Water Bill

HL Deb 27 June 1989 vol 509 cc585-658

3.8 p.m.

Lord Harmar-Nicholls

My Lords, before the next Motion is moved perhaps it should be our duty to refer to the Order Paper and the possible misuse of it. A reasoned amendment on Third Reading is an important part of our conventions and procedures, but the amendment on the Order Paper cannot by any stretch of the imagination be called a reasoned amendment. It is a rehash of all the arguments discussed in detail during all stages of the Bill. To allow this—and it has happened on one or two occasions in recent months—is to undermine the effectiveness of this House.

Noble Lords

Order, order!

The Lord Privy Seal (Lord Belstead)

My Lords, a Motion is not before the House at the moment, and although some noble Lords may have sympathy with what my noble friend said, it should be put when there is a Motion before the House. Perhaps I may therefore suggest to my noble friend that if he wishes to speak in this vein it should be after the Motion has been moved.

The Minister of State, Department of the Environment (The Earl of Caithness)

My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read a third time.—(The Earl of Caithness.)

Lord McIntosh of Haringey rose to move, as an amendment to the Motion that the Bill be now read a third time, at end to insert: but this House regrets that completion of consideration of the Bill in this House is sought in the absence of adequate information in respect of the terms of appointment of water and sewerage undertakers; the likely terms of the flotation and the sale of securities; the basis on which prices to consumers will be set; the final terms of the code of practice on environmental and recreational matters; the detailed requirements in respect of the quality of drinking water and river water, and the relevant timetables for compliance".

The noble Lord said: My Lords, I do not conceal the view that I and my noble friends hold that this is a deeply objectionable Bill. We said so on Second Reading and we are certainly net taking the opportunity of a reasoned amendment to Third Reading to go over the arguments which could have been and, indeed, were put at Second Reading. That is not our purpose.

The purpose of the reasoned amendment is one that can be achieved only by an amendment at this stage of the Bill. It could not have been achieved earlier. Indeed, we would have preferred it not to be necessary but it is essential before the final stage of consideration of amendments. However detailed the Bill may be—it now stretches to 416 pages—and however complex the regulatory mechanism which it sets up—it is of unexampled complexity; much of the mechanism is not in the Bill at all but is in regulations to be laid by the Secretary of State, by the Director General of Water Services and by other people in Scotland and Wales—the essential documentation and government decisions which are necessary for Parliament to reach a rational judgment on whether privatisation is right for the water industry are still not available to Parliament and to this House.

If I had said that at Second Reading, there would have been a proper answer from noble Lords on the Government Front Bench. They would have said that there would be plenty of opportunity for these matters to be made available to the House. I have had to list the essential matters which are not available to us. I must tell the House that, in the absence of this information, this Bill, however detailed and objectionable it may be, is still in essential matters a hollow Bill.

The matters to which I refer have been the subject of debate throughout a long Committee stage and a rather long Report stage. They refer to the whole business basis on which the new private water and sewerage undertakings are to be set up. They refer to much of the codes and rules for environmental and consumer protection, which are an essential part of the provisions of privatisation, in circumstances where the Government are turning over to private industry and private undertakings, whose first priority must be profit, the control of a water and sewerage system which most people in this country—I believe rightly—consider to be essentially a public service and one which ought to be there for the benefit of consumers and not of shareholders.

Perhaps I may repeat—I am sorry to have to do so—the issues which make this amendment necessary and set out the matters which are still lacking not only on the face of the Bill but even in the form of government decisions and government statements. I refer first to the terms of appointment. This amendment was put down on the Marshalled List last Thursday. At 5.20 yesterday evening, at my office at work and not in this House, the assistant private secretary to the noble Earl, Lord Caithness, brought to me by the fastest possible means—I thank him for that—a draft model of the terms of appointment. I am grateful for that. The note from him said that copies would be placed in the Library next week. I must insist that even that courtesy to me is not an adequate courtesy to the House and is not an adequate provision to the House of the information which is necessary for us sufficiently to consider the terms of appointment and to put down proper amendments as we should do as a responsible Opposition.

We studied the terms of appointment as best we could over the weekend. We have taken certain views which will become evident as we come to the debate later on. However, a personal courtesy to me is no substitute for a proper respect for the privileges and responsibilities of this House. We should have had this document in good time for consideration by Parliament. We have not had it.

The terms of flotation are absolutely essential. We are talking about a privatisation procedure whose object is to bring money to the taxpayer in order to free the water and sewerage industry from what is described as the "dead hand of the Treasury"; "the clammy hand", as I think it is called by the chairman of the Thames Water Authority. We do not know what the terms of the flotation are. We do not know whether the debts will be written off and what balance of debt and security will be inherited by the new water undertakings. To put it at its crudest, we do not know whether the taxpayer will get a single penny from this privatisation. We do not know whether the new water undertakings will be adequately financed. We do not know how they will meet the responsibilities which are laid on them by the regulatory mechanism of this Government and by the regulations of the European Commission. None of this information has been made available. None of these things has been spoken of frankly and fully by the Government either in this House or in another place.

Even the model terms of appointment which were sent to me last Friday do not contain any hint of what the prices will be. We know that the prices are to be based on a complex formula of the retail prices index plus K. We do not know what K will be. We do not know whether consumers will be paying 12 per cent. to 15 per cent. more in real terms over the next few years or whether the figure will be 25 per cent., 50 per cent. or even 100 per cent. All those figures are possible depending on other decisions by government and depending on who takes responsibility for the investment programme which is necessary in the water and sewerage undertakings.

The people who vote in elections for another place and in European elections are entitled to know what the Government intend. If the Government are asking elected representatives in another place to support privatisation, they must tell them what the effect will be on consumers' water and sewerage bills. They have not told them. We have no idea. We have our parallel responsibilities as an unelected body, and even we as an unelected body are not being treated seriously by the Government.

It has been common ground throughout the lengthy consideration of the Bill in Committee and in the House that the codes of practice are an essential part of the regulatory mechanism. Many of the concessions for which we have asked have been granted by the Government. I am grateful to the noble Earl, who with his usual courtesy has listened to the arguments sensibly and has made concessions. He has given me assurances, not on the face of the Bill, because the codes of practice are not on the face of the Bill, about what the codes of practice will contain. I know, because I have had a letter about it, that some of the things in the codes of practice will be better. What I do not know is whether things will be worse.

It was only towards the end of last week that we suddenly discovered that an amendment had been introduced—it was described as a transitional amendment—which has the effect of taking away the ability of our inspectorate to control river water quality and sewage disposal into our rivers for a period of at least 12 months. We did not know that. We were not warned about it. It is an almost impenetrable amendment. It is virtually impossible for the layman to understand. We were not warned that that would happen. It is clearly an enormously significant difference in the Bill—one which creates a great gap between enforcement powers under public authorities and enforcement powers under private undertakings, which will now not really be effective until 1991.

I have every confidence in the honour of the Minister. I know that when he tells me that things are in the codes of practice they will be. What I do not know is what other things will be slipped in by the department. I have seen it happening. I do not want it to happen again. I consider that it is the right of this House to see final drafts of the codes of practice before we are asked to make a decision about whether they are accurate. We simply do not have them. Those codes of practice cover essential matters. They cover the whole general issue of regulation of the water and sewerage undertakings. They cover environmental matters, which are set out in detail, but in inadequate detail, in the clauses and schedules of the Bill. They cover disconnections, an important part of social policy as well as of economic and environmental policy, and they cover the whole issue of leakages. In the absence of an up-to-date statement of the Government's views of what those codes of practice will contain, I put it to your Lordships that we cannot consider adequately whether the provisions in the Bill which we are supposed to be debating today are sufficient for the purpose.

I turn now to the quality of water. We have had many debates on the quality of both drinking water and river water. Your Lordships took the view in Committee that there ought to be a timetable for compliance with European Commission directives on drinking water quality. I welcomed that decision; it is one which I sincerely hope members of the Government will not feel necessary to attempt to overturn when the matter returns to another place next week. If they do, I give due warning that those who vote to overturn a timetable for compliance with drinking water qualities will be branded by their electors, and rightly branded by their electors, as having voted for dirty water. It will not be acceptable. Further, I suspect that many Back-Bench Conservative MPs will know in their hearts that it is not acceptable.

The same issue arises as regards river water quality. It arises not only as regards the question of sampling, monitoring, inspecton and enforcement but also as regards the fact that there is no adequate definition in the Bill of what compliance with river water quality should be. We have an amendment on today's Marshalled List about compliance with river water quality objectives. I am not certain whether it is acceptable to the Government. I am not certain, because I am not a professional in such matters, whether the wording is adequate for that purpose. However, I know that an acceptable, complete and adequate answer to the problem is required in the Bill. It is the responsibility of the Government to see that it is in the Bill.

It is also the responsibility of the Government to reassure the people of this country that they have timetables for compliance with river water quality objectives for making our rivers clean, as they now have a timetable for making our drinking water quality clean. They have a responsibility for seeing to it that the necessary investment for both of those purposes—that is, for drinking water and river water quality—will be made available.

We do not have those assurances from the Bill as it stands. Indeed, all of the secondary information and all of the information which should appear on the face of the Bill and ought to be considered by Parliament as the legislation is being considered is lacking.

I have already said that this is an objectionable Bill, and it is. I hope that we shall not have a Second Reading debate on that point. I hope that we shall concentrate, when considering this amendment, on the fundamental point which I have raised: without the information called for in my amendment, which ought to have been available now and ought now to be available for deliberation by your Lordships as consideration of the Bill is completed, the Bill is hollow. It simply allows the Secretary of State to do what he thinks fit after the legislation is passed. In my view Parliament ought not to accept that. I beg to move.

Moved, as an amendment to the Motion that the Bill be now read a third time, at end to insert: but this House regrets that completion of consideration of the Bill in this House is sought in the absence of adequate information in respect of the terms of appointment of water and sewerage undertakers; the likely terms of the flotation and the sale of securities; the basis on which prices to consumers will be set; the final terms of the code of practice on environmental and recreational matters; the detailed requirements in respect of the quality of drinking water and river water, and the relevant timetables for compliance".—(Lord McIntosh of Haringey.)

The Chairman of Committees (Lord Aberdare)

My Lords, the original Question was that this Bill be now read a third time, since when an amendment has been moved, at the end to insert the words set out on the Order Paper. The Question I now therefore have to put is that this amendment be agreed to.

3.25 p.m.

The Earl of Caithness

My Lords, when I first saw this reasoned amendment to the Third Reading Motion last Thursday, I wondered whether it signified that the noble Lord had run out of amendments. Perhaps, I thought, he has decided to put all of his amendments into one and debate them at the start of today's business. I was not far wrong in that guess because he has touched upon many of the amendments which he will be moving later. However, I was disappointed in my original thought because on Friday morning he put down many more amendments. I was also saddened because the noble Lord, among many of your Lordships, has had great influence in changing much of the Bill. Indeed, no fewer than 14 groups of amendments today alone are designed to meet your Lordships' concerns. I must say that this is not an amendment in the usual constructive terms which we have come to expect from him. It is little more than a ritual hand-wringing before we can move on to the business of revising the Bill, which is our duty.

The noble Lord has suggested that he would like to know a lot more before this House finally passes the Bill. How much more information does he want to see? I believe that he is a glutton for punishment. The Bill itself already amounts to over 400 pages and we have published a great deal of supplementary information, as I shall explain in a moment.

Of course there are details of the flotation; and of the appointments of the undertakers; and of the statutory instruments that will be made under the Bill; and of the compliance programmes that will flow out of the asset management plans that have been produced; and of many other things that will not be known before the Bill gets its Royal Assent. But that does not make it any different from previous privatisation measures or so many other measures. What is important is that the Bill contains all the necessary duties and constraints on the Secretary of State as he carries out his functions once it has Royal Assent. That is what the Bill does, that is what the House should be looking at and that is what we have been looking at in much of the earlier stages of the Bill.

Perhaps I may turn to some of the points that have been raised. The model instrument of appointment of the water and sewerage undertakers was first published in December last year and many aspects of it have been debated during the Bill's proceedings in this and the other place. But we cannot publish a final version until the appointments are made, and we cannot make those appointments until we receive Royal Assent. Work on the model has continued and some of the main changes to our intentions during that consideration have been reported to this House. Consultation with the undertakers is now reaching its final stages and we therefore have placed copies of the current working draft in the Libraries of both Houses. Naturally, as the noble Lord, Lord McIntosh, kindly said, I allowed him to have an advance copy of the document last Friday, as soon as it was available.

On charges, the Government's intentions are also perfectly clear. Charges will be limited according to an RPI plus K formula, where K is the maximum amount by which a company can increase its charges in any year above the rate of inflation. Ks will be set initially for 10 years in advance but will be reviewable after Five years if the company or the director general wishes. There will be scope for interim adjustments to reflect certain specified changes in circumstances.

In setting and reviewing Ks, both the Secretary of State and the director general will be bound by their Clause 7 duties. These will require them to set charge limits which ensure that undertakers' water and sewerage functions can be properly carried out in all of England and Wales and that the appointed company can finance the proper carrying out of those functions. They will also have to have regard to the need to protect customer interests, to promote economy and efficiency, to facilitate effective competition and so on. Later on this afternoon we shall consider whether those duties should be added to so that the director general has to pay particular regard to the interests of rural customers when it comes to charges.

But to return to one of the noble Lord's main points, we are simply not ready to announce the level of K. The levels will be announced as soon as decisions are taken. It is impossible to announce decisions before they are taken.

Turning to the issue of the terms of flotation, I would remind the noble Lord of the statement made by my noble friend Lord Hesketh in answer to a Question on 18th May. He made it plain that the Government will put in place capital structures appropriate for the nominated holding companies in the private sector. This will be done in the run up to flotation and implemented by extinguishing all the National Loans Fund debt and taking new securities which may consist of both equity and new debt. The capital structures of each holding company will be determined in the light of the circumstances of that company.

It is too soon to say what those structures will be. As I made abundantly clear during Committee, the necessary decisions cannot and will not be made until shortly before flotation. That is no different from earlier privatisation exercises. There is no question of our concealing our proposals. Similarly, it is too soon to say what the market value of our securities in each holding company will be at the time of flotation. The total value of those securities implied by the share price of the equity sold will depend on the market conditions at the time. If anyone could predict those with certainty, they would not, I suggest, be in the House this afternoon.

Now let me turn to the code of practice on conservation, access and recreation under Clause 10. We have gone to great lengths to secure that the House knows well in advance the way in which the Secretary of State proposes to use his powers. Indeed, he has consulted widely upon its terms. A draft of the code was published some six weeks before the Bill even came before your Lordships' House. That was a quite deliberate action so that the House could identify additions or amendments that it wanted. We have given assurances in response to representations made in the House and as a result have incorporated amendments on six particular matters. I have confirmed those assurances in writing to the noble Lord, Lord McIntosh. We could not have been more open and responsive in the way we have pursued this matter.

Further, in your Lordships' House we have accepted an amendment to provide negative resolution procedure for the code. There will therefore be an opportunity for the House to debate the terms of the code when the relevant order is laid.

There are other codes too. The powers of water and sewerage undertakers to lay pipes are to be subject to a statutory code of practice to be submitted by the private companies to the Secretary of State for approval. Of course, until the private companies are appointed, they cannot submit the codes, but copies of the model code on which the statutory codes will be based were placed in the Library on 2nd March. The codes will provide increased protection for the interests of landowners when undertakers exercise their powers to lay pipes. Unlike the voluntary codes that already exist in some water authorities, those codes will be mandatory and powers will be subject to the ovesight of the director general. We have been quite open about the code and perfectly willing to debate its content.

The general customer code of practice and the two more specific codes on disconnections and leakages are provided for in the model instrument of appointment. Drafts of all three codes were published in February and copies were laid in the Library. The disconnections code was also debated both in this House and in the other place. A revised procedure for the disconnections code was announced on 18th May, and is incorporated in the latest draft of the model instrument of appointment, to which I referred earlier.

Details of the guaranteed standards scheme were also announced in February, and copies of the model scheme were laid in the Library. Those schemes were referred to in debates in both Houses. Copies of the consultation draft of the regulations were made available to the House in April. Following consideration of the responses to the consultation exercise, the regulations themselves will be laid after the Bill has received Royal Assent. The House will have the opportunity to debate them.

Let me now turn to the question of drinking water. Consultation documents on drinking water quality regulations were published in February this year and were widely distributed. Comments have been received from a wide range of interested bodies. The regulations themselves will be laid immediately after the Water Bill receives the Royal Assent and will be based on the consultation documents. The regulations will provide a comprehensive new system for regulating and safeguarding the quality of water supplies. The requirements of the Community drinking water directive will be incorporated in the regulations as mandatory standards, together with additional national measures. There will be more frequent and accurate sampling and a new procedure for approval of chemicals and other substances used in treating water. In addition, water suppliers will be required to provide full information to customers on the quality of water coming from their taps. Once those stringent regulations are in force, both local authorities and the new drinking water inspectorate to be set up by the Government will closely check that all requirements are being met. We have published consultation documents setting out the full details of what we are proposing to do. We cannot bring those regulations before the House until, again, the Bill has received Royal Assent; but we shall do so soon after, and the House will have a chance to debate those regulations.

Undertakers with supplies which do not comply with the standards set under the regulations will have to submit undertakings under Clause 20(5)(b) setting out action programmes to achieve compliance within stated timescales. Any company which fails to comply with the standards will face enforcement action, unless it has submitted an undertaking which has been accepted by the Secretary of State. The Secretary of State will only accept undertakings which aim to achieve compliance as soon as possible; but timescales must be ones which undertakers can physically achieve and they must safeguard the continuity of public supplies. Programmes have been submitted by the water authorities and water companies but they are still being considered, and details of undertakings, including timescales, will be published in due course. They cannot be published before they have been fully drawn up.

On river quality, we have made it quite clear to the House that it would be wholly unreasonable to establish the relevant classifications and objectives before the NRA is in being to give advice and to consult on them. That is especially so since it will have the main role in carrying them forward. It would be quite irresponsible of us to follow any one course; but we have given assurances that the next steps will follow as soon as practicable after the authority is up and running, work on the 1990 river quality survey completed, and appropriate consultations undertaken.

As far as the related programme of sewage treatment works improvements is concerned, we have made clear its scope, purpose and timetable during the past few months. The first announcement was in December. The noble Lord referred to an amendment which we look forward to discussing later.

My noble friend Lord Crickhowell referred on Report to a study that the Secretary of State had invited the NRAAC to undertake in reviewing the present system for monitoring and assessing compliance with discharge consents. That will include the future role of look-up tables which are currently used to assess whether sewage treatment works meet their consent conditions. We should like to endorse what my noble friend said about the open-ended nature of that review.

Neither the Government nor the NRAAC are committed to retaining the present system indefinitely. I am confident that the NRA will undertake the study in an expert and objective manner and it can look forward to government support in carrying through any changes or developments to the system which its review shows to be justified. The outcome will be important for the NRA in securing the improvements to water quality needed in the 1990s. Our officials are currently discussing the detailed terms of reference of that review. My right honourable friend the Secretary of State intends to make a more detailed announcement shortly.

I come back to the point that I made in opening. The noble Lord, Lord McIntosh of Haringey, is a difficult man to please. He is asking us to publish information before we even have it. He is asking for information that has not been available at a similar stage of earlier privatisations. Much of it cannot be.

The important point is that the powers and duties contained in the Bill will govern the way in which the water industry works in the future to the benefit of customers, shareholders, and—and this is my concern—the environment. So we cannot support the reasoned amendment either in its overall aim or its detail.

3.37 p.m.

Lord Ross of Newport

My Lords, one of the problems with following the noble Earl is that he always sounds so reasonable, but Members on this side of the House do not believe that he has sufficiently answered the forceful arguments submitted by the noble Lord, Lord McIntosh. Whatever else may be said about the Bill, there can be no doubt that it is universally unpopular. Its principal sponsor, the Secretary of State for the Environment, whom I will pan, is without question the most disliked and distrusted member of the present Cabinet.

Noble Lords

No, no!

Lord Ross of Newport

My Lords, yes he is. For confirmation of that statement one has only to recall the size of the Green vote in the recent Euro-election and, more particularly, the result in the Cotswolds, where the Green candidate polled exceptionally well. For those of us in all parties who have pursued environmental issues consistently during our parliamentary careers, the size of the support for the Greens is frustrating, to say the least, but understandable. Yet, under this measure, far too much of vital importance is being left to the discretion of the self-same Secretary of State and the provision of future regulations of unknown content.

I appreciate that in Committee and on Report the Minister has shown concern and brought forward a number of reassuring amendments. The fact is that the whole measure was misconceived, and whether a satisfactory flotation will now prove possible remains to be seen. One suspects that the terms, about which of course we remain totally in the dark, will have to be extraordinarily generous, and future regulations watered down, if City investors are to be attracted in sufficient numbers.

We remain in the dark about the mysterious formula K. There are said to be some 39 variations being played around with in the department. Large sums of money are already being spent on advertising. There is even to be a national water exhibition in Birmingham from 3rd to 5th October. That is nice timing if there ever was one. For Mr. Michael Cardey, secretary of the Water Authorities' Association to say, as he did on television last night, that all that expenditure had nothing to do with privatisation is clearly nonsense. He can go and tell that story to the marines. For consumers, it is a disaster. The cost of privatisation alone will add between 30 per cent. to 50 per cent. to their bills. One only has to read the press today to see that, in my former constituency in the Isle of Wight, people receiving their first bills following metering are finding that the cost of water to them has already more than doubled. The Government should, of course, have listened more sympathetically to the views of the noble Lord, Lord Nugent. But he was brushed aside by the friends of "you know who" all of them duly rewarded for their pains by invitations to the celebratory lunch at Chequers.

Most of us suspect that despite its undoubted expertise local government will be largely frozen out, although in Scotland it remains in control, and rightly so. That is par for the course with this Government. Representation of consumers and voluntary bodies with expert environmental knowledge on important committees remains in doubt despite continuing concerns expressed about the planning, the land use, the amenity and conservation implications of this Bill.

If, as we suspect, commercial exploitation occurs on a substantial scale, it will be too late to put the process into reverse in a few years' time. The damage will have been done. Those are some of the reasons why the amendment should be supported. It certainly will be by those of us on these Benches.

Lord Belstead

My Lords, before we go on with the debate, could I just say one thing? I realise that when we have a reasoned amendment of this kind at this stage of our discussion of one of the biggest Bills I have ever seen, feelings run high. However, I beg noble Lords in all parts of the House to remember that while we jealously guard our own rights in this House regarding remarks of a personal nature made in another place, so we ought to have an eye to our own standing orders. Our own standing orders are absolutely explicit: It is undesirable that any Member of the House of Commons should be mentioned by name, or otherwise identified, for the purpose of criticism of a personal nature. I hope that it will not happen again.

3.42 p.m.

Lord Nugent of Guildford

My Lords, I thank my noble friend the Leader of the House for his observation because it saves me making a similar one. I wish to thank also my noble friend Lord Caithness for a marvellous exposition in which he dealt with all the points raised so cogently and strongly by the noble Lord, Lord McIntosh, in supporting this criticial amendment. I thought he made a good answer to most of them. I recognise that there were some effective points in the noble Lord's critical amendment.

My reason for opposing the critical amendment is that so far as concerns this House and very nearly so far as concerns the other place, the parliamentary process for this monster Bill (because that it is, not only in size but in other ways) is pretty well over. I am looking to the future when the water companies have been launched and go into operation. I cannot but think that a critical amendment such as this attached at Third Reading would be damaging to the confidence of the companies as they enter into the immensely difficult task which Parliament has laid upon them.

Although the noble Lord has conducted a most effective campaign, if I may say so, in opposition to the Bill and has indicated in every way that we should do much better without it, that does not alter the fact that Parliament as a whole is about to cause this major change to happen in the water industry. The water companies will be born. What matters now, in my opinion, is that they should be born successfully and that they should operate successfully. There are some 50,000 men and women working in the water industry; there they are, working away every day, supplying the water for the nation, dealing with the effluent and its disposal. Whoever is in Parliament, whatever legislation there is, these people—I know many of them—have to go on working just the same. What matters, as I see it, is that the companies should be properly financed and launched in a reasonable way. I do not believe that the amendment will help in this context. That is why I shall not be in favour of it.

The noble Lord, Lord Ross, referred to the amendment which I moved at Committee stage. I think we should have had a better Bill if the Committee had accepted my amendment. However, that is now water under the bridge; I cannot alter it. The plcs will have a financial structure—in what we all realise is a no-growth industry—that depends upon the profit motive. There will be a permanent conflict between the interests of the shareholders and those of the consumers. So from the start the water companies will have a very difficult job of management.

I sympathise with the wish of the noble Lord, Lord McIntosh, to know the values of K. We have all heard of the urgent discussions going on behind the scenes as to what on earth they are to be in order to reconcile these conflicting interests. Of course the financial structure of the companies is still unknown, as the noble Lord rightly said.

I am surprised at the delay, I am bound to say. I should have thought by now that we should have heard about it. Personally I am prepared to give my right honourable friend the Secretary of State as long as he likes, provided he comes back with the right answer. In my opinion the right answer is a generous financial disposition for the new plcs. I say that with all the urgency I can to my noble friend the Minister. That will enable the plcs to shoulder their new responsibilities of satisfying shareholders as well as consumers without unacceptably high increases in charges next year.

The reality is that the Government have chosen to privatise the industry at a moment when a major improvement in standards of purity of water supply and standards of effluent discharge is seen as necessary both nationally and within Europe. The cost of these higher standards is estimated at approximately £5 billion over the next five years. This capital expenditure is in addition to existing capital commitments on such long-term projects as renewal and repair of the half million kilometres of water mains and sewers and much else, although it must be added, as already mentioned, that the initial cost of privatisation is estimated at some £800 million.

To carry all this capital expenditure on water charges would involve excessively high increases for the next few years of the order of 30 to 50 per cent. per annum. Nobody knows, but it is of that order. Such a prospect would clearly prejudice a successful Stock Exchange launch and would place an impossible strain on the water company managers, squeezed between their duty to pay a dividend to their shareholders and supply water services to their customers at reasonable charges.

I suggest that the priority now is to see that this workforce of 50,000 people who keep the service going throughout the year is given a sound financial basis. I do not believe that this critical amendment will help that. It is the Government's responsibility and interest to provide this adequate financial structure. I suggested in Committee that the proceeds of the sale on the Stock Exchange should go back into the industry. That was not accepted. Therefore, I wish to suggest an alternative to which I have adverted previously. I now suggest using the £4 billion worth of Public Works Loan Board loans to the regional water authorities. The law requires the extinguishment of these loans. My proposal is that this large sum should be re-lent to the new water companies interest free in the form of undated loans. That would give a strong enough financial base for the water companies to face the huge commitments ahead of them. It would give them a fair prospect of meeting capital expenditure without unacceptably high increases in charges.

In this context I referred in Committee to the powerful group of local authorities who are preparing to launch a legal action for compensation for what they regard as their assets which were transferred in 1973 by the 1973 Act to the regional water authorities, on the basis that they were given a majority on the regional water authorities. They were given such a majority; they accepted that. However, that was removed 10 years later by the 1983 Act. Therefore, they feel that they have not been fairly treated. As I am not in the counsel of the local authorities, I do not know whether this is the case; but it is possible that if my noble friend was able to make a generous settlement in this context of providing a generous basis for the financial settlement of the new companies, these local authorities may be persuaded to call off their pursuit.

I have taken this opportunity 10 mention this matter as much has been referred to by the noble Lord, Lord McIntosh. That gives one an opportunity to say almost anything. I have made the point which I feel is of the most practical significance in getting the water companies off to a fair and reasonable start. I hope my noble friend will be able to take note of this point, because I feel that, if my point were taken on board, these regional water authorities who are to become the new private water companies would be given a fair start to carry out an extremely difficult job. That job will be made that much more difficult when they have to satisfy shareholders as well as consumers. I believe that unless we give the new privatised companies a fair and generous start they will not be able to do that job. However, I do not think it would be helpful if the noble Lord's reasoned amendment, even though it is so cogently expressed, were attached to the Bill. Therefore, I shall vote against it.

3.51 p.m.

Lord Addington

My Lords, much of what I originally intended to say has already been covered. However, I wish to make one or two statements which I think are relevant to the discussion we have already had. The noble Earl, Lord Caithness, mentioned that on many occasions the final fine tunings for other privatisations had not been mentioned at this stage in legislation. However, I suggest to the noble Earl that there has never been a privatisation which can compare with this one. We are breaking new ground because we are privatising a body which does not even have comparative competition, in that water cannot be substituted by any other natural resource. We are taking out of the control of the nation something which is absolutely vital to life itself. As such, I suggest we should have set new precedents and gone further and been more definite from the start.

I am not all that well informed as regards the actual flotation, so I shall let that matter pass and let the words of those who are wiser than me in this respect carry their full weight. However, the factor of price is worrying for the simple reason that uncertainty is always damaging. However, that matter can be left to rest upon the comments of those who have spoken before me.

The matter that primarily concerns me is that of the environmental and drinking water standards. I suggest that this Bill should have taken as its prime objective the setting of a date by which we would definitely meet certain standards and take a series of positive environmental measures. The Bill should state when those things would occur and where the financing would come from. The Bill should also state that the Government would make such financing available, hopefully before any privatisation. It would be fairer to the City if the funding was made available before privatisation. Surely, as a money making institution, the City should not have to shoulder such responsibilities.

When all this is said and done, I feel that the Bill is a very odd one as it does not encourage the establishment of a private industry which will face at least a certain degree of competition in dealing with such an important part of our natural environment and our lives. I hope that by the time we finish today many of the questions that have been raised in this debate will have been fully answered.

3.55 p.m.

Viscount Caldecote

My Lords, I do not support this reasoned amendment, broadly for the reasons that my noble friend Lord Nugent has already stated. However, for many of us who support the broad thrust of government policy, this is a disappointing Bill. It is lacking in wisdom, despite the many improvements that have been made in your Lordships' House, and which, no doubt, will be made elsewhere. We have spent many hours on the Bill, and many more hours will be spent on it. Much effort has been spent on what I believe to be unnecessary legislation.

The Bill does nothing to promote either national prosperity or the quality of life which could not have been achieved more easily and more effectively in other ways. However, I wish to pay tribute to my noble friends on the Front Bench, and particularly to my noble friend Lord Caithness. I pay tribute to them for the effort, hard work and, most of all, for the patient way in which they have dealt with the many amendments which have been tabled. If that time had been spent on a Bill which sought to improve the quality of water, to curtail pollution and protect and enhance the environment, it would have been infinitely more worthwhile.

Privatisation of course makes sound sense in every case where competitive market forces operate. Profit is the best incentive to efficient operation, and is an excellent measure of success in serving customers. It is also effective in attracting new capital investment. But that applies only if profit is earned in a competitive market place where customers have a choice. Such conditions do not operate in water supply, so this privatisation is flawed in that respect. Customer protection and prevention of abuse in a private monopoly situation has had to be provided by a vast rigmarole of regulations and regulatory powers in the hands of the Secretary of State and the Director General of Water Services. This is a wholly artificial situation and alien to the sound principles of reward for enterprise and risk taking, and of market forces.

The only one possible reason in favour of this Bill, as my noble friend Lord Nugent of Guildford mentioned, is that the Exchequer will not have to find the large sums of money that will be required for improving the quality of water and controlling pollution. But that is a poor argument, for it is neither wise nor fair that individual water companies should bear the burden of this expenditure which will raise the costs of water to individuals and to industry, neither of which is desirable, particularly in present circumstances. It would be better if that expenditure was shared throughout the country by means of taxation. That could have been achieved without all the complications of privatisation. I very much hope that Her Majesty's Government will give serious and sympathetic consideration to the ideas put forward by my noble friend Lord Nugent who has such wide and long experience in this matter.

I have no enthusiasm for this Bill, nor, I believe, does it have wide support in the Conservative Party or in the country. Indeed, I believe it has done our party quite considerable harm, to no purpose. Certainly the vast majority of Conservative supporters to whom I have spoken have no enthusiasm for the Bill. However, I shall not vote against the reasoned amendment, broadly for the reasons that my noble friend Lord Nugent has given. In any case that would serve no purpose, and it would simply give encouragement to noble Lords opposite, which I have no wish to do. However, I implore the Government when planning future legislation never again to allow dogma to overrule common sense.

Lord Renton

My Lords, on the other hand—

Noble Lords

Order!

3.59 p.m.

Baroness White

My Lords, I apologise, as I have no doubt the noble Lord, Lord Renton, was about to do, in that I did not place my name on the list of those who wished to speak. I had not realised that that was necessary on a reasoned amendment. I apologise for my ignorance in that matter. However, I think it will be agreed that I have been a conscientious follower of this Bill in all its stages in this House; so I hope I may be forgiven.

I wish briefly but emphatically to support the reasoned amendment moved by my noble friend Lord McIntosh of Haringey. He listed wide areas of concern where, after all this time, government policy and the administrative arrangements for carrying it out remain far from clear. I shall refer to only one of these areas; namely, water quality and the monitoring and enforcement of standards. Who is really responsible? Consultative documents were indeed issued in February with the most detailed scientific tables. But they did not tell us where the buck stops.

Responsibility for the monitoring of sampling and analysis is divided among the new plcs, the National Rivers Authority as principal watchdog (but not covering drinking water), the local authorities and the drinking water inspectorate of the Department of the Environment, with the director general holding a watching brief on behalf of the consumer. At this late stage we still do not know what the drinking water inspectorate will do. Will it, as one hears, conduct no more than a paper audit based on monitoring data provided by the plcs? Why does the National Rivers Authority not have the duty or the resources to check drinking water as well as other water quality?

We have been given no adequate explanation of the division of responsibilities. At Committee stage I raised the matter of local authority responsibilities. As one would expect, I received a most courteous letter from the noble Lord, Lord Hesketh, detailing changes made since the 1973 Water Act. However, he was completely silent on the vital matter of the competence in terms of manpower and laboratory resources of the majority of local authorities to carry out what appear to be their continuing very important and complex responsibilities for water sampling and analysis.

In 1973 many of the local authorities simply transferred their staff and equipment to the new water authorities, on which at that time, as we have been reminded, they were represented. Many of them are now seriously under-resourced for the responsibilities which, according to the Bill as it now stands, will still rest with them. Anyone who has followed the Camelford saga will realise how hopeless it was for any of the victims in that area to rely on the work of the local authority.

I shall not elaborate further. It must be clear to everyone that in their decision to float the new companies in November at all costs, come what may, the Government are imposing on us legislation which leaves vital areas of concern unclear and ill-defined. Not least are the proposals put forward with conviction, at this very late hour, by the noble Lord, Lord Nugent.

Had the Department of the Environment realised earlier what was involved in this massive exercise of simultaneously both privatising and regulating the water industry we should not now find ourselves forced to acquiesce in matters which we know ought to have been more thoroughly examined. After several decades in the other place and in this House that is not a position in which I for one care to find myself.

4.3 p.m.

Lord Renton

My Lords, perhaps I may make so hold in my short speech as to confine myself to the terms of the amendment. The noble Lord, Lord McIntosh—and I am one of those who admire his spirited efforts during earlier stages of the Bill—made an impassioned speech which was not really justified either by the terms of the Bill or by our legislative practice. Perhaps I may deal with each of the six points in turn.

First, he said that the Bill should have mentioned the appointment of water and sewerage undertakers. No statute that we have ever passed has set out the full terms of appointment of members of public boards. This Bill does at least indicate, in Clause 1(4), the kind of experience required and does so in fairly broad terms.

Secondly, he complained that there is an absence of adequate information on the terms of the flotation and the sale of securities. I feel bound to point out that an Act of Parliament is not a prospectus for the sale of shares and we do not mention such things.

Thirdly, he referred to the basis on which prices to consumers will be set. Again, no statute has dared to lay down fully, or even to any great extent, the basis on which prices are set because that depends upon so many factors, many of which are unforeseeable.

The noble Lord's fourth point is that the final terms of the code of practice have not been set out. The object of codes of practice is to avoid going into great detail in a statute. Quite frankly, we have had so much indication from the Government already, and a copy of the draft code of practice deposited in the Library, that it would have been quite absurd in my opinion if the terms had been set out in this Bill, which is already 415 pages long.

Fifthly, he referred to the quality of drinking water and river water. We have eight clauses, fairly long clauses some of them, dealing with this very matter and referring to unwholesome water, wholesome water and so on. I should have thought that the Bill has gone quite as far as it could in attempting to achieve drinking water of the quality which the people in this country require and deserve.

Finally, the noble Lord said that there was an absence of relevant timetables for compliance. Quite frankly, it is not usual to put in a Bill a chronology of the action which is going to be taken to follow it. It would be generally impracticable to do so. In the context of this Bill it simply would not be feasible. But my noble friend Lord Caithness has from time to time indicated the steps that he contemplates will be taken. I do not think that we could have expected more in the Bill than the Government have given us. Strictly speaking I do not see how, on its terms, anyone could vote for the amendment.

4.6 p.m.

The Earl of Caithness

My Lords, with the leave of the House perhaps I may say a few words. It is true to say that this is the most difficult debate which I have ever had to sum up. It is part Second Reading, part a re-run of the debates on amendments we have already discussed, part a preliminary encounter with the amendments we shall discuss this afternoon and part Bill do now pass. Perhaps I may touch on three themes which came out of the debate.

I shall deal first with the environment, which was a subject raised by my noble friend Lord Nugent. I was grateful for his words. My noble friend Lord Caldecote also touched on the subject, as did the noble Lord, Lord Addington, and the noble Baroness, Lady White. It is precisely because we wish to see an improvement in our environment that we have brought forward the Bill. It has been proven, to our shame and satisfaction, if those are the appropriate words, that government control of the finances of the water authorities has not led to the improvement in the environment that we had all wished and hoped for.

I am glad to say that, because of rising investment, there are improvements. We have seen it in our bathing waters, we have seen it in drinking water quality and in the vast reduction of sewage works which do not meet the criteria. However, there is more investment to come and further improvements to the environment are needed. I commend this Bill to your Lordships as the right vehicle for achieving that improvement.

My noble friend Lord Nugent raised a subject which I know is of intense concern to him and to many of your Lordships, including the noble Lord, Lord Addington, namely the question of charges, the K factor and the capital structure. I join noble Lords in saying that I too wish to know what that will be. We all do. But I know that the House will realise that those figures cannot be given until all the work has been done. We have not done all the work, but we are working on it and have been for some months. As soon as we are in a position to let your Lordships know the capital structure and charges, we shall do so.

My noble friend Lord Caldecote was quite political. He said that he did not like the Bill and that the cost of the improvements to the environment and to drinking water and sewerage quality should be met out of taxation. I remind him that it must therefore compete with the very strong and urgent demands that are made on the taxation levy by hospitals, schools, education, the police force and other important areas. Perhaps I may take him back some 14 years to when the Labour Party could not tax us any more—so it increased prices by nearly 43 per cent. on average in 1975–76 and 26 per cent. the following year. We have already seen in Committee that the Labour Party does not like to have a control on prices, as we advocate. So I suggest to my noble friend that the method that he has suggested to the House has been proven in the past not to give any protection to the customer.

My noble friend also referred to the quality of life. Perhaps I may remind him that the swingeing increases of which I reminded the House were accompanied by a massive reduction in investment and an increase in pollution. That was hardly an increase in the quality of life for all of us in this country.

I believe that I have answered fully the points raised by the noble Lord, Lord McIntosh of Haringey. I understand why he has put forward the reasoned amendment. I feel that he is wrong to do so. I look forward very much to discussing the amendments to which he has alluded for the rest of this afternoon and this evening. I reiterate that we have a number of concessions to give your Lordships to meet the very concerns that the noble Lord has mentioned. I hope that your Lordships will not accept the reasoned amendment.

4.11 p.m.

Lord McIntosh of Haringey

My Lords, as always, I am grateful to the Minister for his courteous, low-key and even candid response. What he has in effect said to the House is that, "Many of those matters cannot be presented to you because the decisions have not been taken and because"—I believe that I am quoting his words—"they have not been fully drawn up" or, as he said in his winding up speech, "before we have done all the work". I suggest to the House that it is the Government's duty to make their decisions before introducing legislation or before seeking to complete legislation. I suggest that it is the Government's duty to do the work that is necessary. I suggest that it is the Government's duty to draw up fully the instruments that are required to bring into effect legislation.

I do not make that simply as a constitutional point. That would be serious enough. It is most serious because the issues which are still unresolved and on which the Government have not taken their decisions and done all their work—to keep to the words used by the Minister in his response—are vital to the consideration not only by Parliament but by the electorate as to whether privatisation is a good thing or not.

In a speech which understandably undertook to support the Government on this amendment, the noble Viscount, Lord Caldecote, used the remaining nine-tenths of his time to make a devastating attack on the Government and the proposals for privatisation. I wish that he had done so at Second Reading and that he had been free to take a more active part in the consideration of the Bill as it went through.

The noble Lord, Lord Nugent of Guildford, made the point for the amendment in two very effective ways, although he stood up to oppose it. First, he criticised the timing of the Bill. That is one of the major points that we are making in proposing the amendment. We are saying that the Government have got their timing all wrong because they have not been able to reach decisions that are both administratively feasible and politically acceptable. They are therefore keeping those decisions quiet until after the Bill has gone through. Although I reiterate that I trust the Minister personally, I do not trust the Government and I am not at the Dispatch Box in order to trust the Government.

We read in The Times today that, The Government will tommorrow defy the European Commission and the House of Lords over the timetable for Britain to meet EC standards on drinking water", and that, Mr. Michael Howard … will tell the Commission that it is impractical for Britain to meet the £10 billion". I am not simply referring to the issue; I am referring to the fact that Mr. Michael Howard is preparing to do that on the day after the House is asked to pass the Bill. That is what I object to. It is the same principle by which governments—I am afraid that that is all governments—introduce contentious matters at the end July after the House has risen for the summer. But it is a particularly blatant example here of the Government making decisions and having views which they are not prepared to express to Parliament and to have discussed by Parliament.

The noble Lord, Lord Nugent, went on to ask for a generous settlement for the new water companies. I appreciate his motives in doing so, but when he asked for interest-free loans I must remind him that the interest will in effect then be paid by the taxpayers and any benefit will go to the shareholders. If that is not a fundamental criticism of the motives and thinking of the Government in putting forward the legislation, I do not know what is.

I reiterate that I have no criticism of the courtesy and integrity of the Minister and his colleagues in the House who have put forward the Bill. But the Bill is a sham as a piece of legislation so far as concerns Parliament and the people of this country. We should not let it go through without expressing our most severe disquiet at the way the matter has been handled. We should not let it go through without drawing the conclusion that, because they are not able to come into the open about those essential matters, there must be something wrong with them. That is what I think is the case and I believe that the people of this country will think that that is the case.

4.16 p.m.

On Question, Whether the amendment to the Motion that the Bill be now read a third time shall be agreed to?

Their Lordships divided: Contents, 113; Not-Contents, 167.

DIVISION NO. 1
CONTENTS
Addington, L.	Lawrence, L.
Airedale, L.	Leatherland, L.
Amherst, E.	Llewelyn-Davies of Hastoe, B.
Ampthill, L.
Ardwick, L.	Lloyd of Kilgerran, L.
Attlee, E.	Longford, E.
Aylestone, L.	Lovell-Davis, L.
Banks, L.	McCarthy, L.
Birk, B.	McIntosh of Haringey, L.
Blackstone, B.	Mackie of Benshie, L.
Blease, L.	McNair, L.
Bonham-Carter, L.	Masham of Ilton, B.
Boston of Faversham, L.	Mason of Barnsley, L.
Bottomley, L.	Mayhew, L.
Briginshaw, L.	Mishcon, L.
Brimelow, L.	Molloy, L.
Broadbridge, L.	Monson, L.
Brooks of Tremorfa, L.	Morris of Kenwood, L.
Bruce of Donington, L.	Murray of Epping Forest, L.
Burton of Coventry, B.	Nicol, B.
Callaghan of Cardiff, L.	Northfield, L.
Campbell of Eskan, L.	Ogmore, L.
Carmichael of Kelvingrove, L.	Peston, L.
	Pitt of Hampstead, L.
Cledwyn of Penrhos, L.	Ponsonby of Shulbrede, L [Teller.]
Cocks of Hartcliffe, L.
David, B.	Prys-Davies, L.
Davies of Penrhys, L.	Rathcreedan, L.
Dean of Beswick, L.	Ritchie of Dundee, L.
Dormand of Easington, L.	Rochester, L.
Elwyn-Jones, L.	Ross of Newport, L.
Ewart-Biggs, B.	Rugby, L.
Falkland, V.	Sainsbury, L.
Foot, L.	Salisbury, Bp.
Gallacher, L.	Seear, B.
Galpern, L.	Sefton of Garston, L.
Gladwyn, L.	Serota, B.
Graham of Edmonton, L.	Shepherd, L.
Grey, E.	Stallard, L.
Grimond, L.	Stedman, B.
Hampton, L.	Stoddart of Swindon, L.
Hanworth, V.	Strabolgi, L.
Harris of Greenwich, L.	Taylor of Gryfe, L.
Hatch of Lusby, L.	Taylor of Mansfield, L.
Hayter, L.	Thurlow, L.
Hirshfield, L.	Tordoff, L. [Teller.]
Houghton of Sowerby, L.	Turner of Camden, B.
Howie of Troon, L.	Underhill, L.
Hunt, L.	Vernon, L.
Irvine of Lairg, L.	Wallace of Coslany, L.
Jay, L.	Walston, L.
Jenkins of Hillhead, L.	Whaddon, L.
Jenkins of Putney, L.	White, B.
John-Mackie, L.	Williams of Elvel, L.
Kearton, L.	Willis, L.
Kennet, L.	Wilson of Rievaulx, L.
Kilmarnock, L.	Winstanley, L.
Kirkhill, L.	Winterbottom, L.

NOT-CONTENTS
Airey of Abingdon, B.	Hood, V.
Aldington, L.	Hooper, B.
Alexander of Tunis, E.	Hunter of Newington, L.
Allenby of Megiddo, V.	Hylton-Foster, B.
Allerton, L.	Ironside, L.
Annaly, L.	Jellicoe, E.
Arran, E.	Johnston of Rockport, L.
Balfour, E.	Joseph, L.
Beaverbrook, L.	Kaberry of Adel, L.
Belhaven and Stenton, L.	Kemsley, V.
Bellwin, L.	Killearn, L.
Beloff, L.	Kimball, L.
Belstead, L.	Kitchener, E.
Bessborough, E.	Knutsford, V.
Birdwood, L.	Lauderdale, E.
Blake, L.	Layton, L.
Blatch, B.	Lloyd-George of Dwyfor, E.
Blyth, L.	Long, V.
Borthwick, L.	McAlpine of Moffat, L.
Boyd-Carpenter, L.	McFadzean, L.
Brabazon of Tara, L.	Mackay of Clashfern, L.
Brookeborough, V.	Macleod of Borve, B.
Brookes, L.	Malmesbury, E.
Brougham and Vaux, L.	Manton, L.
Bruce-Gardyne, L.	Margadale, L.
Butterworth, L.	Marley, L.
Caccia, L.	Merrivale, L.
Caithness, E.	Mersey, V.
Caldecote, V.	Middleton, L
Camden, M.	Monk Bretton, L.
Campbell of Croy, L.	Morris, L.
Carnegy of Lour, B.	Mottistone, L.
Carnock, L.	Mowbray and Stourton, L.
Carr of Hadley, L.	Moyne, L.
Chelmer, L.	Munster, E.
Coleraine, L.	Murton of Lindisfarne, L.
Colnbrook, L.	Nelson, E.
Constantine of Stanmore, L.	Newall, L.
Cork and Orrery, E.	Norfolk, D.
Cottenham, E.	Norrie, L.
Cox, B.	Nugent of Guildford, L.
Cranbrook, E.	Onslow, E.
Crickhowell, L.	Oppenheim-Barnes, B.
Dacre of Glanton, L.	Orkney, E.
Daventry, V.	Orr-Ewing, L.
Davidson, V. [Teller.]	Oxfuird, V.
Denham, L. [Teller.]	Pender, L.
Derwent, L.	Peyton of Yeovil, L.
Dilhorne, V.	Plummer of St. Marylebone, L.
Dundee, E.
Eden of Winton, L.	Quinton, L.
Ellenborough, L.	Radnor, E.
Elliot of Harwood, B.	Rankeillour, L.
Elliott of Morpeth, L.	Reay, L.
Erroll of Hale, L.	Renton, L.
Fanshawe of Richmond, L.	Renwick, L.
Ferrers, E.	Rodney, L.
Forbes, L.	St. John of Fawsley, L.
Forester, L.	Saltoun of Abernethy, Ly.
Fortescue, E.	Sanderson of Bowden, L.
Fraser of Carmyllie, L.	Seebohm, L.
Fraser of Kilmorack, L.	Sempill, Ly.
Gainford, L.	Shannon, E.
Gardner of Parkes, B.	Sharples, B.
Gibson-Watt, L.	Shaughnessy, L.
Glenarthur, L.	Skelmersdale, L.
Grantchester, L.	Somers, L.
Gridley, L.	Southborough, L.
Grimston of Westbury, L.	Stanley of Alderley, L.
Grimthorpe, L.	Stevens of Ludgate, L.
Haig, E.	Stockton, E.
Hailsham of Saint Marylebone, L.	Strange, B.
	Strathcarron, L.
Halsbury, E.	Strathclyde, L.
Havers, L.	Strathcona and Mount Royal, L.
Henley, L.
Hesketh, L.	Strathspey, L.
Hives, L.	Terrington, L.
Holderness, L.	Teviot, L.
Home of the Hirsel, L.	Thomas of Gwydir, L.

Trafford, L.	Wise, L.
Trumpington, B.	Wolfson, L.
Vaux of Harrowden, L.	Wyatt of Weeford, L.
Vinson, L.	Wynford, L.
Westbury, L.	Young, B.

Resolved in the negative, and the amendment to the Motion that the Bill be now read a third time disagreed to accordingly.

4.25 p.m.

Bill read a third time.

Clause 7 [General duties with respect to water supply and sewerage services]:

The Earl of Caithness moved Amendment No. 1: Page 6, line 18, leave out ("or 72") and insert (", 72 or 160").

The noble Earl said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 94, 95 and 96. I shall start with the last three amendments. Clause 160 places a duty on water and sewerage undertakers to move pipes in certain cases. At Report stage I undertook to look again at the provision in view of what my noble friend Lady Blatch had said, in particular in relation to the question of security for expenses incurred by the undertaker in connection with carrying out the work and the question of moving pipes in the street. We have considered carefully the industry's concern and are generally satisfied that the provisions of the clause do contain the safeguards that the industry is entitled to expect. We agree, however, that an undertaker should be able to require a person who requests that a pipe is moved to provide security for the work involved. This is the case with requisitioning water mains or sewers and connections to water mains. This is provided for by these amendments.

We also agree that the provisions of the clause should not extend to pipes in streets which are dealt with separately under the provisions of the Public Utilities Street Works Act. This is also provided for by these amendments.

Amendment No. 1 is consequential on the provisions in Clause 160. It provides for the director general to exercise the powers conferred by virtue of Clause 160 in accordance with the provisions of Clause 7. This is the first of the government amendments to meet concerns raised in your Lordships' House. I beg to move.

Lord McIntosh of Haringey

My Lords, I am sorry that the noble Baroness, Lady Blatch, is not present to thank the Minister. We give our general support to these amendments. In addition, I should like to say that I am delighted to see that the Government are learning from the Opposition about the effective use of paving amendments.

On Question, amendment agreed to.

Lord Stanley of Alderley moved Amendment No. 2: Page 6, line 46, after ("particular,") insert ("that the interests of customers and potential customers in rural areas are so protected and").

The noble Lord said: My Lords, throughout the passage of this Bill it has been your Lordships' wish to ensure that one class of person is not discriminated against in respect of another class and pay more for their water. If this amendment is approved it would make it a specific duty on the Secretary of State and the director general, when exercising their general duty to ensure that the interests of customers of water companies are protected with regard to fixing and recovery of charges, to make sure that consumers in rural areas are so protected.

Although I and other noble Lords who supported similar amendments earlier in the Bill have, I suppose, had the odd moment of disagreement with the Government, I hasten to say that both my noble friend Lord Caithness (Official Report, 12/6/89; col. 1161) and my honourable friend in another place Mr. Howard in Standing Committee on 21/2/89 at col. 1263, have also agreed with the principle of no discrimination against rural dwellers. Indeed, they both quoted the model instrument of appointment and Clause 7 as being sufficient protection.

Unfortunately, the model instrument is not on the face of the Bill. In fact it was only through the diligence of the Librarian of this House that I unearthed it a few weeks back. In my opinion Clause 7 is made more than vague by Clause 76, and indeed by my old friend Clause 7(2)(b).

As a result of this difference of opinion, my noble friend Lord Caithness and his officials have spent a lot of time and effort with me and with the parliamentary adviser to the National Farmers' Union. I should like to put on record my thanks to all of them, for the outcome has been this amendment which I commend to your Lordships. Perhaps I should explain that my noble friend Lord Caithness persuaded me that in this Bill there were problems in amending Clause 76, which he spelt out very clearly to your Lordships at Committee stage and also at Report stage. I suspect that he will do so again today. I am sure many of your Lordships will wish to query how this amendment will work in practice. I, and perhaps my noble friend, will try to answer those queries when replying.

Finally, I thank those in all parts of the House who kindly put their names to the amendments I moved at earlier stages of the Bill and also all noble Lords who supported them. It was a privilege to experience such support from all parts of the House and I know that that support will be appreciated by all those who live in the country. To those noble Lords who turned up at Report stage expecting a Division I can only say that I had intended to divide the House until my noble friend Lord Caithness made me an offer that I could not refuse. However, having farmed for 30 years near to where Milton lived and married, perhaps I may say to them: They also serve who only stand and wait". I beg to move.

4.30 p.m.

Lord McIntosh of Haringey

My Lords, I congratulated the Minister a moment ago on discovering the use of paving amendments. I now withdraw those congratulations. I think that what he has done is to put in the paving amendment and forget the substantive amendment. That is why I am rising to speak to Amendment No. 31, which has been grouped with Amendment No. 2. The noble Lord, Lord Stanley, quoted Milton. I should like to go down market a good way in the poetry stakes and quote Roy Campbell's poem On Certain South African Writers: You praise the firm restraint with which they write. I'm with you there, of course. They use the snaffle and the bit all right, But where's the bloody horse? I suspect that the problem with this amendment is that it has the makings of a significant concession. I am quite certain it is intended to produce a significant concession, but it is not an adequate one. It does not actually ensure that customers in rural areas will be paying the same price for water as those in urban areas. I would have wished to see the Government accept not only the principle which was urged by the noble Lord, Lord Stanley, and others at earlier stages—and I understand they are going to do so—but the effects of that principle and to write into Clause 76 (which, as the noble Lord, Lord Stanley, says, is where it should be) a provision that the charges for domestic customers should be, at the same level for the same level of service throughout the area supplied or serviced by the undertaker". That is the full effect of the protection for rural areas. I hope that the Government will accept not only the amendment of the noble Lord, Lord Stanley, but also my Amendment No. 31.

Lord Peyton of Yeovil

My Lords, I should like to add my support very briefly to the amendment moved by my noble friend Lord Stanley of Alderley. Like him, I am much concerned that those who live in rural areas should not, as a result of this Bill, have imposed upon them burdens which are not shared by those living in more highly populated areas.

In supporting the amendment—I am bound to say that I am a flicker in favour of the amendment moved by the noble Lord, Lord McIntosh, which is a little more explicit—I should like to say to my noble friend that I also appreciate the courtesy with which he has received these arguments and the attention that he has given to them. I cannot resist the temptation to ask him to be good enough to communicate the ideas that he has had on this Bill to his noble friend who is handling the Electricity Bill in this House. A similar argument applies there and will be brought up again.

The Earl of Radnor

My Lords, I too should like to support my noble friend's amendment and also to support that of the noble Lord, Lord McIntosh of Haringey, because the two seem to go extremely well together. Perhaps the first amendment will be enough on its own, although that must be in some doubt. I hope that when my noble friend comes to sum up this situation he will give us a firm assurance that we cannot accept Amendment No. 31 because in fact rural areas will be protected from what I would term overcharging.

Lord Monk Bretton

My Lords, I also am pleased that we appear to be getting near to some resolution of this matter of charges in rural areas. It is very important because the disquiet in rural areas has remained all this time. I should like my noble friend the Minister when he comes to reply to endeavour to make clear to us as regards Amendment No. 2, without Amendment No. 31, exactly what powers the director general will have to stop discrimination against a rural population. That is the one point about which I should like him to be as clear as possible.

The Earl of Caithness

My Lords, as the noble Lord, Lord McIntosh of Haringey, said, Amendment No. 31 is identical to the one tabled by my noble friend Lord Stanley of Alderley at Report stage. It was discussed with a similar amendment to Clause 37 which was tabled by the noble Lord. The amendment would require that charges schemes made under Clause 76 provide only for charges to be set so that the same level of charge is fixed for the same level of service throughout the area of the undertaker.

At Report stage Amendment No. 31 was put forward by my noble friend to provide protection for rural customers. I think I had persuaded him that the amendment was defective and I hope that the wisdom my noble friend now has will permeate through to the noble Lord, Lord McIntosh of Haringey.

Perhaps I may give him just one example. Thames Water makes a rateable value-based sewage charge of 8.9p per pound of rateable value in the inner area of north London but of 19.5p per pound in Thames western division. This difference of 119 per cent. is intended to allow for the difference in rateable values of similar properties in these two areas to ensure that broadly comparable bills will result. Therefore the net result of the amendment put forward by the noble Lord, Lord McIntosh, would require very substantial and, I would put it to your Lordships, very unfair increases in water charges in the inner area of London. If those increases take place, there is only one person to blame.

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister for giving way, but what we are asking in the amendment is that the charges should be at the same level. I would argue, as he has argued, that the charges in both parts of the Thames Water Authority area are at the same level. The fact that they are levied at a different rate in the pound is neither here nor there.

The Earl of Caithness

My Lords, this was exactly the point I made at Report stage. What does the noble Lord's amendment mean? Does it mean the same level or does it mean the rateable level? It could very well be argued that the pence per pound of rateable value is the level that should be levied. There is the very conundrum that made it so difficult for me to accept the amendment of my noble friend Lord Stanley and why I am happy to recommend to the House that his revised amendment on Clause 7 is the one that should be accepted because it covers the point that he was so concerned about. I should like to pay tribute to my noble friend Lord Stanley and also to my noble friend Lord Peyton of Yeovil for their assiduous work in pressing the earlier amendments for protection of rural customers.

The amendment that my noble friend has tabled reinforces the message to the Secretary of State and the director that in considering whether particular charging proposals are unduly discriminating it is right and proper for the director to address particularly whether customers in rural areas are protected. Charges are differentiated now and will always be so. The question is whether such differentiation—that is, discrimination, can be justfied. The director must consider the interests of rural and of course all other customers (but specifically those in rural areas) in deciding to enforce the undue discrimination requirements.

I urge the House to accept Amendment No. 2 and to reject Amendment No. 31.

Lord Stanley of Alderley

My Lords, I thank my noble friend for that statement. It is right—I agree with the noble Lord, Lord McIntosh—that as the Bill is written it is still possible to discriminate, as has been mentioned, under Clause 76. But perhaps I might be allowed to give an example of how I believe it would work in practice. If there was thought to be a case of discrimination against some rural dwellers in Little Tooting I would hope that they would bring this to the attention of the local National Farmers' Union secretary, the WI or the new organisation, Rural. On their behalf the organisation concerned would complain to the director stating the amendment. They would also point out the terms of the model instrument. I suppose that if there were no agreement at the end of the day the case could come before the Law Lords in this House. As I understand it—I stand to be corrected—when the Law Lords judge they take into account what Parliament meant and what it tried to say.

Every noble Lord who has spoken, from all sides of the House, supports the fact that there should be no discrimination between rural and town or any other dwellers. Much more important is the fact that the Government have said so—my noble friend at col. 1161 and my honourable friend Mr. Howard at col. 1263. Both have said that in principle the Government are entirely in agreement with there being no discrimination. I see my noble friend on the Front Bench nodding his head. With that I commend the amendment.

On Question, amendment agreed to.

4.45 p.m.

Clause 8 [General environmental and recreational duties]:

Lord Howie of Troon moved Amendment No. 3: Page 8, line 10, after ("architectural") insert ("engineering").

The noble Lord said: My Lords, I hope that the House will be kind to me as this is perhaps the most modest amendment that could be moved. I am proposing to add one word and one word only. Admittedly, I am proposing to add that one word in two places which adds up to two words or twice the same word. However, it is still a modest addition to the Bill.

As we discussed at earlier stages most of the artefacts are described generally as buildings and sites but these are of an engineering nature rather than architectural, archaeological or even historical. Their main interest is engineering. The water industry is an engineering based industry; architecture, archaeology and so on are subsidiary. I believe that this was recognised by the Government when they took a substantial step forward and proposed that the word "building" in Clause 8 should also include structures. That was a step I welcomed. I am delighted that the Government have recognised engineering to the extent of including the word "structure".

However, I should like the Government to take one further step and include the word "engineering" on the face of the Bill as well as "archaeological, architectural and historic". It is in this case the most important of the four words. I shall illustrate my point briefly with three examples. We might wish to preserve an old pumping station for architectural reasons, although, again, we might not. We might wish to preserve it for historical reasons, or we might not. However, we might reasonably wish to preserve the beam engines contained within it, not for architectural, archaeological or historical reasons, but for engineering reasons. We ought to say so.

I give my second example. Recently in the Royal Docks a new pumping station has been constructed, but not yet opened. I believe it has been handed over to the Thames Water Authority. The very distinguished architects of a small part of it are Richard Rodgers and Partners; the distinguished consulting engineers of the major part of it are Sir William Halcrow. We are unlikely to want to preseve the building at the moment because it is new: in future we may wish to do so. We should consider that only one-sixth of the building is architectural and five-sixths of it engineering based. The architecture stops at ground level because the architect was not permitted below that level. The part above ground level is in the hands of the architect, but the structure is an engineering structure.

Now for my third example. Let us suppose that at some date in the future we wish to preserve the Thames Barrier. The barrier is almost wholly an engineering structure. There is a tiddly little bit of architecture—but not very good architecture—in the parts standing above water level. Nobody would wish to preserve the barrier because of these structures which look rather like Vikings up to their necks in water. We would not preserve the barrier for that reason, but we might possibly wish to preserve it because of its engineering innovations. It is an engineering structure; it is only for that reason that one would wish to preserve it.

I hope that these examples prove the strength of my case. It is not enough to use the blanket word "historical" to cover everything and then to leave the special cases of archaeological and architectural as well. We should add the third special case of engineering, especially in this industry which is so wholly, perhaps entirely, an engineering industry. I throw myself on the mercy of the House. I beg to move this modest amendment.

The Earl of Balfour

My Lords, I am a little concerned about this amendment; I should briefly like to explain why. Although I sympathise with the idea of trying to preserve engineering work, as the noble Lord, Lord Howie of Troon, has explained, one must move forward with the times. Today a single electric motor replaces a great big steam engine. "Engineering" is not the kind of word we should write into legislation. Very often if these wonderful old steam engines are to be preserved they are better managed and preserved by being moved to a museum.

As I understand the proceedings of your Lordships' House, Amendment No. 3 is to be taken with Amendments Nos. 4, 5, 6 and 9. If that is the case, and in order to save time, I should like to draw your Lordships' attention to Amendment No. 5, which is an amendment to Amendment No. 4. While I sympathise with the idea put forward by the noble Lord, Lord Howie of Troon, I must point out that if his amendment to Amendment No. 4 was agreed to then, according to my understanding, it would mean that the engineering works would be available to the public for inspection.

I know from personal experience of nothing more than the drying machinery on a farm at home that it is very dangerous to have children walking around unless they are carefully supervised. It means that if Amendment No. 5 were accepted the water or sewerage undertaker, or whoever is involved, may have to keep a man employed in the building in order to protect the general public against the risk of hurting themselves on machinery. It is for such reasons that I cannot support the amendment.

The Earl of Arran

My Lords, the effect of Amendments Nos. 4 and 6 would be to extend the access duty under Clause 8(2) to include maintaining facilities for visiting or inspecting buildings, sites and objects of archeological, architectural or historic interest.

We listened with sympathy to the arguments put forward by the noble Baroness, Lady Birk, on Report—

Baroness Birk

My Lords, is not the Minister now talking to Amendments Nos. 3 and 5 and not to Amendments Nos. 4 and 6?

The Earl of Arran

My Lords, I hope that noble Lords will agree that the Amendments Nos. 3, 4, 5, 6 and 9 are grouped together. To continue, on Report we listened carefully to the noble Baroness's arguments about the importance of public access to our man-made heritage. We concluded that it would be both reasonable and sensible to extend the duty to have regard to the desirability of preserving public access in this manner. As the noble Baroness reminded the House, there is considerable public interest in our man-made heritage and it is right that we should facilitate access to historic buildings and objects, whether for enjoyment or for serious scholarly study. I therefore commend these amendments to the House.

The effect of this amendment is simply to make clear that the term "building" when used in Clause 8 includes fixed structures.

Lord Howie of Troon

My Lords, I read the amendment as going further than "fixed structures". In earlier debates we referred to the copyright Act as regards fixed structures. I thought that the Government had omitted the word "fixed" in order to include such items as sluices, which by nature are not fixed. I am happy with "structures" and do not need the word "fixed".

The Earl of Arran

My Lords, I should like to elaborate on the point made by the noble Lord, Lord Howie. In response to amendments proposed by the noble Lord on Report we made clear that it was our intention that dams, pumping engines, aquaducts and other fixed structures should indeed be covered by the duty to have regard to the desirability of protecting and conserving buildings, sites and objects of archaeological, architectural or historic interest. This amendment serves to make clear on the face of the Bill that such structures are covered and I commend it to the House.

As regards the amendments tabled by the noble Lord, Lord Howie of Troon, we regret that we cannot also commend them to the House. They would add a reference to engineering in respect of the building sites and objects in the relevant body's conservation duty and in the new access duty. We do not consider that that is appropriate. The conservation duty will not be relevant to all engineering objects and certainly not to current engineering objects. To the extent that it is relevant it is so only by reason of their historic interest. That point is already covered in the clause as drafted. Of course, items of industrial archaeology can be relatively recent so we do not believe that anything of relevance is lost by not meeting the amendment, which we do not regard as appropriate.

As regards the access duty, our view is that it should apply to historic and other objects and should not cover all the normal engineering works of the undertakers, as would be the effect of the amendments. In these circumstances, I suggest to your Lordships that Amendments Nos. 3 and 5 are neither necessary nor appropriate.

Lord Howie of Troon

My Lords, I must expresss the most modest disappointment with that reply, which I found to be quite disgraceful. It illustrates the contempt with which engineering is held in this country, and quite improperly so. The noble Earl was right in saying that the word "historic" covers engineering. However, it is true that the word covers architectural, and that is in the Bill. It is also true that it covers archeological, and yet that is in the Bill. There is no reason, in logic or good sense, why engineering should not be recognised in an industry which is almost wholly engineering.

I am wholly dissatisfied with that reply. The remarks made by the noble Earl about the dangers of allowing children into the vicinity of machinery are correct. However, my amendments have nothing to do with allowing children into areas where there is machinery. They are to do with the desirability of doing certain things. They merely add an intellectural dimension to the areas in which the desirability functions. The noble Earl's reply was wholly inadequate, but I shall withdraw my amendment.

Amendment, by leave, withdrawn.

The Earl of Arran moved Amendment No. 4:

Page 8, line 23, after ("beauty;") insert— ("( ) to have regard to the desirability of maintaining the availability to the public of any facility for visiting or inspecting any building, site or object of archaeological, architectural or historic interest;").

[Amendment No. 5, as an amendment to Amendment No. 4, not moved.]

The Deputy Speaker (Lord Ampthill)

My Lords, the Question is, that Amendment No. 4 be agreed to?

Baroness Birk

My Lords, we are delighted and pleased that the Government have moved this amendment. As the noble Earl indicated on Report, it will give access to and covers archaeological, historic and architectural sites. I do not wish to appear churlish but I am sad that a number of other amendments of equal importance—and some which were perhaps more important in the field of archaeology—have been resisted by the Government all the way through our debates on the Bill. Nevertheless, we are pleased that the proposal has been accepted. The amendment is important because without it there would have been the opportunity for access to recreational ground, waters and so forth but not to the ancient monuments, buildings and other areas covered by it.

I believe that my noble friend Lord Howie of Troon may find some consolation in the fact that the amendment moved by the Government, as I understand it, will include industrial machinery, portable antiquities and other areas which come under heritage. Therefore, in that way part of what the noble Lord was trying to achieve will be included.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 6: Page 8, line 25, leave out ("the preservation of any such freedom of access") and insert ("any such freedom of access or on the availability of any such facility").

On Question, amendment agreed to.

5 p.m.

Lord Norrie moved amendment No. 7: Page 8, line 44, leave out ("an aquatic environment") and insert ("such waters and land").

The noble Lord said: My Lords, I should like to point out a mistake on the Marshalled List. It should read line 45 and not line 44.

I return to this amendment which I tabled on Report because there was clearly concern on all sides of the House about the wording of Clause 8(4)(b). The Minister said that it was not desirable to extend the duties of the NRA to include conservation of flora and fauna on land as well as water since the NRA would not have any particular expertise in those matters.

However, in practice it is extremely difficult to separate the land from the water. Imagine walking along a river bank or along the side of a reservior. How is it possible to distinguish between life dependent solely on the water and life which uses the land adjacent to it? It is all part and parcel of the same thing. Otters, frogs and eels are examples of mammals, amphibians and fish equally at home in water or on dry land. In practice, the NRA is likely to be involved to a greater or lesser extent in promoting wildlife conservation on land.

Indeed, some of the regional NRA units—for example, Thames—are already advertising for conservation officers who will be involved in habitat enhancement. There is no indication that that should be restricted purely to the aquatic environment. I cannot believe that the NRA will employ conservation officers who are only experts in the aquatic environment. They will surely be trained as regards all matters of flora and fauna.

Clause 8(4) duties are, in any event, subject to a very clear qualification which is that the NRA shall promote conservation and recreation: to such extent as it considers desirable". Therefore, it would not be duty bound to promote the conservation of, for example, badgers as the noble Lord, Lord Hesketh, suggested but neither would it be excluded from doing so if it so desired.

My noble friend Lord Renton, who has put his name to this amendment, introduced conservation aspects to the Electricity Act 1957 which in a nutshell required the relevant bodies to have regard to conserving all flora and fauna. While that general duty exists in Clause 8(1), the full scope is omitted in Clause 8(4)(b) in respect of the NRA.

My amendment would ensure the flexibility essential if the NRA is to carry out its conservation duties effectively and I hope that the Minister will accept it. I beg to move.

The Deputy Speaker

My Lords, I suggest to the noble Lord that his amendment is correctly printed in the Marshalled List because the word "an" begins on line 44.

Baroness David

My Lords, I have put my name to this amendment and I should like to support it and my noble friend on the Front Bench has asked me to say that he also supports it. We discussed this matter at a previous stage and my noble friend Lady White spoke very eloquently in support of it. It does not seem logical for paragraphs (a) and (c) to refer to waters and land for recreational purposes whereas paragraph (b) does not. Therefore, I hope that the simple logic of this matter will be clear to your Lordships and that this amendment will be supported because it seems to be very straightforward and I see no reason why the Government should oppose it.

Lord Renton

My Lords, my noble friend Lord Caithness—and we should all be grateful to him—has done splendid work in this Bill in trying to protect the environment. He has very nearly got it right and this amendment would just about perfect it.

In addition to the examples given by my noble friend Lord Norrie, perhaps I may just mention a rather special one which indicates that this amendment really should be accepted. For example, let us take the swallow-tail butterfly. It lives on land and feeds off vegetation on land but that vegetation dies unless the water table is kept at the required level, and the maintenance of the water table at the required level in some places depends on the water authority.

I know of a wood in Huntingdonshire which some years ago lost its swallow-tail butterfly because although it was a period of drought, the people maintaining the fenland waters in the middle level allowed or caused the water table to fall so far that the vegatation on which the swallow-tail butterfly depended died off.

Therefore, this is not just a question of the aquatic environment unless one assumes that an environment which surrounds water is also aquatic. However, I believe that that would be stretching our language rather too far. It would be much better to accept the very simple amendment moved by my noble friend Lord Norrie and supported, I am happy to say, by the noble Baroness. It would cause no burden on the water authorities in the future bearing in mind the particular phrase to which my noble friend referred, because the NRA only needs to do that job to the extent it considers desirable. To put it bluntly, it really would be very narrow minded for the Government not to accept this amendment.

Lord Addington

My Lords, I should like to add the support of these Benches for this amendment. When I first looked at the amendment I did not think that I should support it because I assumed that aquatic environment would include the land around the water. As the noble Lord, Lord Renton, has just said, the two are so closely linked that it is almost ludicrous to try and separate them. However, I then thought again. I thought that aquatic environment could be far more narrowly defined as merely what is in or in direct contact with the water at a certain level. For example, I could see quite ridiculous arguments about what is the aquatic environment in a tidal river and whether it concerns the level of the river at low or high tide. I suggest that to insert: such waters and land would be a far safer and more sensible guide.

The Earl of Cranbrook

My Lords, I hope that it may make it easier for my noble friend to accept this amendment if I point out that some excellent conservation work on river courses and riparian work is already being carried out by the prototype NRA sub-unit of Anglian Water and that the conservation of land associated with "such waters and land" is already very much part of the duty of water authorities as they exist at present. Therefore, the incorporation of these words would in no way add to that responsibility.

Lord Moran

My Lords, I should like to support this amendment. On reading the relevant clause on page 8 of the Bill, it seems to me that the case for it is overwhelming because the NRA staff will be required, when looking at land associated with inland and coastal waters, to conserve and enhance their natural beauty and amenity and to promote their use for recreational purposes. It seems to me extraordinary that subsection (4)(b) should be restricted in a way in which subsections (4)(a) and (4)(c) are not. To my mind it would be absurd that an NRA conservation officer, for example, when dealing with land associated with inland and coastal waters, should be required to conserve a kingfisher because it is dependent on an aquatic environment,. but not a pied flycatcher on that land because it is not. I hope that the Government will listen to what has been said from all quarters of the House and will accept this sensible amendment.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh)

My Lords, this amendment applies to Clause 8(4)(b) and the NRA's general duty contained therein to promote the conservation of flora and fuana which are dependent on an aquatic environment. This amendment, in the name of my noble friends Lord Norrie and Lord Renton and the noble Baroness, Lady David, would substitute the words "such waters and land" for the phrase "an aquatic environment".

If we were to accept the amendment it could take the NRA's responsibilities into the protection of flora and fauna which happen to be living on land associated with water though not dependent on it. It seems to us that this would lead to a difficult extension of the NRA's role into matters on which it has no particular expertise and may be ill-prepared to deal with. The important point is that where the Nature Conservancy Council is of the opinion that the flora and fauna which this amendment is designed to protect are of special interest, then it will have to provide for their protection through the establishment of a site of special scientific interest under the Wildlife and Countryside Act 1981. That, of course, is a designation which is not available in terms of comparability to subsection (4)(c).

Finally, there is one important difficulty. If we use the words "land associated with waters" it could extend into the extremely extensive catchment lands where the protection of flora and fauna would be a difficult role for a body which is, after all, concerned with rivers and other waters. It is for that last reason particularly that we do not feel able to accept the amendment.

Lord Norrie

My Lords, I listened carefully to what the Minister said and I am disappointed that he does not see the importance of including the conservation of flora and fauna on land within the remit of the NRA. The NRA is to have the duty to promote recreation, the conservation of natural beauty and the amenity of land. All those duties are intricately connected and it is absurd to suggest that the NRA will have no expertise in the conservation of terrestrial flora and fauna. The NRA apparently is to have expertise in all other areas; indeed, it is to have expertise in planning and land use matters. I have already said that the NRA units will in any case have to employ conservation personnel to deal with aquatic flora and fauna.

I am not surprised that my noble friend Lord Renton has put his name to my amendment. As I said, he introduced the flora and fauna aspect to the Electricity Act in 1957. I am sure that he is equally disappointed that the Government regard the amendment as unnecessary. The amendment would simply be in line with most of the NRA's duties. It is an important matter and therefore I wish to seek the opinion of the House.

5.13 p.m.

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

Their Lordships divided: Contents, 115; Not-Contents, 121.

DIVISION NO. 2
CONTENTS
Addington, L.	Hayter, L.
Allenby of Megiddo, V.	Houghton of Sowerby, L.
Alport, L.	Howie of Troon, L.
Amherst, E.	Hunt, L.
Ampthill, L.	Hylton-Foster, B.
Ardwick, L.	Jeger, B.
Attlee, E.	Jenkins of Hillhead, L.
Aylestone, L.	Jenkins of Putney, L.
Banks, L.	John-Mackie, L.
Barnett, L.	Kirkhill, L.
Birk, B.	Leatherland, L.
Blease, L.	Llewelyn-Davies of Hastoe, B.
Blyth, L.
Bonham-Carter, L.	Lloyd of Kilgerran, L.
Boston of Faversham, L.	Longford, E.
Bottomley, L.	Lovell-Davis, L.
Broadbridge, L.	McCarthy, L.
Brookes, L.	McIntosh of Haringey, L.
Brooks of Tremorfa, L.	Mackie of Benshie, L.
Bruce of Donington, L.	McNair, L.
Campbell of Eskan, L.	Mason of Barnsley, L.
Carmichael of Kelvingrove,	Mayhew, L.
	Milner of Leeds, L.
Cledwyn of Penrhos, L.	Molloy, L.
Cocks of Hartcliffe, L.	Monson, L.
Congleton, L.	Moran, L.
Craigavon, V.	Morris of Kenwood, L.
Craigton, L.	Moyne, L.
Cranbrook, E.	Mulley, L.
Dacre of Glanton, L.	Nathan, L.
David, B.	Nicol, B.
Davies of Penrhys, L.	Norrie, L. [Teller.]
Dean of Beswick, L.	Northfield, L.
Dormand of Easington, L.	Ogmore, L.
Elliot of Hanvood, B.	Peston, L.
Elwyn-Jones, L.	Phillips, B.
Ewart-Biggs, B.	Pitt of Hampstead, L.
Ezra, L.	Ponsonby of Shulbrede, L.
Falkland, V.	Prys-Davies, L.
Gainsborough, E.	Renton, L. [Teller.]
Gallacher, L.	Ritchie of Dundee, L.
Galpern, L.	Rochester, L.
Gladwyn, L.	Ross of Newport, L.
Graham of Edmonton, L.	Rugby, L.
Grey, E.	Salisbury, Bp.
Halsbury, E.	Saltoun of Abernethy, Ly.
Hanworth, V.	Seear, B.
Harris of Greenwich, L.	Shackleton, L.

Shepherd, L.	Underhill, L.
Somers, L.	Wallace of Coslany, L.
Somerset, D.	Walston, L.
Stedman, B.	Whaddon, L.
Stoddart of Swindon, L.	White, B.
Strabolgi, L.	Williams of Elvel, L.
Taylor of Gryfe, L.	Willis, L.
Taylor of Mansfield, L.	Winchilsea and Nottingham, E.
Thurlow, L.
Tordoff, L.	Winterbottom, L.
Turner of Camden, B.	Young of Dartington, L.

NOT-CONTENTS
Alexander of Tunis, E.	Knutsford, V.
Allerton, L.	Lauderdale, E.
Arran, E.	Long, V.
Auckland, L.	McAlpine of Moffat, L.
Balfour, E.	McFadzean, L.
Belhaven and Stenton, L.	Mackay of Clashfern, L.
Belstead, L.	Macleod of Borve, B.
Bessborough, E.	Manton, L.
Blake, L.	Margadale, L.
Blatch, B.	Marley, L.
Borthwick, L.	Massereene and Ferrard, V.
Boyd-Carpenter, L.	Melville, V.
Brabazon of Tara, L.	Merrivale, L.
Brookeborough, V.	Mersey, V.
Brougham and Vaux, L.	Middleton, L.
Caithness, E.	Monk Bretton, L.
Campbell of Croy, L.	Morris, L.
Carnegy of Lour, B.	Mottistone, L.
Carnock, L.	Mowbray and Stourton, L.
Carr of Hadley, L.	Munster, E.
Chelmer, L.	Murton of Lindisfarne, L.
Coleraine, L.	Nelson, E.
Colnbrook, L.	Newall, L.
Constantine of Stanmore, L.	Norfolk, D.
Cork and Orrery, E.	Nugent of Guildford, L.
Crickhowell, L.	Oppenheim-Barnes, B.
Cullen of Ashbourne, L.	Orkney, E.
Daventry, V.	Orr-Ewing, L.
Davidson, V. [Teller.]	Oxfuird, V.
Denham, L. [Teller.]	Pender, L.
Derwent, L.	Peyton of Yeovil, L.
Dilhorne, V.	Plummer of St. Marylebone, L.
Dundee, E.
Eden of Winton, L.	Portsmouth, E.
Elliott of Morpeth, L.	Quinton, L.
Erne, E.	Radnor, E.
Enroll of Hale, L.	Rankeillour, L.
Forbes, L.	Rees, L.
Fortescue, E.	Renwick, L.
Fraser of Carmyllie, L.	Rochdale, V.
Fraser of Kilmorack, L.	Sanderson of Bowden, L.
Gainford, L.	Sempill, Ly.
Gardner of Parkes, B.	Sharples, B.
Gibson-Watt, L.	Skelmersdale, L.
Glenarthur, L.	Southborough, L.
Gray of Contin, L.	Stanley of Alderley, L.
Gridley, L.	Stevens of Ludgate, L.
Grimston of Westbury, L.	Stockton, E.
Grimthorpe, L.	Strange, B.
Haig, E.	Strathclyde, L.
Hailsham of Saint Marylebone, L.	Strathspey, L.
	Swinfen, L.
Havers, L.	Thomas of Gwydir, L.
Henley, L.	Trafford, L.
Hesketh, L.	Trumpington, B.
Hives, L.	Vaux of Harrowden, L.
Holderness, L.	Wise, L.
Hooper, B.	Wolfson, L.
Johnston of Rockport, L.	Wyatt of Weeford, L.
Joseph, L.	Wynford, L.
Kimball, L.	Young, B.
Kitchener, E.

Resolved in the negative, and amendment disagreed to accordingly.

5.22 p.m.

Lord Gallacher moved Amendment No. 8: Page 9, line 3, at end insert ("except that no charge shall be made other than a charge which relates to the provision of physical facilities for members of the public, and any such charge shall be levied at a level likely to produce an income over the expected period of operation of the facility commensurate with the expenditure incurred in such provision").

The noble Lord said: My Lords, this amendment returns to issues highlighted at the Report stage. Before that, the noble Earl, Lord Caithness, had stated in Committee that he wished to brood on whether Clause 8(6) required amendment. The subsection states that nothing in the Clause 8 environmental duties shall require access to be made available free of charge. In the debate on Report, the noble Lord, Lord Renton, repeated his view, expressed in Committee, that some qualification of the subsection was necessary, possibly along the lines of Amendment No. 74, which had been put forward at that stage. It stated that no facility available as at midnight that night should be charged for thereafter. My noble friend Lord McIntosh made it clear that this was intended to relate to facilities at their existing standards. Subsequent improvements could be the subject of charging.

In resisting the amendment, the noble Lord, Lord Hesketh, argued that authorities did not at present charge for access for informal recreation, such as walking or rambling. Any incidental costs of these tended to be borne through water charges. Where charges were levied these were intended to be for the use of specific facilities. The noble Lord said: The balance which is at present struck is that, where specialised facilities are provided, the water authority normally charges the going rate for the use of them. Elsewhere, where it is simply a matter of access for informal recreation, no charge is made. That is the position which can be expected to obtain after privatisation. As we have said many times before, it is impracticable to levy charges for access to the open countryside, mountains and moorland, and the companies have said that they have no intention or wish to try. So far as reasonable, it will still be open to the companies to recover the general costs of performing their recreational duties from their general charges".—[Official Report, 8/6/89; col. 1025.]

As we see it, the problem with the noble Lord's statement is that it is not reflected in the Bill. This amendment seeks to produce precisely that outcome. Purpose-built facilities such as car parks could be the subject of a charge. Access to the open countryside would not be charged. This meets the noble Lord's objection that there was no incentive for a company to invest to improve a facility at present provided free. It fulfils the noble Lord's statement that: The prospect of companies seeking to charge for access to the open countryside is remote".—[Official Report, 8/6/89; col. 1025.] We accepted the force of much of this argument in relation to large areas of land where supervising a charging regime would be impracticable, but pointed to other areas of land where charging could be introduced. The amendment goes further and recognises the need for the cost of new facilities to be met. As my noble friend Lord McIntosh made clear at col. 1027 of the Official Report, the purpose was to avoid new charges for existing facilities which are currently without charge. He expressed himself happy to withdraw the amendment if the Government would give a commitment that no existing facility would be made subject to charging where there had been no improvement in the service. No such assurance was forthcoming.

This amendment recognises the need for change by limiting the amount of charges to the total on an annual test basis attributable to the overall cost of the facility over the period of its operations. In other words, in building or commissioning a car park, the plc would need to project the likely income and usage over a period and charges would be commensurate with the cost incurred. The amendment can be regarded as in two parts. It would be extremely helpful if the Government could give a commitment to limit charges to the provision of physical facilities related to public access. I beg to move.

The Earl of Caithness

My Lords, as the noble Lord, Lord Gallacher, has just reminded us, this amendment takes us over familiar ground. It has the same weaknesses as similar amendments moved at earlier stages. It is both too wide and too rigid. I put it to the House that the outcome of the amendment would be wholly undesirable. Despite the major efforts made by the noble Lord to meet the comments of my noble friend Lord Hesketh—I pay tribute to him for that—I contend that the amendment would impose unreasonable limitations on the circumstances in which a company may recover its costs directly from those who benefit.

Perhaps I may be allowed to give one example. By providing that no charge shall be made other than a charge which relates to the provision of facilities for members of the public, it would prevent a company from charging a private boating club. That cannot be right. Again, it might well discourage a company from improving its physical facilities as there is no provision for increasing charges to accommodate the costs of such improvements; the level of charges for a facility being fixed for its expected life.

However, the underlying purpose of the amendment is to resurrect once again the question of charging for access to the open countryside, mountains and moorlands, Yet again I must remind the House that to try to levy charges for such access is bound to prove impracticable and unreasonable, and that the companies have said that they have no intention or wish to try. It will still be open to the companies, so far as is reasonable, to recover from their general charges the general costs of performing their recreational duties.

I thank the noble Lord for trying to take on board what my noble friend Lord Hesketh said at earlier stages. However, there are still major drawbacks to the amendment.

Lord Gallacher

My Lords, I thank the noble Earl for what he has had to say about the amendment and for his acknowledgement of the fact that we on this side of the House have tried in he drafting to meet the points raised at previous stages of the Bill by way of objection to the underlying principle in the amendment.

There is a gulf between us. Whereas there is no argument that existing facilities giving access to moorland and the like which the public presently enjoy would continue and any cost of giving that access and maintaining it would be met as now from general charges levied by the plcs, any new facilities would be the subject of charge. So far as I understand the noble Earl's response, he would like to see the plcs allowed, when providing those facilities, to levy charges at such a rate as would not merely reimburse them for the capital cost involved but might in fact give them a handsome profit on the recreational or other facilties provided.

That seems to us to be rather an invitation to the plcs to be somewhat commercially minded in this area. Far from encouraging them to be so, our amendment—inadequately drafted though it may be—seeks to discourage them. It aims to give them a fair reward for what they have done but does not offer an open-ended invitation to increase charges, perhaps annually and so on, so that eventually providing these facilities becomes quite a commercial proposition. To that extent the public would be disadvantaged because people would be contributing in another way to the revenues of the plcs.

For that reason, despite the cordial way in which the Minister replied, I feel that we should test the opinion of the House on this amendment.

5.31 p.m.

On Question, Whether the said amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 96; Not-Contents, 136.

DIVISION NO. 3
CONTENTS
Addington, L.	Hanworth, V.
Amherst, E.	Harris of Greenwich, L.
Ardwick, L.	Hatch of Lusby, L.
Attlee, E.	Hayter, L.
Aylestone, L.	Hunt, L.
Banks, L.	Jeger, B.
Barnett, L.	Jenkins of Hillhead, L.
Birk, B.	Jenkins of Putney, L.
Blease, L.	John-Mackie, L.
Bonham-Carter, L.	Kirkhill, L.
Bottomley, L.	Leatherland, L.
Broadbridge, L.	Llewelyn-Davies of Hastoe, B.
Brooks of Tremorfa, L.
Bruce of Donington, L.	Lloyd of Kilgerran, L.
Buckmaster, V.	Lovell-Davis, L.
Caldecote, V.	McCarthy, L.
Campbell of Eskan, L.	McIntosh of Haringey, L.
Carmichael of Kelvingrove, L.	Mackie of Benshie, L.
	McNair, L.
Cledwyn of Penrhos, L.	Mason of Barnsley, L.
Cocks of Hartcliffe, L.	Mayhew, L.
David, B.	Milner of Leeds, L.
Davies of Penrhys, L.	Molloy, L.
Dean of Beswick, L.	Monson, L.
Dormand of Easington, L.	Morris of Kenwood, L.
Elwyn-Jones, L.	Mountevans, L.
Ewart-Biggs, B.	Mulley, L.
Ezra, L.	Murray of Epping Forest, L
Falkland, V.	Nathan, L.
Fitt, L.	Nicol, B.
Gallacher, L.	Northfield, L.
Galpern, L.	Ogmore, L.
Graham of Edmonton, L.	Peston, L.
Grey, E.	Phillips, B.
Hampton, L.	Pitt of Hampstead, L.

Ponsonby of Shulbrede, L. [Teller.]	Taylor of Mansfield, L.
	Tordoff, L. [Teller.]
Prys-Davies, L.	Turner of Camden, B.
Ritchie of Dundee, L.	Underhill, L.
Rochester, L.	Wallace of Coslany, L.
Ross of Newport, L.	Walston, L.
Seear, B.	Whaddon, L.
Serota, B.	White, B.
Shackleton, L.	Williams of Elvel, L.
Shepherd, L.	Willis, L.
Somerset, D.	Winchilsea and Nottingham, E.
Stedman, B.
Stoddart of Swindon, L.	Winstanley, L.
Strabolgi, L.	Winterbottom, L.
Taylor of Gryfe, L.	Young of Dartington, L.

NOT-CONTENTS
Allenby of Megiddo, V.	Hives, L.
Allerton, L.	Holderness, L.
Arran, E.	Hooper, B.
Auckland, L.	Hunter of Newington, L.
Balfour, E.	Hylton-Foster, B.
Belhaven and Stenton, L.	Johnston of Rockport, L.
Belstead, L.	Joseph, L.
Bessborough, E.	Killearn, L.
Blake, L.	Kimball, L.
Blatch, B.	Kitchener, E.
Blyth, L.	Knutsford, V.
Borthwick, L.	Lauderdale, E.
Boyd-Carpenter, L.	Long, V.
Brabazon of Tara, L.	McAlpine of Moffat, L.
Brookeborough, V.	McFadzean, L.
Brookes, L.	Mackay of Clashfern, L.
Brougham and Vaux, L.	Macleod of Borve, B.
Caithness, E.	Manton, L.
Campbell of Alloway, L.	Margadale, L.
Carnegy of Lour, B.	Marley, L.
Carnock, L.	Massereene and Ferrard, V.
Carr of Hadley, L.	Melville, V.
Chelmer, L.	Merrivale, L.
Coleraine, L.	Mersey, V.
Colnbrook, L.	Middleton, L.
Colwyn, L.	Monk Bretton, L.
Constantine of Stanmore, L.	Morris, L.
Cork and Orrery, E.	Mottistone, L.
Craigavon, V.	Mowbray and Stourton, L.
Craigmyle, L.	Moyne, L.
Craigton, L.	Munster, E.
Cranbrook, E.	Murton of Lindisfarne, L.
Crickhowell, L.	Nelson, E.
Cullen of Ashbourne, L.	Newall, L.
Daventry, V.	Norfolk, D.
Davidson, V. [Teller.]	Norrie, L.
Denham, L. [Teller.]	Nugent of Guildford, L.
Dilhorne, V.	Oppenheim-Barnes, B.
Dundee, E.	Orkney, E.
Eden of Winton, L.	Orr-Ewing, L.
Elliot of Harwood, B.	Oxfuird, V.
Elliott of Morpeth, L.	Pender, L.
Erne, E.	Peyton of Yeovil, L.
Erroll of Hale, L.	Plummer of St. Marylebone, L.
Forbes, L.
Fortescue, E.	Portsmouth, E.
Fraser of Kilmorack, L.	Quinton, L.
Gainford, L.	Radnor, E.
Gainsborough, E.	Rankeillour, L.
Gardner of Parkes, B.	Rees, L.
Gibson-Watt, L.	Renton, L.
Glenarthur, L.	Renwick, L.
Gray of Contin, L.	Rochdale, V.
Gridley, L.	Rugby, L.
Grimston of Westbury, L.	Saltoun of Abernethy, Ly.
Grimthorpe, L.	Sanderson of Bowden, L.
Haig, E.	Sempill, Ly.
Hailsham of Saint Marylebone, L.	Sharples, B.
	Skelmersdale, L.
Harmar-Nicholls, L.	Somers, L.
Havers, L.	Southborough, L.
Henley, L.	Stanley of Alderley, L.
Hesketh, L.	Stockton, E.

Strange, B.	Trumpington, B.
Strathclyde, L.	Vaux of Harrowden, L.
Strathspey, L.	Wise, L.
Swinfen, L.	Wolfson, L.
Thomas of Gwydir, L.	Wynford, L.
Trafford, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.39 p.m.

The Earl of Arran moved Amendment No. 9:

Page 9, line 4, after ("section") insert— (" "building" includes structure; and").

On Question, amendment agreed to.

Clause 9 [Environmental duties with respect to sites of special interest]:

Lord Graham of Edmonton moved Amendment No. 10:

Page 9, line 45, at end insert— ("(3A) Where, within three weeks of the completion of consultation under subsection (3) above it appears to the notifying body to be reasonably likely that the consequences referred to in paragraphs (a) or (b) of that subsection may occur, the body may refer the matter to the Secretary of State for decision before any such works, operations or activities may proceed, and no such works, operations or activities shall be undertaken or authorised before either—

1. (a) where no such referral is made, the expiration of the date by which it could have been made; or
2. (b) where such a referral is made, the determination of the matter by the Secretary of State").

The noble Lord said: My Lords, in moving Amendment No. 10 I should like to speak also to Amendment No. 11. Both amendments are tabled in the name of my noble friend Lord McIntosh of Haringey. These amendments reflect continuing concern over the balance of powers contained in Clause 9, which deals with sites of special interest, as identified by the Nature Conservancy Council, or sites within a national park or the Broads. Such bodies have the power to identify areas of special interest, in respect of which Clause 8 has particular importance, and to notify the water plc of the importance of those sites.

When work is undertaken in those areas which may destroy or damage any flora, fauna or geological or physiographical features, the plc is required to notify the NCC, the park authority or the Broads Authority.

The main problem with the notification procedure which the Government introduced into Clause 9 in Committee is that the decision is made by the plc as to whether or not works, operations or activities may be damaging.

On Report, my noble friend Lord McIntosh moved Amendments Nos. 78 and 79 which were designed to give the notifying authority, as well as the plc, the right to make the judgment as to the level of damage. Furthermore, the notifying authorities would have had the right, after consultation, to refer the matter to the Secretary of State for decision as to whether operational works should proceed where there was no agreement on the question. As regards the latter amendment, the noble Lord, Lord Hesketh, made only one criticism; namely, the need for a time limit within which the reference should be made. More generally, he pointed in respect of both amendments to the conservation duties contained in Clause 8.

The argument about Clause 8 is essentially a non sequitur as the notification process would hardly be necessary in the first place if the actions of plcs were adequately safegarded by Clause 8. More specifically, the main amendment now tabled seems to deal with the issue of time limits and puts forward an alternative method of improving the notification process. All that is by way of background.

The first of the two amendments would provide that where the plc had informed the notifying body of the existence of works, the body would have the power, within three weeks of the completion of the consultation process, to refer the matter to the Secretary of State where it considered that damage was likely to result. The works would be suspended pending either the exploration of the three-week date, or, where a referral had been made, the determination of the matter by the Secretary of State. In other words, the amendment builds in only a limited additional time requirement to that already accepted by the Government in their redrafted Clause 9. The purpose is still somewhat to redress the balance between the plc and the notifying authority.

Amendments tabled on Report which sought to give the notifying authority the right to make the judgment alongside the plc as to whether works were damaging have been dropped. Instead, the more limited suggestion is put forward that the reserve power to refer to the Secretary of State should be available to the notifying authority once it has been informed of works which the plc judges to be damaging. That is regarded as a less satisfactory alternative in that some works could proceed without the notifying authority receiving information about them. It can only be hoped, at least in relation to major works, that the notifying authority would be aware of forthcoming works and would be able to encourage consultation on them.

The second amendment directly addresses the question of notification. It provides that the plc should (in respect of works, operations, or activities covered by the clause) consult the notifying body in the prescribed manner where the notifying body so requests. That would be most likely to arise where the plc did not necessarily consider that the necessary level of damage would result, but the notifying authority was concerned to establish the basis of the proposals and sought consultation on them before the works were commenced.

The amendment highlights an issue which Clause 9 does not satisfactorily address; namely, what happens if the plc does not consider that damage or prejudice to Clause 8 duties is likely to flow from works in the manner described in subsection (3). The Government should think carefully about the provision. One would have thought that the last thing they wanted would be (possibly through mistake or optimistic assumptions about the effect of a particular proposal) for work to go ahead in a national park or in the Broads on which there was no consultation and which led subsequently to public controversy as to its effect on the natural environment. The amendments not merely seek to aid the cause which I plead, but provide sound advice and good government. I beg to move.

5.45 p.m.

The Earl of Caithness

My Lords, the amendments would introduce new procedures in the case of SSSIs and national parks. For simplicity, I shall confine my response to the case of national parks although the points apply with equal force to SSSIs.

Clause 9 imposes on the relevant bodies (that is the undertakers and the NRA) a duty to consult national park authorities on operations or decisions likely to affect areas of land within national parks which the park authorities have notified to the relevant bodies. The duty supplements the general environmental duties of the relevant bodies in the particularly sensitive circumstances of national parks in two ways.

First it provides a notification procedure so that the attention of relevant bodies is firmly drawn to those areas where the operation of those duties may be particularly important; secondly, it ensures that there is an additional element of consultation in respect of any operations which might adversely affect those areas.

It also has the further effect of injecting a second opinion—the national park authority—into the relevant body's policy formulation and decision-making. The procedure is a trip-wire which ensures that the relevant bodies are warned and advised on the performance of their duties in particular cases.

The question is whether we should go further, and take the decision in those cases where there is not agreement between the park authority and the relevant body out of the hands of the relevant bodies and place it with the Secretary of State. We think that that is both unnecessary and inappropriate. It is unnecessary because the relevant bodies are bound to have the fullest regard for what the park authorities say: their Clause 8 duties operate very obviously and clearly in those cases and the performance of those duties must be enforced by the Secretary of State.

It is also inappropriate, however, because it would take out of the hands of the relevant bodies the decision as to how they performed their duties and place it with the Secretary of State. I hope that the noble Lord, Lord Graham of Edmonton, will agree that that is wrong. The better course is, as we propose, to leave the relevant bodies to perform their duties, and use enforcement powers if they fail.

Finally, if we followed that course we would in effect replace a framework encouraging consultation and co-operation by one which imposed formalised procedures and could rapidly lead to transfer of responsibility to the Secretary of State. Such involvement could become heavy and continuous. We think it is better to leave decision with the local bodies, with suitable enforcement powers in reserve.

The noble Lord, Lord Graham, may not entirely agree with our conclusion, but I hope that he will accept that our objectives are not far apart and that we have, as he requested, considered carefully the points he has made.

Lord Graham of Edmonton

My Lords, I begin where the Minister left off. We are satisfied that the Minister and his colleagues have carefully considered what he said because I know that he wants to satisfy interested bodies that they will be fully consulted. He can take it from me that the last thing that we want to do is to allow the Secretary of State to have a greater say in more matters than he already has. We do not lightly make the Secretary of State a referee in this or any other matters—and "referee" is not a reference to a Bill that is being debated in another place at the moment.

The question of the ability of interested parties to resolve the matters is fairly dealt with. We have painted a scenario where it is possible (not for underhand or mischievous purposes) to find that some decisions are taken which the plc does not believe to be worthy of consultation because it does not consider that they are important. However, they could be seen by others to be important, but then it would be too late. Like many other things in the Bill we need to see what happens. I am satisfied that the Minister has gone as far as he can. We shall have to wait to see whether we come back in a few years' time and say, "We told you so". In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 11 not moved.]

Clause 10 [Codes of practice with respect to environmental and recreational duties]:

The Earl of Arran moved Amendment No. 12: Page 10, line 26, leave out ("Secretary of State") and insert ("relevant Minister").

The noble Earl said: My Lords, I wish to move Amendment No. 12 and with the leave of the House I shall speak to Amendments Nos. 15, 24, 29, 36, 40, 41, 53 to 56 en bloc, 59, 61, 64, 65 to 70 en bloc, 75, 76, 77, 78, 102, 103, 104, 105, 110, 111 and 112, 122, 136, 137, 138, 139, 147 and 148 to 151 en bloc.

Lord Renton

My Lords, before my noble friend proceeds any further, it seems that he has departed from the grouping. I wonder whether he could give us any help as to how that arises and what will happen to the amendments which have been grouped differently from the way in which he dealt with them?

Lord McIntosh of Haringey

My Lords, before the noble Earl replies to that, I should like to say that I only noticed half way through that he was departing from the grouping. I had planned to give notice that in my view this grouping of all the amendments which are described as "transitional or technical" is not satisfactory to the House. They are not related in subject; they are only being grouped together on the grounds that the Government think that they are not controversial. If we recall what the Government thought about Amendment No. 135, which was the one which gives a 12-month moratorium to undertakings for freedom from prosecution for breaches of river water quality, we realise that this is not satisfactory.

I am not sure that I followed the whole of the list which the noble Earl read out, but I wish to give him notice that I shall expect him to move and to speak to Amendments Nos. 54, 59, 111, 122, 136 to 139 and 141. I believe that they may well raise issues of which the House ought to be aware. Would the noble Earl like me to repeat those numbers? I believe that I notified the Government Whips of them. They were: Amendments Nos. 54, 59, 111, 122, 136 to 139 and 141. Some of them may have been taken out of the grouping already, which may solve the problem. However, these matters are of substance and ought to be debated.

The Earl of Balfour

My Lords, my noble friend the Minister included Amendment No. 103. I wonder whether he intended to do so because it stands in the name of the noble Lord, Lord McIntosh.

The Earl of Arran

My Lords, I think that my noble friend is quite correct and I did refer to Amendment No. 103. However on reflection I feel that that is not correct and I apologise for it.

Lord McIntosh of Haringey

My Lords, I think that Amendment No. 104 is in a similar situation.

The Earl of Arran

My Lords, I have to agree with the noble Lord, Lord McIntosh, that Amendment No. 104 should not be moved in these circumstances.

The Deputy Speaker

My Lords, does the noble Earl wish to move Amendment No. 12? That is all he is in a position to move. He cannot move any other amendment at this juncture.

The Earl of Arran

My Lords, yes, I have moved Amendment No. 12.

On Question, amendment agreed to.

Clause 20 [Orders for securing compliance with certain provisions]:

Lord Addington moved Amendment No. 13:

Page 24, line 31, at end insert— ("( ) A notice served or published under subsection (6) above shall set out the reasons for the decision of the Secretary of State or the Director under subsection (5) above.").

The noble Lord said: My Lords, this amendment merely provides information. Effectively, a notice from the Secretary of State or the director that an order will not proceed under Section 20 could at present simply state that it is not intended to take the matter any further. The person should certainly have a reference to the reasons why something is not to be taken further and thus have the foundation for the decision. Effectively, the amendment is to try to clarify the situation because there is no reason why someone should not have this information. I beg to move.

Lord Hesketh

My Lords, under Clause 20 the Secretary of State or the director is required to make enforcement orders when an appointed company is in contravention of its duties. Where a contravention is found to be trivial, or the company has undertaken to carry out a programme of remedial action, or the duties imposed on the Secretary of State or the director by Part I of the Bill preclude it, a final order or provisional order need not be made or confirmed.

We believe that the amendment is unnecessary. The notice required to be published under subsection (6) of the clause will explain that the Secretary of State or director has decided not to proceed with enforcement action for one of the three reasons set out in subsection (5); for example, that the contraventions are trivial. The reason for not taking enforcement action will therefore be stated in the notice. If it is considered that the decision of the Secretary of State or director is unreasonable it may be challenged in the courts. It is for the preceding reasons that we believe that the amendment is unnecessary.

Lord Addington

My Lords, having heard what the Minister has said, I am not completely happy. However, he has met many of the points which were raised. In those circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 [The Director's register]:

Lord Addington moved Amendment No. 14:

Page 38, line 27, at end insert— ("(f) every direction issued in pursuance of subsection (3) below.").

The noble Lord said: My Lords, the purpose here is to ensure that interested people have the right to know that they have been excluded from the register. An empty register would be a source of considerable frustration and might involve waste of time and money as people tried to find out what had happened. A precedent appears in Clause 116(1)(b) on page 127 where the Secretary of State has issued a certificate that certain matters may be excluded from the pollution register. The certificate still has to be entered into the register. The same principle can surely be applied here. I beg to move.

Lord Hesketh

My Lords, Clause 31 requires the director general to maintain a register of key documents and decisions relating to the appointments of water and sewerage undertakers. The register will hold details of appointments, variations and terminations of appointments and of modifications of conditions of appointment. It will also contain details of directions, consents and determinations given and enforcement orders made by the director, and of undertakings given by the appointed companies under Clause 20.

Subsection (3) empowers the Secretary of State to direct the director not to include in the register any entry where he considers inclusion would be against the public interest. Amendment No. 14 would amend subsection (2) so that any such direction by the Secretary of State would itself have to be included in the register.

The provision for registers and for entries to be withheld in the public interest is well precedented. The Government have accepted in earlier debates that we should not blindly follow precedent and we should be ready to justify the intention in its present content, just as the noble Lord, Lord Addington, has made his case.

Here we believe that the case is clear cut, indeed almost self-evident. If it is not in the public interest to disclose an entry, the direction not to disclose the entry is likely itself to disclose the matter which it is not in the public interest to disclose. This might for example include directions concerning precautionary measures in the interest of national security. I would not expect the powers to be used frequently or lightly but where they are used I am sure the House would want to do nothing which might breach the necessary confidentiality. It is for these reasons that I hope that the noble Lord, Lord Addington, will be able to withdraw his amendment.

Lord Addington

My Lords, having listened to the Minister, again I am not happy—perhaps a little less happy even than on the last amendment. However, once again I feel that the answer has met many of the points, or at least some of the more fundamental material, of the amendment. Therefore I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 41 [Financial conditions for water main requisition]:

The Earl of Arran moved Amendment No. 15: Page 48, line 22, leave out ("direction") and insert ("determination").

On Question, amendment agreed to.

Clause 45 [Duty to supply water for domestic purposes]:

The Earl of Cranbrook moved Amendment No. 16: Page 53, line 23, after ("building") insert ("together with any land occupied with it").

The noble Earl said: My Lords, this is a new amendment but it has precedents. There are several points in the Bill where the word "premises" has been expressly modified by government amendments, for example, in Clause 42(3)(b)(ii) and in Clause 52(2). The effect of these amendments has been to avoid unfortunate consequences if the word "premises" referred only to a building or to a part of a building. The same phenomenon recurs in Amendment No. 112 which we passed over rather transiently a moment or two ago. Perhaps we shall return to that amendment later this evening, as an amendment to Schedule 10.

The effect of these amendments is that the word "premises" will, in such cases, embrace both the building and any land which is occupied with it. Despite requests from the Water Authorities Association and others that this wider meaning of the word should be extended to other appropriate clauses, there has not been consistency in the Bill, or in Clause 45. This clause describes circumstances in which the undertaker: shall owe a domestic supply duty".

The present wording contains the inference that the duty is to supply the building in question, notwithstanding circumstances in which the responsibility for part of the service pipe crossing land to reach the building rests with the customer. If there should be defects or damage in this part of the pipe before it reaches the building, the undertaker is wholly reliant on the defence contained in subsection (8) of this clause, as having taken: all reasonable steps and exercised all due diligence". That defence is inappropriate when no amount of care or diligence or reasonableness on the part of the undertaker can remedy the fact that he has no control, as an undertaker, over part of the means of supply between the building and the stopcock running over the land. That distance can sometimes be quite great. This amendment is designed to attempt to dispel confusion or uncertainty regarding the extent of the undertaker's domestic supply duty, resulting from a failure in Clause 45 to define the word "premises" comprehensively in accordance with the definition that appears elsewhere in the Bill. I beg to move.

The Earl of Balfour

My Lords, I get the impression from this amendment that it could involve the undertaker in standpipes in, say, a garden. I am not sure that that is desirable.

6 p.m.

Lord Hesketh

My Lords, Clause 45 defines the circumstances in which a water undertaker owes a domestic supply duty to particular premises. Clause 50 gives an undertaker the right in certain circumstances to require the provision of separate service pipes to provide a supply of water to separately occupied premises. Clause 51 sets out the requirements on undertakers in respect of the constancy and the pressure of water supplied to those premises.

The purpose of Amendments Nos. 16, 18 and 19 is apparently to seek to clarify the provisions of these clauses by specifying that they relate to premises comprising buildings and land occupied with buildings, rather than just the buildings. I have to say that if the provisions of each of these clauses are considered closely, it is clear that this is not in fact the case. The water supply duty, the power to require separate service pipes and the constancy and pressure requirements all relate to the supply of water to a building, rather than to a building and associated land.

If I understand my noble friend Lord Cranbrook correctly, he is concerned that, under the provisions of these clauses, an undertaker could be considered to be in breach of the duty to supply water for domestic purposes and the requirements in respect of constancy and pressure of supplies if a problem with that part of the service pipe for which the consumer is responsible leads to a failure to supply water to a building on the premises. This concern, however, fails to take account of the provisions of Clauses 45 and 51. An undertaker is required to provide a constant supply of water at the required pressure to the consumer's premises, that is the building occupied by the consumer. An undertaker which fails to comply with these duties is open to legal action. In any proceedings brought against an undertaker, the clauses provide for an undertaker to show in its defence that it took all reasonable steps and exercised all due diligence to avoid the breach of the duty.

In any proceedings brought against the undertaker for failing to comply with its duty or meet the requirements placed upon it, an undertaker would be able to show that it had taken all reasonable steps and exercised all due diligence if the water, in that part of the service pipe for which it was responsible, was sufficient to supply the building at the required pressure.

In circumstances where a breach of the supply duty or a failure to meet the constancy and pressure requirements was due solely to a failure in that part of the service pipe for which the consumer is responsible, the undertaker would clearly be able to show that it had taken all reasonable steps and exercised all due diligence to avoid breaching the duty or failing to meet the requirement. I hope with those words that I have been able to demonstrate to my noble friend Lord Cranbrook that there is no reason for him to press his amendments.

The Earl of Cranbrook

My Lords, it is very important for the undertaker to pay attention and to take note of those words which occurred towards the end of the speech of my noble friend, when he said very clearly that no court of law would consider the undertaker to be at fault if anything was to happen in that part of the service pipe which does not belong to the undertaker but to the customer. The essential point of the amendment was to make it absolutely clear that there is a section of the service pipe which is not under the control of the undertaker, and for which he cannot therefore be held responsible as regards any damage or anything that goes wrong in that service pipe which causes a failure to supply water at the correct pressure, or under other appropriate conditions, to the building at the end of that pipe. Provided that my noble friend's words are absolutely clear, I am content to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 49 [Powers to disconnect service pipes and cut off supplies]:

Lord Hesketh moved Amendment No. 17: Page 60, line 21, leave out from beginning to ("on") in line 22 and insert ("without restoring that supply before the end of the period of twenty-four hours beginning with the time when it is cut off, the undertaker shall, no later than forty-eight hours after that time, serve notice that it has cut off that supply").

The noble Lord said: My Lords, Amendment No. 17 meets a commitment I gave to my noble friend Lady Blatch on Report. Clause 49 currently requires a water undertaker to notify the relevant local authority of all disconnections made to inhabited houses within 48 hours of the disconnections taking place. The noble Baroness was concerned that undertakers would be required to notify local authorities even of disconnections lasting no more than an hour or so. In many cases the notification would not take place until well after the supply had been restored. Amendment No. 17 provides that undertakers will only be required to notify local authorities of disconnections lasting longer than 24 hours. I beg to move.

Baroness Blatch

My Lords, I am very grateful to my noble friend the Minister for bringing this amendment to the House. As I said when I pressed my own amendment, most cut-offs occur within the 24-hour limit. I think this provision will eliminate a large number. of occasions when local authorities would have to be notified. I am most grateful to my noble friend.

Lord McIntosh of Haringey

My Lords, we are not opposed to this amendment, but I must express my regret that the Government have not found it possible to agree to the more important amendments which we moved about notification of disconnection. Those amendments would have ensured that the customer service committees were notified of disconnections, in particular for reasons of non-payment of bills, and, at any rate, even if individual disconnections were not notified, that there would be a statistical analysis of disconnections for that purpose. If the customer service committees are to do their job properly, they must know what is happening as regards disconnections in order to be sure that the disconnections code is being adhered to. As I say, I do not resist this amendment, but the other amendments would have been much more important and more welcome.

On Question, amendment agreed to.

Clause 50 [Power to require separate service pipes]:

[Amendment No. 18 not moved.]

Clause 51 [Duty as respects constant supply and pressure]:

[Amendment No. 19 not moved.]

Clause 54 [Offence of supplying water unfit for human consumption]:

Lord McIntosh of Haringey moved Amendment No. 20: Page 66, line 20, leave out ("water undertaker") and insert ("any person").

The noble Lord said: My Lords, in moving Amendment No. 20, I wish to speak to Amendments Nos. 21 to 22 and also to Amendment No. 28, which is not exactly on the same subject, but which can, for convenience, be debated with the other amendments. These amendments are concerned with private supplies. Lest it is thought that private supplies are insignificant, let me remind the House that according to Environmental Health, the journal of the environmental health officers. there are approximately 80,000 private supplies in this country. There are 450,000 regular users of water from private supplies, and there are probably 2 million occasional users of private supplies.

The European Commission funded a study of private supplies in Calderdale and found that 3 per cent. of the population there were connected to private supplies. That figure was surprising because it is very much higher than the national average and there was no reason to suppose that it would be. Of those private supplies 88 per cent. exceeded the European Commission's maximum admissible content of extraneous materials and 48 per cent. contained faecal contamination. Clearly it can be a problem; it is not merely a theoretical point.

I remind the House that European Community Directive 87/78, which has been the subject of debate in the House, does not distinguish between private supplies and public supplies. Any regulations for public supplies will eventually have to apply to private supplies as well. In April of this year the noble Lord, Lord Hesketh, wrote in a Written Answer that the Government are proposing to the European Commission a 10 year timetable for bringing private suplies into line with the European Commission directive. However, the department itself, as evidenced by a letter which it sent to local authorities in 1987, has no reason to suppose that the European Commission will agree to that 10 year period. Even if it does, the department believes that there will have to be monitoring every two years, and in a letter to local authorities of 26th August 1987 asked local authorities to take part in that monitoring process.

Clearly, not only does the European Commission believe that this is an important matter, the Government think it is an important matter and the Department of the Environment thinks it is an important matter. That is why we return to it at Third Reading. We also do so because, in my view, our amendments at Report stage were pretty heavy. They were overbearing in a number of ways.

Those amendments required that private suppliers should apply for appointment as water undertakings and that the Secretary of State would then grant them an exemption from the conditions. The amendments also provided that private suppliers could not compete with water authorities to supply, for example, new housing estates. I am told that that pleased the Water Authorities Association, although it was not intended to. On reflection, both of those appeared to us to be bad ideas. We believe that we have brought forward better amendments at this stage. The noble Earl thinks that that is funny; when he apologises for his mistakes, as I do, I shall take care to laugh at him.

Amendments Nos. 20 to 22 relate to Clause 54, which concerns the offence of supplying water unfit for human consumption. The three amendments would secure that any person—including private suppliers—can be guilty of an offence of supplying water unfit for human consumption on the same basis as water undertakings. They provide the same protection for consumers against being supplied with water which is unfit for human consumption wherever they live in the country. That is an important element of justice for water consumers throughout the country.

Amendment No. 28 solves some of the problems raised by our amendments at Report stage by giving the Secretary of State the power to set regulations which would prescribe standards of performance and to set out any requirements he thinks necessary about the supply, pressure, recovery of charges, etc. It would extend to the customers of private suppliers the same conditions with regard to the necessity for a continuous supply at an adequate pressure, the same disconnections code, provisions on metering, leakages, overcharging, etc.,which will be available to the customers of the appointed water undertakings. Again, that seems to us to be a matter of equity and justice for all water consumers throughout the country. Once the matter has been drawn to the attention of the House, as it was, however inadequately, at Report stage, we think that the Government ought to recognise the justice of the case.

We are encouraged to think that the Government have recognised the justice of the case, because the Lord Advocate, when replying to Scottish amendments on 13th June at the end of the Report stage, said that: Water which is not fit for human consumption should never be supplied to the public … neither south nor north of the Border can anyone afford to be complacent"—[0fficial Report, 13/6/89; col. 1370] He went on to say, in the context of hoping that it would not be his responsibility to institute prosecutions against suppliers for breaching those rules, that: Their consumers, the general public, deserve nothing less"; in other words, nothing less than the same protection against unfit drinking water.

I hope that the House and the Government will feel that we have moved towards correcting a wrong which had not previously been identified. I am grateful to those in the National Consumer Council who first drew it to our attention. I believe that we now have amendments which give the Secretary of State powers to make reasonable provision. Obviously he will not want to deal with small supplies from individual farmers to tenants and neighbours, but there is reasonable provision to protect the half million inhabitants of this country who rely on private supplies and are, in justice, entitled to the same protection as those who are customers of the water authorities or the appointed water undertakings. I beg to move.

6.15 p.m.

The Earl of Balfour

My Lords, I am concerned by the amendments. If Amendment No. 22 were accepted subsection (3) would read: In any proceedings against any water undertaker for an offence under this section it shall be a defence for that person to show that he … took all reasonable steps and exercised all due diligence for securing that the water was fit for human consumption". That is very nice. It protects the water undertaker, but it does not protect the private individual.

Turning to Amendment No. 28, I am concerned personally. Clause 54 is repeated almost word for word in paragraph 76C of Schedule 22. As I have already explained to your Lordships, I am a private supplier of water. However, I have no control over the pressure because the water comes from a spring. I do not know whether that spring will continue or not. The only guarantee I have is that there has been no trouble in the past 120 years.

Paragraph (f) of the amendment states that regulations may: provide for the payment of compensation in respect of a breach of any regulation under this section". That could place me in a very difficult position indeed because I do not make any charge for the water. I have no desire to do so. However, reading the amendment I have a feeling that any small undertaker, particularly in England and Wales, will have to make some charge. The Secretary of State may approve or disapprove of that under the proposed clause, but I do not think that that is the sort of thing with which we want to be bothered. I am sure that I speak for many people in the same position. It involves a great deal of book-keeping that we do not want.

Lord Ross of Newport

My Lords, perhaps I may also declare an interest in that I survive on a private supply and am hoping to God at the moment that the spring does not run out!

I have much sympathy with what the noble Earl, Lord Balfour, has said. Obviously, it is only right that water that is consumed by those who have a private supply must be fit for consumption. But if we are not careful—I recognise that the noble Lord, Lord McIntosh, has watered down the amendment to some extent—we shall cause all sorts of problems in the countryside because landlords, farmers and others who out of courtesy—I am sure that that is the case on the noble Earl's estate—provide people with a supply of water that is not otherwise available to them, will cut it off. I do not say that the noble Earl would do that, but I can see many people in the farming world who would say, "This is too big a thing for me to administer. I am not prepared to allow myself to be prosecuted for this, that and the other". Somehow the pipe would suddenly be broken and not replaced. That will lead to all sorts of problems.

It is not a simple matter and I have a great deal of sympathy with what the noble Earl said. I should certainly find it gravely inconvenient if my supply were suddenly cut off. I have good relations with my next-door neighbour. The pipe burst the other day and we had no supply at all for over 24 hours, but he repaired it and did not charge for it. I think that this is a difficult area in which to legislate and I hope that the Minister will agree with that.

Lord Vinson

My Lords, perhaps I may support the previous two speakers. One is concerned about the attempts to raise the purity and general standard of water and about the introduction of controls. But, while the noble Lord, Lord McIntosh, suggested to us that there would be a waiver in the case of small farms and tourist houses—I put the words in his mouth—in remote rural areas, one can see the regulations being applied insidiously further and further down the line to arrangements where the supply and control of water is more in the hands of nature than it is in the hands of the farmer or the current owner, particularly in the years of drought.

I should therefore like the noble Lord to expand on how he believes that the regulation will not be applied with its full rigour to those casual and small users, farmers and holidaymakers in remote areas where the water supply is extremely erratic at any time. As previous speakers have implied, to bring the full rigours of the law into the matter could only result in the supply being withdrawn. Surely that is not what anyone wants to see.

Lord Howie of Troon

My Lords, I hope that my noble friend will not be put off by the thought that the noble Earl, Lord Balfour, has no control over the pressure at which water comes out of the spring. I am quite sure that he is right. He has no control over that, but ensuring water at a proper pressure is not the point. That comes from the noble Earl or anyone else taking water from the spring or wherever and putting it into a suitable tank or receptacle at a suitable height. It is from that height that the pressure comes. There is no difficulty of any kind in applying regulations to that situation.

The Earl of Caithness

My Lords, the noble Lord, Lord McIntosh, has developed arguments that he first put forward at Report stage in relation to the licensing of supplies. But I must say that, notwithstanding the major attempts that he has made to alter his amendment—I credit him for that—our objections in principle to a farther tier of regulations for private supplies remain.

In our view, it would be quite unjustifiable to take arbitrary powers to change existing agreements under which private supplies are made, particularly where there is no evidence of customer complaints for the sort of contingency for which the amendment would provide. Among the reasons why private supplies are sometimes preferred to public supplies is the fact that they can often be of minimal cost and in some cases even free. Should the opposite situation of excessive charging or disconnection for non-payment ever arise, there would be every incentive on the householders concerned to consider obtaining supplies from the appointed water undertaker. There might be scope for competition for private industrial water suppliers and the discipline that imposes on charging and the other terms and conditions of supply.

However, for any significant new green field site housing development, the domestic supplier would be expected by house purchasers to be a water undertaker because, as I said at Report, the power of undertakers will be needed to provide the necessary infrastructure and because customers will expect the certainty that goes with requiring services from the appointed undertaker.

If the fears that lie behind the amendment had any justification, the new customers or their mortgagees would, in the case of a major new development to which I have referred, check very carefully to ensure that the water supply was by a water undertaker and, if not, to see that safeguards were there in any agreement with a private supplier. In those circumstances, there would be every reason for the private supplier to become a new undertaker. Clause 12(2)(c) provides for variation of appointments in areas where the undertakers currently serve as customers so that a different company could be appointed.

In so far as the amendments relate to the quality of private supplies—which is something that the noble Lord, Lord McIntosh, stressed—I can assure noble Lords that the Bill already contains perfectly adequate provisions for ensuring that private supplies are wholesome. The regulations shortly to be made under Clause 65, laying down standards of wholesomeness, will apply just as much to private supplies as they will to mains supplies. Local authorities will have new powers under Clauses 57 to 59 to ensure that the private supplies comply with those regulations.

In our view, it would not be appropriate to apply the criminal offence in Clause 54 to private supplies. There are few private water supplies run on a commercial basis. More commonly, the private supply is on the premises of the person supplied. We do not think that it would be a crime for a person to drink from his own well. In other cases, the private supply may be provided free of charge to neighbours, as my noble friend Lord Balfour generously provides.

The arrangements under which those supplies are provided are many and various. In those cases where the quality of the supply is governed by the terms of a contract or agreement, the person supplied could take action against the supplier for breach of the contract or agreement. He may be able to sue for damages if he suffers any injury or loss as a result of the negligence of the supplier.

We are at one with the noble Lord, Lord McIntosh, in agreeing that the most important need is to ensure that such water is not supplied. For that, there is a longstanding power for local authorities to ask a magistrates' court to close down or restrict the use of water from a polluted source. That power is contained in Section 140 of the Public Health Act 1936. Where the water is so polluted as to be prejudicial to health, it enables a local authority to ask a court to issue a summons to the owner of such a source. After hearing the summons, the court may make whatever order it considers necessary to prevent injury or danger to the health of those using the water.

Agreement on the principle is, therefore, not in doubt, but the method of achieving the objective causes a difference between the noble Lord, Lord McIntosh, and ourselves.

Lord McIntosh of Haringey

My Lords, I am afraid that there have been a number of misunderstandings about the amendments, particularly among noble Lords opposite. The noble Earl, Lord Balfour, seems to think that something in the amendment would require him to charge for the water that he supplies. Indeed, he said that at Report stage with regard to similar amendments. He has been wrong on both occasions. There is nothing in the amendment that would require, encourage or even make it advisable or necessary for him to charge for his supply to his neighbours.

The other point that seems to have been missed is that the criminal sanctions in Clause 54 apply only to the very limited definition of water that is unfit for human consumption. The Minister has reminded us of the Public Health Act 1936 and the provisions in it for local authorities, and he is quite right. But, if that is the case, it is difficult to see why Clause 54 is in at all unless it adds something to the 1936 Act. If it adds something, then surely the added protection that it provides should be available to all customers, not just to the customers of the authorities.

So far as concerns all other aspects, including such matters as pressure, charging, metering and so on, I remind the House that Amendment No. 28 provides only for the possibility of the Secretary of State making regulations. Clearly, in making those regulations the Secretary of State will have regard to the points which have been raised by noble Lords and will not make regulations for very small groups of people. The amendment provides that he can make different regulations for different groups of people. And it specifically provides that the regulations shall not be more onerous than they would be for water undertakings.

I am therefore not satisfied with the response. I do not think that adequate protection has been given to the people—nearly half a million of them—who are concerned. I hope that the Government will take the opportunity of the regulations under Clause 65 and indeed of other regulations to increase protection for customers or users of private supplies. In that spirit I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 and 22 not moved.]

6.30 p.m.

Lord Addington moved Amendment No. 23: Page 66, line 41, leave out ("or the Director of Public Prosecutions") and insert ("the Director of Public Prosecutions or a constable.").

The noble Lord said: My Lords, with this amendment we return to a subject to which I referred at both Committee and Report stages; namely, the right to bring prosecutions when water is unfit for human consumption. At present those allowed to bring prosecutions are the Secretary of State or the Director of Public Prosecutions. We think that that is too narrow. We proposed initially that local authorities should be allowed to bring such prosecutions. When that proposal was rejected we stated at Report stage that in our opinion it should be the consumer councils; once again, our suggestion was rejected.

We now suggest that it should be the responsibility of the police. I believe that the police are an excellent choice: they enforce the law and make sure that those who break the law are caught. Someone who provides water that is unsafe and may do damage could effectively be committing a type of assault. That may be stretching a point; if so I am sure that the lawyers present will correct me. However, I believe that we should give to some wider body the power to bring prosecutions. It is a simple issue but one potentially of great importance that could have wide consequences. I beg to move.

Lord Renton

My Lords, I hope that the Government will not accept the amendment. The question of water being unfit for human consumption arises in some people's minds. I must confess that for years I have drunk tap water all over the United Kingdom and have reached the age of 80 without any ill effects. On the other hand some people take one sip of a glass of water from anywhere and say, "Oh dear! This is not fit for human consumption. We must tell the local police".

We cannot expect people responsible for this matter to deal with a large number of unnecessary prosecutions. It is far better that we should stick to the Bill as it is. Either the Secretary of State or the Director of Public Prosecutions should be the ones—the only ones—with the responsibility for initiating prosecutions.

Lord Hesketh

My Lords, this amendment would enable a police constable, in addition to the Director of Public Prosecutions and the Secretary of State, to prosecute a water undertaker for supplying water unfit for human consumption.

The amendment would not actually achieve anything very different from what is already in the Bill. Although a police constable could institute proceedings under the Prosecution of Offences Act 1985, the Director of Public Prosecutions would thereafter have to decide whether or not to continue those proceedings before the courts. The addition of these words would hardly therefore broaden the subsection as prosecution would still be directly subject to DPP control. In both cases the DPP would be responsible for deciding whether to proceed with prosecution. But what the amendments could do is result in a delay in the department and the Secretary of State hearing about a serious breach of an undertaker's responsibilities while a local police force investigates it and prepares the case for submission to the DPP. That is the last thing that we would want.

I was very grateful for the learned words of my noble friend Lord Renton who put so lucid a case that it is our belief that the noble Lord, Lord Addington, will not be able to resist withdrawing his amendment.

Lord Addington

My Lords, I am very glad to hear that the noble Lord, Lord Renton, has not been damaged by drinking tap water. The fact remains that there is the distinct possibility that he could be damaged one day. The aim of the amendment is to ensure that wide access is given to people who feel that damage has been done to them. I agree that there is always a slight danger that one or two lunatics will 'phone up the police. I suggest however that the police have to deal with dozens of such people anyway and have more than adequate experience of dealing with them.

The aim of the amendment is to give consumers wider access for making a complaint it' they feel that damage has been done to them. I suggested earlier that local authorities should be able to bring a charge. That amendment was withdrawn. It was then suggested that consumer councils would be appropriate bodies. That amendment was also withdrawn. I do not feel that we can again withdraw our proposal. This time it must be pressed. I feel that there should be a wider body capable of dealing with this matter. I shall ask the opinion of the House.

6.36 p.m.

On Question, Whether the said amendment (No. 23) shall be agreed to?

Their Lordships divided: Contents, 74; Not-Contents, 119.

DIVISION NO. 4
CONTENTS
Addington, L. [Teller.]	McCarthy, L.
Ardwick, L.	McIntosh of Haringey, L.
Attlee, E.	McNair, L.
Aylestone, L.	Mason of Barnsley, L.
Blease, L.	Mayhew, L.
Bonham-Carter, L.	Molloy, L.
Broadbridge, L.	Morris of Kenwood, L.
Brooks of Tremorfa, L.	Murray of Epping Forest, L.
Carmichael of Kelvingrove, L.	Nelson, E.
	Nicol, B.
Cledwyn of Penrhos, L.	Northfield, L.
Cocks of Hartcliffe, L.	Ogmore, L.
David, B.	Peston, L.
Davies of Penrhys, L.	Phillips, B.
Dean of Beswick, L.	Pitt of Hampstead, L.
Dormand of Easington, L.	Ponsonby of Shulbrede, L.
Ewart-Biggs, B.	Prys-Davies, L.
Ezra, L.	Raglan, L.
Falkland, V.	Rea, L.
Fitt, L.	Ritchie of Dundee, L.
Gallacher, L.	Rochester, L.
Galpern, L.	Ross of Newport, L.
Graham of Edmonton, L. [Teller.]	Serota, B.
	Shepherd, L.
Grey, E.	Stedman, B.
Hampton, L.	Strabolgi, L.
Hanworth, V.	Taylor of Gryfe, L.
Harris of Greenwich, L.	Taylor of Msinsfield, L.
Hatch of Lusby, L.	Thomson of Monifieth, L.
Houghton of Sowerby, L.	Tordoff, L.
Howie of Troon, L.	Turner of Camden, B.
Jeger, B.	Underhill, L.
Jenkins of Hillhead, L.	Wallace of Coslany, L.
Jenkins of Putney, L.	White, B.
Kirkhill, L.	Williams of Elvel, L.
Llewelyn-Davies of Hastoe, B.	Willis, L.
	Winstanley, L.
Lloyd of Kilgerran, L.	Young of Dartington, L.
Lovell-Davis, L.

NOT-CONTENTS
Allenby of Megiddo, V.	Blake, L.
Allerton, L.	Blatch, B.
Alport, L.	Blyth, L.
Arran, E.	Boardman, L.
Auckland, L.	Borthwick, L.
Balfour, E.	Boyd-Carpenter, L.
Beaverbrook, L.	Brabazon of Tara, L.
Belstead, L.	Brookeborough, V.
Bessborough, E.	Brookes, L.

Brougham and Vaux, L.	Kimball, L.
Buckmaster, V.	Kitchener, E.
Caithness, E.	Knutsford, V.
Carnegy of Lour, B.	Lauderdale, E.
Carnock, L.	Long, V.
Carr of Hadley, L.	Lucas of Chilworth, L.
Chelmer, L.	McAlpine of Moffat, L.
Coleraine, L.	Mackay of Clashfern, L.
Colnbrook, L.	Manton, L.
Colville of Culross, V.	Margadale, L.
Colwyn, L.	Massereene and Ferrard, V.
Constantine of Stanmore, L.	Merrivale, L.
Cork and Orrery, E.	Middleton, L.
Craigavon, V.	Montgomery of Alamein, V.
Craigmyle, L.	Morris, L.
Craigton, L.	Mottistone, L.
Cranbrook, E.	Mowbray and Stourton, L.
Crickhowell, L.	Munster, E.
Cullen of Ashbourne, L.	Murton of Lindisfarne, L.
Davidson, V. [Teller.]	Newall, L.
Denham, L. [Teller.]	Norrie, L.
Digby, L.	Nugent of Guildford, L.
Dundee, E.	Oppenheim-Barnes, B.
Eccles, V.	Orkney, E.
Eden of Winton, L.	Oxfuird, V.
Elibank, L.	Pender, L.
Elliott of Morpeth, L.	Plummer of St. Marylebone, L.
Ferrers, E.
Fortescue, E.	Portsmouth, E.
Fraser of Carmyllie, L.	Quinton, L.
Fraser of Kilmorack, L.	Radnor, E.
Gainford, L.	Rees, L.
Gainsborough, E.	Renton, L.
Gardner of Parkes, B.	Russell of Liverpool, L.
Gisborough, L.	Saltoun of Abernethy, Ly.
Glenarthur, L.	Sanderson of Bowden, L.
Gray of Contin, L.	Sharples, B.
Gridley, L.	Skelmersdale, L.
Grimston of Westbury, L.	Somerset, D.
Grimthorpe, L.	Stanley of Alderley, L.
Haig, E.	Stockton, E.
Hailsham of Saint Marylebone, L.	Strange, B.
	Strathclyde, L.
Harmar-Nicholls, L.	Thomas of Gwydir, L.
Henley, L.	Trafford, L.
Hesketh, L.	Tranmire, L.
Hives, L.	Trumpington, B.
Holderness, L.	Vaux of Harrowden, L.
Home of the Hirsel, L.	Vinson, L.
Hooper, B.	Wynford, L.
Johnston of Rockport, L.	Young, B.
Joseph, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.44 p.m.

The Earl of Arran moved Amendment No. 24: Page 71, line 5, at beginning insert ("may").

On Question, Amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 25: Page 73, line 1, after ("may") insert ("on the recommendations of the Director").

The noble Lord said: My Lords, in moving Amendment No. 25 I should like to speak also to Amendment No. 26. These amendments are different versions—

The Earl of Caithness

My Lords, is the noble Lord speaking also to Amendment No. 27?

Lord McIntosh of Haringey

My Lords, I am grateful to the Minister. Yes, I am speaking to Amendment No. 27 as well. With these amendments we return to the issue of drinking water quality assessors under Clause 60, which has been the subject of debate both at Committee stage and Report stage. However, these are significantly different amendments. They do not seek dramatically to change the location of the assessors for the enforcement of drinking water quality. Amendment No. 25 involves the Director General of Water Services in the appointment of the technical assessors for water quality. Amendment No. 26 sets out more clearly than the clause at present sets out the functions of the assessors. Amendment No. 27 specifies that the powers and duties of the assessors shall apply to private supplies as though those supplies were provided by an undertaker.

These amendments are of considerable importance, not so much because the Government do not recognise the necessity for the technical assessment of drinking water quality but because the method by which they are proposing to achieve that is both bureaucratic and centralised. We have heard how the Government propose that those concerned shall be centrally appointed and centrally recruited. We have not heard any significant concession to the argument we put, that the technical assessment of water quality is essentially a local matter, and although standards must be set centrally the actual assessment—I nearly said "on the ground" but that would have been quite inappropriate—must be carried out at local level.

This applies particularly to the functions which we set out in Amendment No. 26. There is the monitoring of the compliance with regulations on drinking water quality; and although the publication of an annual report of course ought to be central, advice to the Secretary of State and the director on breaches of water quality regulations is hardly possible unless the assessors are actually there to observe and monitor the breaches. An overall decline in drinking water quality is of course a central matter and is produced by collating evidence from the local activities of the assessors. The monitoring of improvement programmes is also a local matter and the making of arrangements with local authorities is clearly a local matter. So in the amendments we are not now claiming that the technical assessors should be appointed purely locally and controlled purely locally. We accept that there is a mixture of functions between central and local functions. We hope that by specifying it in this way and specifying that the Director General of Water Services will have a say in it, we shall achieve both a clearer definition of the responsibilities of the assessors and a clearer division between the local functions and the central functions, as I have set them out. I beg to move.

Lord Renton

My Lords, I do not see how the Government could reasonably accept these worthy amendments. The motive behind them is sound and sensible, but their content is already covered in effect by the terms of the Bill. If I may give an example, in Clause 60 under the side note Assessors for the enforcement of water quality we find that a person appointed shall carry out such investigations as the Secretary of State may require for the purpose of advising him as to whether, and if so in what manner, the various powers mentioned in Clauses 52 to 58 and Clause 65 should be exercised.

If we were to go into all the detail that is set out in these amendments as well as keeping to the terms of the Bill, it would be cluttering up the Bill quite unnecessarily and it would be confusing to those who have to administer it. My own view, for what it is worth, is that the Government should not accept the amendments.

The Earl of Caithness

My Lords, there is much in the amendments which we already have in mind to apply to the technical assessors, or the drinking water inspectorate as we are now calling it. I set out some of the tasks which we envisage for the inspectorate when we discussed the topic on Report. The noble Lord, Lord McIntosh has clearly taken what I said to heart and has elegantly re-presented these tasks in the proposed subsection (1A) in Amendment No. 26. I confirm to him and the House that it is our intention that the inspectors should monitor compliance with the drinking water regulations and with the other duties concerning water quality set out in Part II of the Bill. We will also want them to monitor improvement programmes and advise the Secretary of State in connection with his enforcement duty in Clause 20. They will also need to liaise with local authorities and carry out a certain amount of check samplings and analysis. Indeed this is all provided for in the existing Clause 58, as my noble friend Lord Renton has just reminded the House. The only additional matters brought in by this new subsection are the reference to the director general and the use of the word "shall" in relation to the tasks of the inspectors.

I have several times explained why it is inappropriate to involve the director general in the subject of drinking water quality. Economic regulation does not sit very easily with public health considerations, and placing responsibility on two bodies rather than one is, I contend, a recipe for confusion and delay. I gave an assurance in Committee that we would not employ water undertakers to carry out any of the assessments. I also explained why we may wish to employ consultants for some of the initial and more technical tasks of the inspectors, and that we would not wish to be limited to full-time Government employees.

If customer service committees had the power to require an inspector to carry out whatever monitoring or analysis it wanted, I would hesitate to put a figure on the number of inspectors who might be needed to duplicate a task which is essentially carried out by the water undertakers. Such a role for CSCs would also quite change their relationship with water undetakers so that they became part of the enforcement function. As for the local organisation of the inspectorate, this question is being considered but no decisions have yet been taken. It would therefore be premature to fix the organisation in the mould desribed in Amendment No. 26.

The final amendment, No. 27, is not necessary as private supplies will be assessed by local authorities, and they will have ample powers to ensure that the quality regulations are met. The only time when the inspectors might have a function; relation to private supplies would be if an appeal were made to the Secretary of State under Clause 58 against the terms of a notice serviced by a local authority. They could then hear that appeal.

Your Lordships will have gathered from my remarks that the Government are not able to support these amendments, but I hope that the noble Lord, Lord McIntosh will bear in mind the assurances that I have again been able to give him.

Lord McIntosh of Haringey

My Lords, I was entirely convinced by the Minister's argument on Amendment No. 27. I am satisfied that the local authorities should continue to have the responsibilities for local supplies that exist now and that he referred to. I am less satisfied with the other assurances he has given us, although in so far as they move towards the position that we are trying to achieve, I thank him for them. I particularly thank him for the assurances about the responsibilities of the assessors, the drinking water inspectorate, under our proposed subsection (1A).

I confess that I am still disappointed that the Government have not found it possible to make a decision about the establishment of local divisions. I should have thought that the matter had been under consideration for long enough for them to be able to make up their minds and recognise the necessity for it. I do not believe that consumers will be convinced that a drinking water inspectorate based on Marsham Street which does not have local divisions in which the inspectors or assessors do not deal with customer service committees in the areas, is providing the back-up necessary to enforce increasingly, and rightly, severe drinking water quality standards.

I am afraid that even with all the assurances and indications of what will be in the regulations, this will not be seen to be the Government's finest hour. They will in the end find that this is another example of intransigence, or at least partial intransigence, against substantial public pressure for more open and more responsive assessment of drinking water quality and for greater access for ordinary people to achieve the drinking water quality they require. However, this is Third Reading, and this is not the kind of matter we can deal with by Divisions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 26 to 28 not moved.]

Clause 72 [Financial conditions of sewer requisition]:

The Earl of Arran moved Amendment No. 29: Page 87, line 42, leave out ("direction") and insert ("determination").

On Question, amendment agreed to.

Clause 73 [Performance of sewerage functions by local authorities]:

Lord Gallacher moved Amendment No. 30:

Page 88, line 32, at end insert— ("(4A) Arrangements entered into for the purposes of this section shall, where a relevant authority has served notice on the undertaker, include provision that where arrangements are varied or terminated, the Local Government Agency Arrangements (Staff Transfer and Protection) Order 1976 shall have effect").

The noble Lord said: My Lords, at Report Stage my noble friend Lord McIntosh of Haringey moved an amendment which is reported at cols. 1403 and 1404 of the Official Report. That amendment was designed to ensure that all existing sewerage agencies would, if they were terminated under the provisions of the Bill from 1st April 1992, be covered by the provisions of the present staff transfer order for sewerage staff. The purpose of the present amendment is different. It seeks not to require transfer arrangements to conform with the order in the period after the 1st April 1992. Rather, it looks further ahead to the period when agencies created as a result of the Bill may be terminated after that date—perhaps in the late 1990s or even the early years of the next century. The purpose, however, is that identified by Lord McIntosh: namely, to preserve for local authority sewerage agencies the prospect of retaining good staff on proper terms and conditions commensurate with the responsibility of the job.

The 1976 order is discretionary and may be applied or omitted under a particular agency agreement at the decision of the parties. As the Minister pointed out at Report stage, the great majority of agency arrangements are believed to incorporate the 1976 provisions. At that stage the Minister resisted an amendment, which would have underwritten existing agreements with the 1976 provisions, to cover the minority of cases where they have not been incorporated into the agreement. This amendment recognises the Minister's argument that existing arrangements should not be disturbed and looks rather to the future of the sewerage agency under the new regime created by the Bill.

The amendment would require the 1976 provisions to be applied to a sewerage agency where a local authority indicated in the drawing up of the agreement that it wished those provisions to be applicable; in other words, to give the local authority the opportunity to protect the terms and conditions of its staff to the standards envisaged in 1976. The undertaker could not be forced to accept these provisions, since the creation of the agency itself would be a matter for agreement.

There is a widespread fear in local authorities that the uncertainties over the future of the agencies, which have been created in the recent past and which have led to a decline in the numbers of senior and middle management staff, will prove the precursor of a long-term trend. The agency could wither if the prospects of its staff, particularly on the engineering side, are not given a measure of protection. This amendment would at least enable a local authority negotiating an agency to attempt to protect the medium term prospects of its staff by ensuring that they would enjoy a measure of transfer protection where that agency is terminated by the undertaker at a future date. By accepting the amendment, or the spirit of its terms, the Government would go a long way to reassure those managers and staff who are providing an increasingly pressured service in an uncertain environment.

We do not regard the amendment as being contentious. It merely ensures the same level of protection where arrangements are renegotiated at any time after 1st April 1992. It has no effect upon any new arrangements which may be created where currently none exists although such inclusion may be agreeable to both parties. It does nothing to increase or strengthen the position of the local authorities in their desire for continued sewerage involvement. It does not impose provisions on the undertaker nor does it restrict any freedom under the Bill.

The amendment seeks only to ensure that where local authorities are recognised as providing a fully efficient and effective service to the undertaker the terms of any renegotiation of arrangements which may arise after the transfer date recognise the 1976 order. I beg to move.

7 p.m.

Lord Hesketh

My Lords, this amendment would allow a sewerage agent to require that the provisions of the Local Government Agency Arrangements (Staff Transfer and Protection) Order 1976 should apply to any sewerage agency arrangement. This order specifies, in some considerable detail, the terms on which staff would be transferred, if they were transferred on variation or termination of the arrangement.

We welcome a continuing role for local authorities as sewerage agents; and if they are providing a fully efficient and effective service I cannot see that they have any cause for concern. Even if undertakers do wish to terminate an arrangement they must give reasonable notice which cannot expire before 1st April 1992. In this way, we believe we have provided the conditions for a smooth transition to the new regime without introducing any unnecessary rigidity. It is against this background that I ask your Lordships to view this amendment.

Existing sewerage agency arrangements have been made between individual sewerage undertakers and local authorities within certain guidelines laid down by the Secretary of State. We understand that the vast majority, if not all, of current arrangements do provide that the 1976 order shall apply if the arrangement is varied or ended. For such arrangements, the provisions of paragraph 15(2) of the schedule ensure that the order, and all other aspects of the arrangements, shall continue to apply after the coming into effect of the Water Bill. So for most if not all existing arrangements this amendment is irrelevant.

It may be that a few arrangements do not incorporate the provisions of the 1976 order. Some future arrangements may not. I remind your Lordships that such an omission would be the result of unconstrained negotiations between the two parties involved, and I am sure that you will understand that in such circumstances we should not wish to allow one party the right to unilaterally impose a change in the termination provisions. That is why we resist this amendment.

Lord Gallacher

My Lords, I thank the noble Lord for that reply although I am considerably disappointed by both it terms and its tone. There is an air of unreality on the part of the Government in assessing the degree of uncertainty which must arise for the qualified staff of local authorities who are sewerage contractors after 1992. That is not an eternity away; even at our present ripe old age some of us have high expectations of seeing 1992.

I believe that the Government considerably underestimate the problems of maintaining a highly-qualified technical staff, particularly on the engineering side. Such people may believe that after 1992 there will be the possibility of changes in arrangements which could mean that they are not required by the local authority or that their terms and conditions would be adversely affected. In those circumstances qualified engineers and others will look to the future with some apprehension. They will take the sensible view that it may be better to be sure of one's future than uncertain about it. That appears to be the effect of the Government's attitude to the amendment.

Having tried my best and failed to persuade the Government to see what might be done without great difficulty and without imposing any obligation on either party to do anything in particular—because the provisions of the amendment can come about only after agreement between both sides—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 76 [Charges schemes]:

[Amendment No. 31 not moved.]

Clause 77 [Liability of occupiers etc. for charges]:

The Earl of Arran moved Amendment No. 32: Page 92, line 25, leave out subsections (5) and (6).

The noble Earl said: My Lords, following the persuasive arguments put forward by my noble friends Lords Renton and Lord Trafford and the noble Lord, Lord McIntosh, during the Report stage of the Bill, my noble friend Lord Caithness undertook to consider whether subsections (5) and (6) of Clause 77 should be deleted. We have now carefully considered the issues and have come to the conclusion that, on balance, it is in the interests of consumers that they should be deleted from the Bill.

As a result of this amendment, where there is an agreement with an undertaker that a person other than the occupier, for example a landlord, will be liable for charges, the undertaker will no longer be able to recover outstanding charges owed by that person from a subsequent owner or the occupier. Instead, the undertaker will have to recover the debt through the courts from the person who originally agreed to be responsible for the charges. I beg to move.

Lord McIntosh of Haringey

My Lords, the noble Earl knows that if he blows in my ear I will follow him anywhere. When he describes his noble friend Lord Renton and myself as been persuasive he knows that he will have our support for the amendments. It was always a nonsense that new occupiers could be pursued for the debts of old occupiers. As a number of noble Lords pointed out, it is always better to rely on recovery through the courts, as is the case for other debts. We welcome the amendment and the removal from the Bill of these unnecessary provisions.

Lord Renton

My Lords, I should also like to express my great thanks to my noble friends on the Front Bench for moving the amendment. It has more significance than appears at first sight. Not only does it remove an injustice. It is also refreshing to find that in this case at least the Government are not using the excuse that the provision is already contained in the present law as a reason for perpetuating it. The amendment removes an injustice; it removes too from this voluminous Bill 30 lines of quite unnecessary detail. For that we rejoice.

I do not know whether the noble Lord, Lord McIntosh, will join me in saying that as I was inspired by the National Consumer Council to move the amendment on Report it is also entitled to its share of the credit for removing the injustice.

Baroness Oppenheim-Barnes

My Lords, on behalf of the National Consumer Council I should also like to thank my noble friend for this generous concession which is extremely welcome. We cannot win them all; but we are most grateful for those we do win.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 33: After Clause 81, insert the following new clause:

("Fixing maximum charges for services provided with the help of undertakers' services.

.—(1) The Director may from time to time by order fix maximum charges which a person who is not a water undertaker or sewerage undertaker may recover from another such person in respect of water supplies or sewerage services provided to that other person with the help of services provided by a water undertaker or sewerage undertaker.

(2) For the purposes of this section water supplies or sewerage services are provided to a person with the help of services provided by a water undertaker or sewerage undertaker if—

1. (a) a facility for that person to have access to a supply of water provided by a water undertaker in pipes, or to make use of sewerage services provided by a sewerage undertaker, is made available to that person otherwise than by the undertaker;
2. (b) that person is provided with a supply of water in pipes by a person to whom the water is supplied, directly or indirectly, by a water undertaker; or
3. (c) that person is provided with sewerage services by a person who, for the purpose of providing those services, makes use of sewerage services provided, directly or indirectly, by a sewerage undertaker.

(3) It shall be the duty of the Director to publish any order under this section in such manner as he considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by it

(4) An order under this section may make different provision for different cases, including different provision, in relation to different persons, circumstances or localities, and may fix a maximum charge either by specifying the maximum amount of the charge or by specifying a method of calculating that amount.

(5) Where a person pays a charge in respect of anything to which an order under this section relates and the amount paid exceeds the maximum charge fixed by the order, the amount of the excess shall be recoverable by that person from the person to whom he paid the charge.").

The noble Lord said: My Lords, the purpose of this new clause which arises out of an undertaking that my noble friend Lord Caithness gave to your Lordships during the Report stage, is to give the director general powers to make orders fixing the maximum prices at which water supplied or sewerage services can be re-sold.

By necessity, this new clause is rather more complicated than the corresponding provisions in the Gas Act 1986 and the Electricity Bill. This is because of the need to exclude from the arrangement such sales as bulk supplies between water undertakers or, at the other extremes, bottled water or a glass of orange cordial in a public house or restaurant. In consequence, the clause covers only the resale of water services by persons who are not a water or sewerage undertaker but where the service was originally provided by an undertaker. There is a further restriction in the case of water where the person being resold the water must be provided, either directly or indirectly, with a supply of water through a pipe.

Subsection (3) places a duty on the director general to publish any order under this new clause in such a manner so as to bring it to the attention of people likely to be affected by it. It will of course be up to the director to decide how best to carry out this duty but, for example, we imagine that he would want to ensure that copies of orders are set to citizens advice bureaux.

Subsection (4) provides that an order under this new clause may make different provision in relation to different persons, circumstances or localities, and may fix a maximum charge either by specifying the maximum amount of the charge or by specifying a method of calculating that amount. This should provide the director general with sufficient flexibility to cover the different circumstances by which water might be resold; for example, on an unmeasured basis or through the use of individual meters.

Finally, subsection (5) provides that where a person pays a charge for water or sewerage services in excess of the maximum resale price, the amount in excess will be recoverable by the person to whom it is resold. I beg to move.

Lord McIntosh of Haringey

My Lords, we are grateful for this amendment. I hope that the noble Earl will not think that I am churlish if I still have some worries about its wording and some of its content. It is clearly going in the right direction. It is the Government's intention to secure that there is no overcharging on resale of water supplies and to secure the protection which is necessary for tenants and those who live in houses in multiple occupation, or, as the noble Earl, Lord Cranbrook, reminded us, tenants who live in a park of mobile homes. Such tenants should be protected from landlords who could otherwise readily overcharge for the use of water which comes from a water undertaking.

As the noble Earl acknowledged, this is a much more complicated amendment than that which I moved on Report. I was not fully satisfied with his reasoning for the additional complexity. After all, if this law is to be effective, it also has to be clear. I hope that the Government, in implementing the law, will see to it that there are general regulations on resale and that they are couched in such a way that they can be understood by the ordinary people who will have to rely on them in order to obtain their rights. For example, the phrase in subsection (4): or by specifying a method of calculating that amount does not seem to me at all clear. I hope that the Government will issue clear and explicit regulations which are not misleading and, perhaps, leaflets which are not misleading in order to explain the intention of the amendment with which we thoroughly agree.

The Earl of Arran

My Lords, with the leave of the House, in response to the noble Lord, Lord McIntosh, it is up to the director general to make the order and to provide the explanatory material.

On Question, amendment agreed to.

Clause 82 [Initial Government holdings]:

7.15 p.m.

Lord McIntosh of Haringey moved Amendment No. 34: Page 96, line 17, after ("may") insert ("in accordance with subsection (2A) below").

The noble Lord said: My Lords, Amendment No. 34 returns to the issue which we debated on Report but which we also touched on in the Reasoned Amendment at the beginning of this afternoon.

The issue here is that there should be an adequate gap between the setting of the K figure on which charges to consumers are to be based and the flotation of the shares. There are many reasons why that is necessary, even though we acknowledge that K will not now be set until the Bill has completed its passage through Parliament.

I still feel that that is deeply regrettable and that we should have been given an idea of what consumers are to be charged. Moreover the electors of Members of the House of Commons will feel that their representatives should have been given some idea of what will be the cost of water privatisation as reflected in consumer prices. I am strengthened in deploring that by the indication from the Financial Times on Friday that the figures for K have already been communicated, if only on the basis of final consultation, to the regional water authorities and the statutory water companies. That may be only a press rumour but even so it shows that we are, as indeed we must be, very close to the time when the information on consumer prices must be made available, should have been made available and should now be made available in an adequate time—and we suggest three months—before flotation.

The situation is different from that which we faced when the Bill started in your Lordships' House in April. The 1988–89 accounts of the regional water authorities have now been published although there has been very little time to subject them to adequate analysis. We understand that the asset management plans of the authorities have been submitted and may even have been agreed. As I say, the regional water authorities and the statutory water companies are being informed about the K formula.

Therefore, we have good justification for saying that there should be an adequate gap between the declaration of K and flotation. The purpose of this amendment is not to put back flotation but to put forward publication of K. That is what is essential. It is the gap between the two which matters.

This is an issue on which the Government's credibility is very much at stake. The Secretary of State has gone on record as saying that he thinks that water prices will increase by, I think the figure was, 7.5 per cent. to 12.5 per cent. in real terms over the next five years. If that is the case, the figure for K in addition to the RPI can only be about plus 1 per cent. If the Secretary of State's estimate of the rise in prices is to mean anything and is not to mislead the public, then the Government should be committing themselves to a figure for K of not more than 0.1 per cent. However, the indications are that K might be as much as plus 10 per cent. in which case we should be talking of increases in prices of as much as 150 per cent. in real terms over the next 10 years.

Somewhere between those two figures, the truth lies. The Government should have told us in time for that to be considered by Parliament. However, even if we have lost that argument, we must insist that the Government tell the consumers and investors in good time for them to make judgments. Consumers should be making judgments about the figures because they must be assessing K against the stated investment needs in the asset management plans of the authorities. They must be able to assess it against the statement in the Bill that the Government will ensure a reasonable rate of return for the new water and sewerage undertakings. What is that reasonable rate of return to be? We received no answer from the Government despite heavy probing. Above all, they need to know what are the performance improvements which the Government have always used as their basis for privatisation but on which we have no firm indication and no firm assurance that the pricing formula will be adequate to secure those performance improvements.

Of course, investors are concerned with all those matters but in the end they are concerned with making a commercial judgment about the water industry as an investment. The prime piece of evidence which they must have, where the Government are choosing price regulation rather than profit regulation, is what the price will be. At present, nobody knows. Speculation in the City is becoming increasingly despondent about prospects for a successful flotation. Only the Government can put the City out of its misery and only the Government can do their duty to consumers. They should do so by allowing an adequate gap for analysis, consideration and public debate between the setting of K and the time of flotation. I beg to move.

The Earl of Caithness

My Lords, these amendments seek further to protect the interests of customers, and I must say that the existing provisions are already adequate to meet the noble Lord's concerns. I base my argument on two points. First, the customer is protected from excessive increases in charges by the terms of the Bill itself which lays down the way in which the Secretary of State must act in setting charges initially and, similarly, the responsibilities of the director general subsequently.

What are important are the terms of Clause 7 which, I remind your Lordships, say that the Secretary of State must, ensure that the interests of every person who is a customer … of a company … are protected as respects the fixing and recovery by that company of … charges". That is a requirement which could not be stated more clearly and it is one to which we are already paying the most serious attention as we consider the expenditure programmes of the future water plcs and the charges needed to finance them.

Secondly, I remind your Lordships that the model intrument of appointment which makes clear the basis on which charges will be set was published as long ago as last December and has been widely discussed since then. The noble Lord, Lord McIntosh of Haringey, will also be aware that, following discussions with the undertakers and before the House goes into Recess, we hope to make known what the project K values are for future charges. The requirement to publish such information three months in advance of the Secretary of State exercising his powers under Clause 82 ensures that the consumers will know in good time. However, the three months is an over-rigid period and it may be marginally less, as the noble Lord knows only too well.

I contend that the Government have acted generously in consultations on future charging arrangements and the terms of the Bill reflect our concern for customers. In conclusion, .1 have to say that the reason behind these amendments smacks a little of an attempt to wreck the Government's timetable for privatisation.

Lord McIntosh of Haringey

My Lords, I am shocked that the Minister should think that I have any interest in wrecking the Government's timetable for privatisation. As he well knows, and as he acknowledged in his description of the purport of the amendments, we are concerned that both investors and consumers—but particularly consumers—should have an adequate time to consider the figure of K, which is an essential element of consumer prices in the judgment of whether privatisation is of advantage to the consumer, as it is claimed to be, and whether it is a viable basis for flotation.

I am grateful to the Minister for saying in public what he was good enough to say in a letter to me last week, that the figures for K will be available before the House rises at the end of July. As he said, that comes close to the Government's own timetable for flotation. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 35 not moved.]

Clause 85 [Conversion of certain loans]:

The Earl of Arran moved Amendment No. 36: Page 99, line 5, leave out ("on") and insert ("under").

On Question, amendment agreed to.

Clause 94 [Tax provisions]:

The Earl of Arran moved Amendment No. 37: Page 106, line 13, leave out ("on") and insert ("under").

On Question, amendment agreed to.

Clause 100 [Registration of statutory water companies under the Companies Act 1985]:

Lord Hesketh moved Amendment No. 38: Page III, line 4, leave out subsections (2) and (3) and insert— ("(2) Where—

1. (a) provision for the constitution and regulation of a statutory water company holding an appointment under Chapter I of this Part—
   1. (i) is contained in local statutory provisions having effect in accordance with paragraph 5 of Schedule 21 to the said Act of 1985 (enactments to have effect as if contained in memorandum and articles); or
   2. (ii) would, apart from this subsection, be so contained if the company became a registered water company;
2. (b) the company has by special resolution proposed (whether before or after becoming a registered water company) that provision contained in a memorandum and articles shall have effect in substitution for those local statutory provisions;
3. (c) the proposal that a memorandum and articles shall so have effect in relation to the company has been approved by order made by the Secretary of State; and
4. (d) in the case of a company that has not already done so, the company becomes a registered water company,

those local statutory provisions shall cease to have effect on such date as may, for the purposes of this subsection, be specified or described in that order and the proposed memorandum and articles shall come into force on that date subject to any modifications, terms or conditions contained in any order made by the High Court under section 101 below.").

The noble Lord said: My Lords, Amendments Nos. 38, 39, 42 to 52 and 142 would allow a statutory water company to register under the Companies Act 1985 and to adopt a new memorandum and articles, in one step, rather than in two separate steps, which is what the Bill as currently framed would require.

The advantages are clear. Only one shareholders' meeting would be necessary and this measure could prevent companies being stuck in the half-way position of being for a time both a statutory water company and a registered company. The Secretary of State and shareholders would still have to give their approval to any changes to a company's status, so we are not dispensing with any safeguards, and nobody will be disadvantaged; we are simply taking the opportunity to streamline the conversion procedure.

I now turn to Amendment No. 144. This amendment has been laid to meet the concerns expressed by my noble friend Lord Elliott at Report stage, when he moved Amendments Nos. 120B and 120C to allow a statutory water company to restructure its debentures. It would allow a statutory water company or its creditors to apply to the courts for an arrangement or reconstruction under Part XIII of the Companies Act 1985. The practical effect of this would be that companies which intended to convert to plc status, using the powers in the Water Bill, would be able to reconstruct their capital at the time of conversion rather than having to carry this out as a separate and later exercise.

I have already indicated that for practical reasons companies will probably not wish to apply for registration under the Companies Act until they have obtained all the necessary approvals from shareholders for the adoption of a new memorandum and articles; and the time for appeals to the courts by dissentient minorities has elapsed. But until they register they would not, under the current Bill's provisions, be able to apply to the courts for a restructuring of their debentures, which many wish to undertake. The time required for this application to the courts would either delay conversion or result in the debentures being restructured as a separate exercise after conversion.

This amendment would apply Part XIII of the Companies Act 1985 to statutory water companies with such modifications as may be prescribed and so allow them to approach the courts for a restructuring of their debentures before they are registered under the Companies Act. I hope that your Lordships will agree that this extension of well-tried Companies Act provisions to the water companies is the most satisfactory way of resolving the difficulty which the companies face in achieving a modern structure for their debentures. I hope your Lordships will accept these amendments. I beg to move.

Lord Elliott of Morpeth

My Lords, I thank my noble friend and the Government for meeting, as they have done through this group of amendments, the very real concerns of the water companies which I expressed on Report through my amendments. The Water Companies' Association is most grateful for this meeting of their concerns.

On Question, amendment agreed to.

The Deputy Speaker (Baroness Serota)

My Lords, unless any noble Lord wishes to speak to Amendments Nos. 39 to 48 I propose that they be taken en bloc.

Lord Hesketh: moved Amendments Nos. 39 to 48:

Page 111, line 23, leave out ("under subsection (3) above in relation to a registered water company") and insert ("for the purposes of subsection (2)(c) above in relation to a proposal by any company").

Page 111, line 36, leave out second ("to") and insert ("of").

Page 111, line 39, after ("consent") insert ("to").

Page 112, line 6, leave out ("registered water").

Page 112, line 9, leave out ("under subsection (3)") and insert ("for the purposes of subsection (2)(c)").

Page 112, line 13, after ("specified") insert ("or described").

Page 112, line 29, leave out ("under subsection (3)") and insert ("for the purposes of subsection (2)(c)").

Page 112, line 34, leave out ("under subsection (3) or") and insert ("for the purposes of subsection (2)(c) above or an order under subsection").

Page 112, line 44, leave out from ("resolution"") to end of line 46 and insert—

1. ("(a) in relation to a meeting held after the company in question has become a registered water company, means an extraordinary resolution within the meaning of the Companies Act 1985; and
2. (b) in relation to a meeting held before that company becomes a registered water company, means such a resolution as would be a special resolution within the meaning of section 97 above if the meeting were a meeting of the company;").

Page 113, leave out lines 1 to 3 and insert— (""registrar of companies" has the same meaning as in that Act; and special resolution"—

1. (a) in relation to a time after the company in question has become a registered water company, means (subject to subsection (2) of section 101 below) a special resolution within the meaning of that Act; and
2. (b) in relation to a time before that company becomes a registered water company, means (subject to that subsection) a special resolution within the meaning of section 97 above;

and in this section and section 101 below a reference to a company's becoming a registered water company is a reference to the issue to that company (whether before or on or after the transfer date) of a certificate under section 688 of that Act.").

On Question, amendments agreed to.

Clause 101 [Procedure for cancelling resolutions for substituting memorandum and articles]:

Lord Hesketh moved Amendments Nos. 49 to 52:

Page 113, line 5, leave out ("registered water").

Page 113, line 40, leave out from ("after") to end of line 43 and insert ("the date of the last resolution, consent or approval to be passed or given for the purposes of subsection (2)(b) or (4)(b) of section 100 above or for the purposes, in connection with the company's becoming a registered water company, of section 681 of the Companies Act 1985 (procedural requirements for registration).").

Page 114, line 17, leave out ("registered water").

Page 114, line 26, leave out ("registered water").

On Question, amendments agreed to.

Clause 102 [Waters to which Chapter I applies]:

Lord Hesketh moved Amendment No. 53: Page 115, line 39, after ("means") insert ("(subject to subsection (5) below)").

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 54:

Page 115, line 49, at end insert— ("(bb) that a lake or pond which does so discharge and is of a description specified in the order is to be treated for those purposes as if it were not a relevant lake or pond;").

The noble Earl said: My Lords, the noble Lord, Lord McIntosh, was good enough to advise me beforehand that he would require some further clarification on Amendment No. 54. This amendment allows the Secretary of State to make an order excluding lakes or ponds of the type described in the order from the class of controlled waters.

In framing Amendment No. 54 we had in mind such things as settling lagoons at coal mines. If those lagoons discharge into rivers they count as controlled waters because of the definition of "relevant lake or pond" in Clause 102(4). Thus, a coal miner would need a discharge consent from the NRA before he could discharge effluent into his lagoon. Clearly the NRA would have no interest in what goes into a lagoon but will be concerned with what comes out of it and into a river. As a result of the amendment it will be possible to exclude lagoons from the class of controlled waters, thus confining the NRA's involvement to what it is interested in; namely, what enters the river from the lagoon.

I should add that any order made under this amendment will, because of Clause 102(6), be subject to negative annulment by either House. I beg to move.

Lord McIntosh of Haringey

My Lords, I am grateful for that explanation. I have no objection to the amendment.

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 55: Page 116, line I, leave out ("specified in the order") and insert ("so specified").

On Question, amendment agreed to.

The Earl of Arran moved Amendment No. 56: Page 116, line 10, leave out from ("(b)") to ("make") in line 11.

On Question, amendment agreed to.

The Earl of Arran

My Lords, I hope your Lordships will find this an appropriate moment to break for dinner. I suggest that we return to Third Reading at 8.30 p.m.

I beg to move that further proceedings after Third Reading be now adjourned.

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