Water Bill

HL Deb 12 June 1989 vol 508 cc1131-94

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 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 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—

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

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

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 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". 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.

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.

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 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 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 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 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 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 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 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 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 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 moved Amendment No. 106A: Page 28, line 45, after ("Act") insert—

1. ("(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
2. (b)").

On Question, amendment agreed to

Clause 29 [Mergers of water or sewerage undertakings]:

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 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 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 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 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 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 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 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 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 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.

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. 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 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 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 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.

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 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 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 moved Amendment No. 108ZD: Page 40, line 19, at end insert ("or, in accordance with any regulations made by the Secretary of State—

1. (a) a local authority in the area concerned; or
2. (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 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 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 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.]

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.

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 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 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 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 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.

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.

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 between now and Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6 p.m.

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 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 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 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 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.

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 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 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 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 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.

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 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 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 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 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 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 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. 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.

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