. It is the interaction of those provisions together with new powers which will have been obtained under the memorandum and articles of association adopted under the provisions of Clause 100 which gives rise to the impossible constitutional position.
These new clauses are intended to rectify that situation by providing a procedure under which a company can make a proposal to its lenders to replace by other provisions the rights and documentation relating to those loans. Any such proposal to lenders would require the approval of each class of lenders affected and give minorities the same rights to apply to the High Court as if they were a member of a statutory water company considering conversion to a plc. The new clauses disapply certain provisions of the Insolvency Act 1986 which were
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not designed to apply to this sort of situation but which would otherwise place lenders in a position of some jeopardy. If the approval of lenders is obtained and the company so approves by special resolution, the new clauses require an order from the Secretary of State to approve the new provisions and then to repeal the redundant local statutory provisions.
I cannot believe that it is the intention of the Bill to place statutory water companies which wish to convert to plcs in a position of constitutional disadvantage. I therefore hope that these amendments will receive the support of the Government. I commend them to the House. I beg to move.
The Earl of Caithness: My Lords, I am grateful to my noble friend Lord Elliott of Morpeth for taking on board so much of what my noble friend Lord Hesketh said at an earlier stage. My noble friend undoubtedly has some very sound arguments. However, I must say to my noble friend that I still have some important reservations on his proposals. For example, while shareholders are jointly members of the company and it is therefore appropriate to consider changing their rights by majority vote, debenture holders have an individual relationship with the company and it is far from clear that a majority vote should override the rights of minorities unless the debenture holders have individually agreed to accept such voting provisions.
Despite these difficulties, I repeat that my noble friend has some very good arguments which I should like to consider further with him. If we got together, we may be able to resolve the problem. If my noble friend will withdraw the amendments, I shall certainly meet him between now and another stage to see if we can reach agreement.
Lord Elliott of Morpeth: My Lords, I am again most grateful to my noble friend for his reception of this proposal. I shall be more than happy to meet him in the interim. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 120C not moved.]
Clause 101 [Procedure for cancelling resolutions for substituting memorandum and articles]:
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No. 121:
Page 110, line 10, leave out from ("value") to end of line 12 and insert ("of the company's issued share capital or issued stock;
() by the holders of not less, in the aggregate, than fifteen per cent., in nominal value, of the issued shares or stock of any class in respect of which a consent to or approval of the proposal to which the resolution relates is required for the purposes of subsection (4)(b) of that section; or").
The noble Lord said: My Lords, in moving this amendment, I wish also to speak to Amendments Nos. 122 and 123. Noble Lords may recall that in Committee I moved an amendment to this clause—Amendment No. 99—which sought to remove the possibility of damaging and long delays in the conversion of statutory water companies to plcs. The

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clause as originally drafted would have enabled a minority of shareholders to block the conversion process, at least temporarily, even though an overwhelming majority of shareholders had given approval to the conversion proposals. It was that situation which my amendment sought to rectify. I withdrew that amendment following an assurance from my noble friend Lord Hesketh that what I had said would be considered most carefully.
It is following that consideration that I have put down the amendment to line 50. It will enable the court to order an award of compensation if it finds that the interests of a minority have been unfairly prejudiced. Previously its only powers would have been either to set aside the resolution passed by the overwhelming majority of shareholders or to order the purchase of shares, thus delaying the process of conversion. This additional power substantially diminishes that possibility while still enabling the court to set aside a resolution in extreme cases.
My noble friend also undertook at Committee stage that amendments would be tabled to bring the rights awarded to minorities to access to the courts more closely into line with the Companies Act. The amendments to lines 10 and 18 have that effect.
I hope that these amendments will receive the support of my noble friend and I commend them to the House. I beg to move.
The Earl of Caithness: My Lords, the amendments moved by my noble friend Lord Elliott of Morpeth show that if one perseveres one will succeed. It is third time lucky. We are always keen to improve the Bill and we end today's proceedings as we began, by recommending acceptance of the amendment and the two consequential amendments.
Lord Elliott of Morpeth: My Lords, I am most grateful to my noble friend.
On Question, amendment agreed to.
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No. 122:
Page 110, line 18, leave out ("under that subsection or for the purposes of) and insert ("for the purposes of subsection (2) or").
On Question, amendment agreed to.
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No. 123:
Page 110, line 50, at end insert ("or for the payment of compensation to such members").
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 twenty-nine minutes past eleven o'clock.