Lords Sitting of 15 May 1989

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.

The Lord Trefgarne: Personal Statement
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I wish to make a personal statement.
During Question Time last Friday, and in answer to a supplementary question from the noble Lord, Lord Mayhew, I rejected the noble Lord's assertion that there had been a decline in real terms defence expenditure since 1985. I was, I fear, mistaken. While defence expenditure has indeed grown in real terms since 1979, there was a decline in the years immediately following 1985–8 which I should have acknowleded, and I apologise for not doing so.

Inheritance Tax: Residential Accommodation
2.37 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What would be the loss of revenue if a deceased person's principal home were exempted from inheritance tax.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, the information is not available in precisely the form requested by my noble friend. To exempt all residential property from inheritance tax on death is estimated to cost around £500 million in a full year.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that reply. Is he aware of the fact that the tax on someone's personal home—given the very high valuation based on house property at the moment—is often a serious blow to an individual at a particularly difficult time? Does the Minister not agree that it would be in accordance with the Government's policy of encouraging a nation of home owners to make a concession here?
Lord Young of Graffham: My Lords, I appreciate the point that my noble friend makes. The spouse exemption means that neither widows nor widowers need face bills with inheritance taxes. In the case of other beneficiaries who retain the home, tax may be paid by instalments over 10 years. In any circumstance, exempting the residential property from inheritance tax would undesirably narrow the tax base.
Lord Bruce of Donington: My Lords, on the assumption that a fairly large sum were to become
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available to the Chancellor in such circumstances, would the noble Lord not agree that the first action of any responsible government would be to devote whatever sum might be saved to the relief of the 4 million people in our country who today find themselves far worse off than they were in 1979?
Lord Young of Graffham: My Lords, I believe that all Members of your Lordships' House will agree that the noble Lord, Lord Bruce of Donington, has strayed somewhat wide of the point of this Question. A little over £1,090 million is raised by inheritance taxes each year. It is all part of the structure that this Government have evolved since 1979 and which has ensured that the economy of the United Kingdom has restored itself; that people are better off and that we have prudent and sensible government for the first time.
Lord Strabolgi: My Lords, will the noble Lord concede that the concession to abolish the inheritance tax between spouses was brought in by a Labour Government and not by the present one?
Lord Young of Graffham: My Lords, the Question is about the present Government. I am quite willing to accept that there have been previous governments of our country. In time they have evolved the entire tax base that we have today.
Lord Mellish: My Lords, perhaps we may return to the original Question. Is it not a fact that if a person owning a house makes a will in which there is joint ownership of the house, in the event of the death of one of the spouses there is no inheritance tax to be paid? Can the Minister say whether that is right?
Lord Young of Graffham: My Lords, it is just over a third of a century since I last practised as a solicitor. That is the kind of question where I believe particular advice is required since circumstances can vary so much from case to case.
Lord Boyd-Carpenter: My Lords, as regards my noble friend's argument about narrowing the tax base, is it not a fact that capital gains tax is excluded in the case of a principal home? Will the Minister not agree that that is a very good precedent for dealing similarly with the inheritance tax?
Lord Young of Graffham: My Lords, about 660,000 people in our country die each year and only about 4 per cent. of the estates pay an inheritance tax. The vast majority of people come outside that tax. About three-quarters of the estates above the threshold include a residential property, and of those the house-owning estates are rather less than half of the value of the estates. So it comes down to a comparatively small figure.
Lord Rees: My Lords, even though the Government are not prepared to contemplate a specific exemption for the principal home, can the Minister say whether in fixing the threshold they will at least take into account the value of the

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property, which may have diminished unduly in real terms over the past decade?
Lord Young of Graffham: My Lords, the basis of the inheritance tax is the value of the property at the time that the estate passes. I do not see how we can fix any other value.
Lord Bruce-Gardyne: My Lords, perhaps I may ask my noble friend a question which is slightly in conflict with those that have so far been asked. Can he say whether it is true that, once we have lost the domestic rate, apart from the inheritance tax the family home in this country will carry no burden of taxation whatsoever? Does the Minister not agree that that is fairly unusual by international standards? Is it not possible that that distorts the pattern of asset ownership in this country and is it not possible—greatly daring!—that in these circumstances there is some kind of a case for the reintroduction of schedule A?
Lord Young of Graffham: My Lords, my noble friend will not be in the least surprised if I say to him that I feel his questions are a little wide of the Question on the Order Paper. He can expect no less from me.
Lord Northfield: My Lords, the noble Lord said that the tax can be levied only on the basis of valuation. Is he aware that with landed property—tenanted farms, and so on—a percentage of that valuation is taken for taxation purposes? To meet the noble Lord's point, could not, for example, the first 50 per cent. of the valuation be free of inheritance tax? There are precedents.
Lord Young of Graffham: My Lords, this also applies in the case of residential homes. For those beneficiaries who retain the home, tax can be paid over 10 years. That, again, is a difference.
Lord Campbell of Alloway: My Lords, is it right that the matter of the family home should be complicated by considerations such as whether it is in joint names or whether a will has been made and what is the precise drafting of the will? Could not further consideration be given to the broad merits and fairness of the position?
Lord Young of Graffham: My Lords, it is difficult to disentangle these matters. Legal requirements, the wording of a will and whether it is a gift may change the whole basis. However, I have heard what my noble friend has said and I shall pass his remarks on to my right honourable friend the Chancellor of the Exchequer for his consideration.
The Earl of Halsbury: My Lords, can the noble Lord tell the House a little more about payment by instalments? If there are several beneficiaries—let us say four children—and one of them defaults on an instalment plan, what will happen to the liability of the others?
Lord Young of Graffham: My Lords, I can do no more than repeat an answer I gave to an earlier supplementary question. I am no longer in practice, but I am sure that if the noble Earl wishes to take advice he will get an answer to his; question.

"Green" Initiatives
2.45 p.m.
Baroness Blatch Baroness Blatch asked Her Majesty's Government:
What "green" initiatives have been taken since 1987 and what practical measures are in prospect as a result of the recent seminars on the environment.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Hesketh): My Lords, we have taken action in many areas. These include the environmental provisions of the Water Bill, international agreements on CFCs and on air and marine pollution, and our major campaign to persuade motorists to switch to unleaded petrol. We have published proposals for major reform of the law of waste disposal and the control of industrial pollution.
Baroness Blatch: My Lords, I thank my noble friend for that encouraging and comprehensive Answer. Does he agree that two factors are important? First, there should be not merely a European commitment but a global commitment to strategies for the environment. Secondly, is not a strong economy important in being able to do something about the environment? The Green Party talks caringly about the environment but advocates an economic policy which simply could not deliver.
Lord Hesketh: My Lords, my noble friend is entirely right that a strong economy makes an enormous difference in being able to carry out the various clean up programmes we have initiated. She is also entirely correct on her other point. We are looking at the convention on climate change. All future activities in major areas must, as with CFCs, take place on a global basis, because we are only a small part of a crowded planet.
Lord Cledwyn of Penrhos: My Lords, notwithstanding the public pronouncements of the noble Lord and other members of the Government, why are the Government cutting down on essential programmes connected with this vital area? Is it not a fact that the National Environment Research Council has had to cut its scientific staff by 150 as a result of the current budget? Is it not true that the budget of the Energy Efficiency Unit has had to be cut by 5 per cent. as a result of government action? Does the noble Lord not agree that it would be best to act in the public interest and not to seek to make a party political issue of everything?
Lord Hesketh: My Lords, with the greatest respect to the noble Lord, I was not trying to make a party political point at all. Over the broad range of areas

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concerning the environment today there will be those where reductions have taken place and others where there have been changes. An example is a doubling of the commitment we made to UNEP at the CFC conference to assist in giving the lead to get a programme to help the world.
Lord Ezra: My Lords, following on from the question of the noble Lord, Lord Cledwyn, what is the Government's attitude towards initiatives taken in the European Community for improving the environment and dealing with the matters to which this Question refers? One hears that we have been reluctant to join in new initiatives which the EC has recently propounded.
Lord Hesketh: My Lords, we believe that a large part of what we can do starts at home. An example of which the noble Lord will be well aware is the £1 billion commitment to cleaning up the power stations. If he cares to put down a specific Question about where he feels we have not been helpful in Europe I shall be more than happy to answer it.
Baroness Sharples: My Lords, is my noble friend aware that my stepson, Robert Swan, arrived at the North Pole yesterday leading an international team from eight different countries? The reason for the visit was to express concern about the ozone layer. That is why he did it.
Lord Hesketh: My Lords, I am sure that all Members of your Lordships' House will wish to join with me in extending heartfelt congratulations to the noble Baroness, Lady Sharples, on the achievement of her stepson.
Lord Strabolgi: My Lords, has the noble Lord seen the article which appears in today's edition of The Times about the pollution of the River Avon and other rivers? Further, is it true, as stated in the article, that the Government have told the water authorities to cut down on anti-pollution measures in order to increase the assets before privatisation?
Lord Hesketh: My Lords, I have not seen the article to which the noble Lord, Lord Strabolgi, refers. However, I shall endeavour to search for it very shortly.
Baroness Nicol: My Lords, is the Minister aware that we agree when he says that we are but a small part of the world scene of users of CFCs? Is he further aware however that we are one of the major producers of CFCs, not only through our own companies but also through their subsidiaries? Can the Minister tell us what is the programme for phasing out the production of CFCs, as against their use, in this country? Is a date fixed for ending their production?
Lord Hesketh: My Lords, as the noble Baroness, Lady Nicol, is well aware, the big boost as regards CFCs was the meeting held in Helsinki earlier this month at which governments agreed to phase out CFCs as soon as possible, and not later than the year 2000.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that one of the most serious problems at present is the emission of CO2 gas from power stations and elsewhere, which causes global warming? Is he also aware that many people, including myself, believe that the Government are doing practically nothing to solve the problem by means of energy conservation measures and the production of renewable energy? Can he say whether the Government have better plans in this connection?
Lord Hesketh: My Lords, I am most surprised that the noble Lord is unaware of the recent seminar hosted by my right honourable friend the Prime Minister at which global warming was discussed. It was a very important seminar.

Green Belt Policy
2.51 p.m.
Baroness Sharples Baroness Sharples asked Her Majesty's Government:
What steps they have taken since 1979 to preserve and extend the green belt.
Lord Hesketh: My Lords, the Government have resolutely upheld green belt policy. My right honourable friend the Secretary of State for the Environment has demonstrated this commitment by consistently dismissing proposals for inappropriate development in the green belt. Since 1979 the area of approved green belt in England has more than doubled to 4·5 million acres and now covers 14 per cent. of the total land area.
Baroness Sharples: My Lords, I thank my noble friend for that very positive Answer. However, can he say whether there have been any cases where costs have been awarded against developers within the green belt?
Lord Hesketh: My Lords, the Secretary of State for the Environment has recently dismissed several proposals for inappropriate development in the green belt. These included proposals for a research and development centre in the West Midlands and proposals for major shopping and leisure facilities in the metropolitan green belt at Wraysbury, Berkshire, and at Bricket Wood near St. Albans. In the last two cases the Secretary of State awarded costs against a prospective developer in favour of the local authority.
Lord Wallace of Coslany: My Lords, can the Minister say to what extent British Rail's Channel Tunnel link will conflict with the green belt policy, especially in Kent?
Lord Hesketh: My Lords, I believe that the Channel Tunnel is part of the Transmanche Link and not British Rail.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that while no one would disagree that

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there are advantages in having a general principle as regards the green belt, the situation needs tidying up a little? For example, we have green belts and green wedges. Further, will he agree that if it were possible to make the surrounding boundaries more sensible, and if areas could be put to more sensible use, then that would perhaps not be a bad idea?
Lord Hesketh: My Lords, I quite agree with my noble friend. However, there is a problem in that people have tried to allow land to become derelict in green belt areas. That sets a poor example. If planning permission was granted when land was derelict it would encourage others to make land derelict.
Lord Molloy: My Lords, notwithstanding to whom the land affected by the Channel Tunnel rail link belongs, will the Government, if they feel there is risk of a grave misuse of land, consult with the local authorities involved in order to take full cognisance of their views?
Lord Hesketh: My Lords, as the noble Lord, Lord Molloy, will be aware, the vast majority of planning applications are decided by local authorities. In the year 1987–88, 394,000 planning applications were granted by local authorities; against that figure, there were only 7,000 appeals.
Baroness Gardner of Parkes: My Lords, can my noble friend inform the House what the position is regarding infill sites in green belts; that is, small pockets within the green belt? Can he say whether such policy is decided by the local authority or whether the department has any specific ruling on the matter?
Lord Hesketh: My Lords, the basis of decision rests at the start with the district council.

Social Security Payments: Computerisation
2.58 p.m.
Earl Alexander of Tunis Earl Alexander of Tunis asked Her Majesty's Government:
What progress is being made with the strategy to computerise the Department of Social Security's benefit payment systems.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Skelmersdale): My Lords, the Department of Social Security's highly complex £1·2 billion strategy for the computerisation of the social security benefit payment systems is proceeding to the accelerated timetable announced on 22nd November 1988. The major systems for the payment of pensions and income support are being piloted in 23 local offices to ensure they are running smoothly before national implementation starts in autumn this year. All central and local offices will be computerised by August 1991.
Earl Alexander of Tunis: My Lords, I thank my noble friend for his reply. Can he tell the House what effect the system will have on fraudulent claims?
Lord Skelmersdale: My Lords, what matters to claimants, as well as the speed with which their claim is actioned, is accuracy and clarity of explanation. The new computerised departmental central index is already beginning to combat fraud because the computerisation makes it very much easier to check, for example, whether double applications have been made. Installed in the 23 pilot social security offices, the system has exposed a number of bogus claims for income support. We are taking action to ensure that offices yet to receive the system can check suspicious cases with those that already have the system, thus exposing fraudulent claims.
Baroness Turner of Camden: My Lords, can the Minister tell the House whether the strategy which he has outlined will have the effect of diminishing queues at local benefit offices and generally improving efficiency?
Lord Skelmersdale: Yes, my Lords. As I said, what matters to claimants is the speed, accuracy and clarity with which their claim is actioned. Where the issue of the length of queue arises, certainly a faster throughput of customers in local offices will be achieved.
Lord Stallard: My Lords, will computerisation improve the collection of statistics concerning poverty so that Ministers are better informed of the numbers involved?
Lord Skelmersdale: My Lords, the statistics on poverty normally come from the family expenditure survey. That is a direct application investigation; it has nothing to do with the number of people claiming social security benefits.
Lord Bruce-Gardyne: My Lords, can my noble friend give any indication of the ultimate advantage to the taxpayer of this exercise?
Lord Skelmersdale: Yes, my Lords. We anticipate that there will be reduced administration costs benefiting the taxpayer to the tune of about £150 million a year by 1995.
Baroness Turner of Camden: My Lords, can the Minister say whether he envisages that there will be redundancy among the staff as a result of the introduction of this system? If so, can he say what steps are being taken to deal with the situation?
Lord Skelmersdale: Yes, my Lords. Clearly some—indeed, a large part—of the figure of £150 million a year will be used as regards the reduction of staff. We have given staff a guarantee that there will be no compulsory redundancies as a result of the operational strategy; that is, this computerisation project. Staff have accepted that fact. It is envisaged that by 1995 or thereabouts there will be something in the region of 20,000 fewer staff in local offices.

Business
2.59 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Hesketh will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on the future of the Rose Theatre.
It may be for the convenience of the House if I announce that the Committee stage of the Water Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Committee stage of the Disabled Persons (Northern Ireland) Bill and consideration on Report of the Scrabster Harbour Order Confirmation Bill will be taken.

Water Bill
3 p.m.
The Earl of Arran: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Earl of Arran.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES.in the Chair.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 192ZA:
Before Clause 20, insert the following new clause:

("Enforcement by local authorities as to supply and quality of drinking water.

.—(1) It shall be the duty of every district and County Council in England and Wales, in accordance with the procedures specified in Section 20 below to enforce within their area the standards of quality and sufficiency of water supplies and the provisions made by or under Chapter II of this Part.
(2) Any local authority shall have power for the purpose of ascertaining whether any condition of drinking water quality or any standards made under Chapter II of this Part has been contravened in relation to the quality, wholesomeness or sufficiency of water supplies—

(a) to take or authorise an officer of the authority to take samples of any water supply and by whatever means is practicable and available to test the quality or sufficiency of such supplies; and

(b) to secure, or authorise an officer of the authority to secure, the provision of any services, accommodation or facilities.

(3) In exercising their functions under this section, a local authority shall have regard to any guidelines issued by the Secretary of State or the Director.
(4) In section 20 below, any reference to the Secretary of State or the Director shall be taken also to include a local authority in the area concerned.").
The noble Lord said: The fifth Marshalled List for the Bill runs to 57 pages, which is slightly more than the first Marshalled List which faced us some two weeks ago. I am not good at classical metaphors but I wonder whether we are facing the task of Sisyphus or whether someone has not put upon us the results of the task of Penelope. However, we shall try as best we can to make progress with the substantial body of amendments set down for today's business.
The amendment reflects the actual position of the responsibilities of local authorities and tries to match those responsibilities with rights. With Amendment No. 192ZA I should like to speak also to Amendments Nos. 193A, 194Aand 197AB.
Amendment No. 192ZA provides that local authorities shall have a duty to enforce standards under Clause 20, which is the basic enforcement clause in the Bill relating to the standard, quality and sufficiency of water supplies in provisions made under Chapter II of this part. To do so they will of course need to have the power to ascertain whether the drinking water is of sufficient quality and whether the supply is adequate. They will therefore need, under subsection (2)(a), to have the power to take, or authorise the taking of, samples of the water supply and to do whatever is necessary to test the quality or sufficiency of supplies; and, under subsection (2)(b), to secure the provision of the services, accommodation and facilities which are necessary to do the work.
In order that no one shall think that we are proposing revolutionary change to free local authorities at one bound from the constraints of the Secretary of State, I say that we are doing no such thing. Subsection (3) provides that a local authority shall have regard to any guidelines issued by the Secretary of State, and under subsection (4) we take advantage of the wording of Clause 20 to say that references to the Secretary of State or the director shall be taken also to include a local authority in the area concerned. That is a necessary corollary of other parts of the amendment.
Amendment No. 193A has been tabled by the noble Lord, Lord Ezra, and I shall leave him to explain it.
Amendment No. 194A relates to the statutory requirement. At the moment Clause 20(3) provides that the Secretary of State or the director shall have regard to any loss or damage caused before proceeding with the implementation of the statutory requirements. The statutory requirement to secure the adequate quality and sufficiency of water must be the prime consideration. The Secretary of State ought not to have to have regard to loss or damage before seeking to enforce that. What penalty is then imposed on a water undertaker for breach of the statutory requirements in a case where there is no loss or damage is another matter, and the Secretary of State may well decide that pursuit in a severe form is not appropriate, but he must have the power to take action to secure the enforcement of the statutory requirements even though in the end he does not seek to pursue it to its ultimate degree.
Amendment No. 197 AB—I apologise for hesitating, but the numbering has been changed—removes the stipulation that the Secretary of State shall not make a final order, or make or confirm a provisional order, if the company has agreed to take, or is taking, all such steps as appear to him for the time being to be appropriate, and the contraventions were of a trivial nature. The definition of a trivial nature is one to which I shall come in a subsequent amendment. The definition contained in subsection 5(b) is the subject of a

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government amendment with which we shall be dealing later this afternoon.
The main thrust of the group of amendments to which I am talking is clear. It is that local authorities have a responsibility for checking on compliance as to the supply and quality of drinking water. What is required now is that they should have both the duty and resources to do so. It is necessary to do that because of the Government's hesitation as regards statutory requirements. I referred the Committee to the words used on more than one occasion by the Minister of State, Mr. Michael Howard, in Committee in another place on 14th February this year, when EC Directive 80/778 was under consideration. Mr. Howard expressed considerable doubt as to whether EC requirements, which after all are statutory requirements, or will be statutory requirements when fully implemented, were sufficiently sensible or were too stringent. He said that he would be looking for regulations which were "more sensible"; in other words, less stringent.
If the Secretary of State, or the Minister of State in this case, does not seem to think that the statute makes sense, we need some other protection to ensure that our law and European law is obeyed. It is no good leaving the matter to the ultimate decision of the Secretary of State, under the complex procedures proposed under the Bill, if direct action by the local authority on the spot is needed.
Reference has already been made in Committee to Camelford, where the drinking water of a large community was seriously damaged by an error at the water authority's premises in such a way as to cause subsequent illness to a number of people. Legal action on that matter is now being pursued. There are two lessons to be learnt from that incident: first, that it took a long time for anything to be done about the drinking water in Camelford. For some time the water authority denied that anything was wrong. A local authority would have been able to enforce direct action quickly. The second lesson to be drawn is that there were regulations which could have been enforced, and under the amendment could be enforced more effectively. At the moment, the Secretary of State, by regulation, sets the standards which shall be adhered to and under the Bill only the Secretary of State can enforce compliance. That is not good enough. In case anyone should believe that local authorities do not have the ability to do the work, I remind the Committee that local authorities have inspectorates which are concerned with a wide range of consumer protection matters. The protection of water quality is no different in principle from many of the other functions of local authorities.
Ministers are very fond of reminding Parliament that the water industry can be private in the way that the food industry is private. I wish to remind the Government that the food industry requires and receives a substantial degree of essential regulation by the inspectors of local authorities. They find considerable breaches by the food industry of safety and health standards and they are able to put those right by direct action on the spot without reference back to the Government.
I suggest to the Committee that the procedures proposed in Clause 20 of the Bill, as well as in this part of the Bill generally, are too slow, too cumbersome and too lacking in enforcement power on the ground in the local community to be really effective. I also suggest that this group of amendments would make matters significantly better. I beg to move.
Lord Addington: I wish to speak to Amendment No. 192ZA as well as Amendment No. 193A, standing in the name of my noble friend Lord Ezra. The first amendment has been very well covered by the noble Lord, Lord McIntosh. I wish to reiterate his remarks to the extent that local authorities still have a considerable number of professional people who are qualified to deal with environmental health and other environmental matters through the environmental health officers. They will also probably have ready access to such facilities as laboratories for testing. So it would seem to be rather silly for them to be excluded to any great extent from the actual enforcing of environmental conditions. Also, cases of unwholesome water affecting the areas they represent are certainly their concern.
As regards the amendment standing in the name of my noble friend, basically it is designed to make sure that the conditions of appointment as drafted give the director few, if any, powers to enforce compliance after breaches of conditions. There are examples in the Bill, for instance, under Clause 7(3)(a), to ensure that,
"no undue preference is shown, and that there is no undue discrimination, in the fixing of those charges and amounts".
That is dealt with in the draft model instrument of appointment by condition D, which requires the appointee to give the director information about these matters, as is required, but gives him no power to step in if he finds that a company is indulging in price discrimination. What power does he have in these circumstances? Unless the amendment is passed the director will be the most well-informed spectator in what could be termed the water game.
Lord Renton: The amendment moved by the noble Lord, Lord McIntosh of Haringey, would enable the local authorities to share with the Secretary of State the responsibility for enforcement. At present, under Clause 20 of the Bill it is the Secretary of State upon whom that responsibility is firmly placed. Of course, one sympathises with the noble Lord, Lord McIntosh, in wishing to help the local authorities because he has had valuable experience on a local authority in the metropolis. Indeed, all of us have had good reason to feel in certain circumstances—but not all—that local authorities should be given responsibilities and rights in matters which affect local people.
However, I am very much afraid that if the amendment were accepted, instead of the enforcement being carried out by the Secretary of State in accordance with a consistent policy, we might find that local authorities, given the responsibility as regards their own areas, could operate the enforcement provisions somewhat unevenly.
Therefore, subject to what my noble friends on the Front Bench may say, I should have serious doubts about the acceptance of the amendment and the other two Opposition amendments which go with it. As regards the latter, I feel bound to say that the amendment in the name of the noble Lord, Lord Ezra, and another in the name of the noble Lord, Lord McIntosh, himself, by taking provisions out of Clause 20 would seem to me to weaken the power of the Secretary of State under that clause. Therefore, while it is right that we should always consider what part local authorities can play in looking after the interests of the people in their own areas, I think that it would be misguided for us to say that there should be this duality of powers of enforcement.
Let us just consider the position at the moment. Under the present law local authorities have the opportunity for their members to be included on water authorities and I think that each of the water authorities has some local authority members on it. But apart from that, so far as I remember, they do not have powers of enforcement, except such powers as are available to the public as a whole; so we should be creating a new responsibility. Quite frankly, I do not think it would be workable, especially as that responsibility is to overlap with those given to the Secretary of State in Clause 20.
3.15 p.m.
Lord Ezra: I am sorry that the noble Lord, Lord Renton, does not agree with the proposition because I believe that local authorities have an important role to play in this connection. The local inhabitants are much concerned about the quality of water and its standard. I myself happen to be involved in a trading standards organisation and I know what a great role such organisations play in ensuring that standards are maintained with the wishes of local people. I do not see this as a duality so much as national authorities and local authorities working together to the same end.
I should very much like to see something on these lines incorporated in the legislation in order to show that it is not just a matter of central government direction but is also a matter of concern at the local level. Local government and national government must work very closely together in order to ensure that the standards and quality of this essential product achieve the best results that can be obtained.
Lord Hesketh: The proposed new clause may be considered in a group with Amendments Nos. 194A, 197AB and 193A. Although they are all concerned with enforcement they are not necessarily related.
Taking the new clause first, its effect would be to place a duty on local authorities to enforce compliance by water undertakers with their duty to meet drinking water quality standards set in regulations made under Clause 65 and with certain other duties in Chapter II. The enforcement procedure would be that set out in Clause 20. Powers ancillary to such a duty, such as power to take samples, are also included in the amendment. I understand the intent behind the noble Lord's proposal and I shall address that first before
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mentioning certain practical problems which we believe exist with the proposal.
Local authorities have a long-standing interest, as the noble Lord pointed out, in the quality of water supplies in their areas, and this interest is continued by the Bill. In particular, Clause 56 continues their existing duty to keep themselves informed about the wholesomeness and sufficiency of water supplies in their areas. We shall be providing in regulations for local authorities to be sent full information on water quality at regular intervals, so there need be no concern that they will have inadequate information about the quality of water supplies in their areas. They will also have a duty to notify the water undertaker whenever they believe that water is unwholesome, insufficient or deteriorating in quality.
Clause 56(3) provides that if local authorities are not satisfied with the undertaker's response, they must inform the Secretary of State. This is a new provision. It provides the link with the new enforcement duty in Clause 20. This duty will be exercised by the Secretary of State in respect of drinking water quality. He will be supported in doing so by a new inspectorate which will be established to carry out thorough technical assessments of compliance with the drinking water regulations. The inspectors will be checking not only compliance with the standards but also progress on improvement programmes settled under subsection (5)(b) of Clause 20, action taken where a standard is infringed, sampling arrangements and frequencies, and analytical methods and quality control. If these investigations show up any shortcomings in complying with the regulations which are not rectified, the Secretary of State will have to consider enforcement action.
The Committee need have no concerns that the Secretary of State will be too remote and ill-informed. He will be provided with very full information on this subject by his inspectors, and also by local authorities, and will thus be well placed to follow up reports of non-compliance.
Moving on to the more practical aspects of the new clause, it is clear that it would immediately create certain problems. First, local authority areas and water supply areas bear no relationship. This raises the question of what an undertaker should do if two or more local authorities take a different view on what should be done about the same supply. A similar issue arises concerning the Secretary of State and a local authority. For instance, an improvement programme may be under way under subsection (5)(b) of Clause 20 which is acceptable to the Secretary of State but not to the local authority. I note that the new clause requires local authorities to take account of any guidelines issued by the Secretary of State or the director. But guidelines cannot deal with issues of timing, and in any case guidelines are not mandatory. So we could well have a situation where an improvement programme was proceeding in a manner acceptable to the Secretary of State, and all the district councils concerned, yet the county council had made an order under Clause 20 requiring the undertaker to do something quite different.

929
There would be over 400 enforcement authorities with overlapping duties. They would not be accountable to Parliament. We believe this is a recipe for confusion, and not to be recommended. I mention in passing that the subject matter of subsection (2) of the new clause is already amply covered by the powers given to local authorities by Clauses 56 and 59.
I now return to the main theme of the new clause. I summarise the Government's arguments against it as twofold. First, the clause is quite unnecessary as the Bill already provides an important role for local authorities in relation to the quality of water supplies. Secondly, the Secretary of State, advised by the new drinking water inspectorate and by local authorities, is best placed to operate the enforcement provisions in Clause 20. We believe that placing such enforcement powers in the hands of local authorities in these circumstances would create confusion and conflict between all the parties concerned. We do not believe this amendment would strengthen enforcement. It would fragment it, and it would not serve the interests of consumers. We believe the amendment should be resisted.
It is not clear now whether these amendments have been grouped together with Amendment No. 193A, which is intended to provide three possible enforcement authorities: the Secretary of State, the director or a local authority. As it previously stood, the implication was that either the Secretary of State or the director was to be the enforcement authority. But whichever is intended, in our view it would be clear in respect of the important provisions enforceable under Clause 20 who is responsible for enforcement. In this case it should be the director. That is what the Bill provides.
Clause 20 (8) makes provision for defining who is to be the enforcement authority in respect of any particular duty or requirement. Thereafter the Bill is always explicit about who is responsible. In this clause, subsection (8)(b) defines the enforcement authority for contraventions of conditions of an appointment as the director. That is so because in our opinion the director will be the best qualified person to be the enforcement authority.
I shall now turn to Amendment No. 197AB. Clause 20 requires the Secretary of State or the director to take enforcement action where a company has contravened a condition of appointment or statutory requirement enforceable under the clause. Subsection (5)(b) provides that if he is satisfied that the company is taking all such steps as it appears to him are necessary to secure compliance he is not required to make an enforcement order. The effect of this amendment is to remove the provision in subsection (5)(b), so that in such case of contravention of a condition of appointment or statutory requirement it would be necessary to make an enforcement order.
It has to be accepted that some breaches of a condition of appointment or statutory requirement cannot be put right overnight. To remedy a breach it may, for example, be necessary to provide a new water or sewage treatment works. The new treatment
930
works would have to be designed. Planning approval, perhaps involving a planning inquiry, may be needed. Time is needed for construction. Is the noble Lord suggesting that a final order should then be made when the undertaker is taking the necessary steps to put matters right?
Subsection (5)(b) of the clause provides for situations where it is not possible for undertakers to comply fully with certain of their obligations immediately, and programmes of remedial action have been agreed with the Secretary of State or the director. These programmes must be made public and will have to be implemented if the company is to avoid a final order. But, provided the programmes so agreed are being implemented properly, it would hardly make sense for the Secretary of State to make a final order. This part of the clause therefore provides a very effective means of achieving compliance. I therefore suggest that Amendment No. 197AB should also be rejected.
The final amendment in this group is Amendment No. 194A. Under Clause 20, where the Secretary of State or the director is satisfied that a company is contravening a condition of its appointment or statutory requirement enforceable under that clause, he may make a provisional order instead of making a final order. The power to make a provisional order is included in the enforcement procedure to allow the Secretary of State or the director to take immediate action where circumstances require it.
If a final or provisional order is made, the obligation to comply with that order constitutes a statutory duty which the appointed company owes to anyone who may be affected by a contravention of it. Under the provisions of Clauses 22, 24 and 25 failure by an undertaker to comply with a final or provisional order may be the subject of civil proceedings brought by any person who is affected by a contravention of the order and who consequently sustains loss or damage. The fact that compensation may be sought in relation to a provisional order means that where such an order has been made the appointed company is immediately liable to action for damages if it fails to comply with the order. On the basis of my remarks, which I fear took rather a long time as I wished to be as comprehensive as possible, I ask the Committee to reject these amendments.
Lord Ezra: The noble Lord said that the amendment that is proposed would create confusion in ensuring that water supplies and quality of water were up to the right standards. I draw the attention of the noble Lord to subsection (3) of the proposed amendment, which states:
"In exercising their functions under this section, a local authority shall have regard to any guidelines issued by the Secretary of State or the Director".
That makes it absolutely clear that local authorities would act in total accordance with what is laid down by the Secretary of State and the director, and would add to those strengths in ensuring that the public achieves the right standards and quality of water supply, rather than the reverse.
Baroness Phillips: Will the Minister tell the Committee where the enforcement officers are to be

931
based? Will there be one in each local authority's area? Most enforcement officers operating under various Acts of Parliament in connection with health and safety are at present invariably linked with a local authority. If a sewer is the matter at issue, a local authority would have to be brought into the affair immediately because it would have the jurisdiction over the land involved.
The Minister's noble friend suggested there was duplication in the amendment. But there is, by heavens, duplication in the Government's proposals. We are talking about private companies. The quality of water provided by those companies needs to be overseen by some authority. Quite recently we discovered, somewhat to our horror, that the pigs at the food and farming festival in Hyde Park did not consider the London water fit to drink. I have always had great respect for pigs, having tended them on a farm. The quality of our water is an absolutely vital issue. There must be no dissembling in this regard. The amendment will not lead to duplication; it will make the operation of the Bill much simpler.
Lord Hesketh: In answer to the point raised by the noble Baroness, Lady Phillips, as I tried to explain—probably inadequately—we are setting up a new inspectorate which will be exactly the body which she feels is appropriate.
In answer to the noble Lord, Lord Ezra, I tried to make it clear that the guidelines to which he referred would not be mandatory. That is why we believe that, with what will effectively become 400 enforcement authorities, there will be overlap and confusion.
3.30 p.m.
Lord McIntosh of Haringey: The Minister appears to put the protection of the Secretary of State's all-seeing powers and all-powerful statutory duties before almost any other consideration, indeed before every other consideraton. It seems to be suggested that the intervention of local authorities into the responsibilities under the Act for ensuring drinking water quality is a new proposal. That is not the case.
Perhaps I may say to the noble Lord, Lord Renton, that it is not the case that I want to help local authorities, as he seems to suggest. I am not in any way interested in helping local authorities; I am interested in helping the people who drink the water. That is the real consideration.
In his reply the Minister referred both to Clause 56 and to Clause 65. I should like to turn to both of those clauses because he suggested that they provide an alternative procedure which would adequately bring the local authorities into enforcement activity. I do not believe that that is the case. Under Clause 56 the intervention of local authorities is referred to in subsecton (5):
"The Secretary of State may by regulations make such provision … as he considers appropriate for—(a) imposing duties and conferring powers on local authorities with respect to the acquisition of information about the quality and sufficiency of water supplies.
First, it says "may" rather than "shall"; secondly, it is by regulation rather than on the face of the Bill; and, thirdly, it is an extraordinary state of affairs that
932
that low down the chain of command the Secretary of State confers powers on local authorities.
If powers are to be conferred on local authorities, they should be conferred in the Bill. Everyone should know that that is happening. That is what we provide in our amendment. We do not do it not just by the back door but by the back, back door, which is what is proposed in the Bill under Clause 56. In any case, I am not satisfied that the powers in Clause 56 will be affective. It is no use giving people duties unless they have powers which they can use.
Under Clause 65(2)(f)—and here again it is a matter of regulations—
"regulations made for the purpose of determining the wholesomeness of any water may … enable the Secretary of State to authorise a local authority …to exercise in relation to a private supply any power conferred on the Secretary of State by regulations made by virtue of paragraph (e) above".
Again, "may" and "by regulations" seem to me in the first place to be a duplication. Perhaps the noble Lord, Lord Renton, would like to look at that point before we come to those clauses of the Bill. Secondly, they seem to me to be hopelessly weak in relation to the requirements which we believe are necessary in order to secure the effective application of the enforcement procedures.
Clause 20 has many defects, which we shall deal with later this afternoon; but in order for it to be effective at all there has to be an organisation on the ground in the local area. There is no question of any threat to the Secretary of State; the Secretary of State sets the guidelines under which local authorities will act. There is no question of duplication: the Secretary of State's guidelines can be drafted in order to avoid duplication. However, there must be something better than a provision later in the Bill for regulations which the Secretary of State may or may not make in order to place duties on local authorities. If they are to have duties at all, and it is common sense that they should, local authorities should also have the powers to enforce those duties and the resources to exercise those duties. Otherwise the relationship between central and local government is not adquately reflected in the drafting of the Bill.
Unless the Minister can show us that the Bill is more powerful than he indicated in his first response, it looks to me as if I shall have to seek the opinion of the Committee on this matter.
Lord Hesketh: I fear that my reply may not be as helpful as the noble Lord, Lord McIntosh, would like. He has been slightly selective in his observations on clauses to come. I should like to point out that Clause 56(1), (2) and (3) provides full powers for local authorities, and the regulations which he mentioned are supplementary to those powers. The first lines of Clause 56(1) make the position absolutely clear:
"It shall be the duty of every local authority to take all such steps as they consider appropriate for keeping themselves informed about the wholesomeness and sufficiency of water supplies".
Baroness Lockwood: If it should be the duty of every local authority to take all such steps as it considers appropriate for keeping itself informed,

933
why should it not also be the duty of local authorities to follow through that information and take action to ensure that the quality of water is improved? I think that the Minister introduced a number of red herrings into the discussion in his earlier remarks when he talked about duplication of authority and the sharing of responsibility for enforcement. There are many examples in which enforcement is shared by local authorities and other bodies. Having given local authorities the duties that are embodied in these clauses, it seems sensible to give them the further responsibilities which my noble friend's amendment requires.
Lord Renton: I hope that it may help noble Lords opposite if I say that the noble Lord, Lord McIntosh, in moving the amendment, dealt with the matter very strictly. He pointed out this amendment was intended to operate on Clause 20. Clause 20 has the very important purpose of enabling the Secretary of State to ensure that the companies which are to be the undertakers of water supply in the future abide by the conditions which are attached to their opportunity to do so. He did not at the time refer to later clauses (Clause 54 to 60) but they have come into the picture—and I do not complain of that—in speeches which have followed. But I should have thought that we need to consider Clause 20 on its merits and the later clauses on their merits because they have a different purpose.
We are being asked to amend Clause 20. At the risk of repeating what I said before, I simply say this. To give the local authorities the power which the amendment which has been moved would give them under Clause 20 would create duality, would create unevenness of results and of administration. It is far better that these rather special and important powers should be exercised solely by the Secretary of State, bearing in mind—if one may refer to the later clauses—that the local authorities are given different powers under the Bill, and very sensibly so.
Lord Trafford: Further to what my noble friend says—and I agree with what he says—if we are to look at subsequent clauses then Clause 56(3), for example, outlines the steps that a local authority can take which lead to an order by the Secretary of State. Therefore, in one sense the point of the noble Lord, Lord McIntosh, may be met. In addition, the correct channels of procedure would be used. That would avoid parallel procedures causing confusion, which was one of the other points which was raised. However, it seems to me that there is a channel by which those could be used. As my noble friend said, it would confuse the issue not to look at Clause 20 on its merits and see, when we come to Clause 56, as we shall, the fact that it gives the local authority those rights.
Lord McIntosh of Haringey: It was the Minister who raised the question of the later clauses, not I. I shall respond to the challenge. Perhaps I may remind him of the clause to which he referred. He accused me of referring selectively to that clause. As he rightly said, Clause 56 states that:
934
"It shall be the duty of every local authority to take all such steps as they consider appropriate".
But the point is that those steps must be appropriate for keeping the authorities informed about the wholesomeness and sufficiency of water supply. It is not until one gets way down over the page that one comes to any question of the powers of local authorities. It is no good imposing duties upon local authorities to keep themselves informed about water supply unless one also provides them with the powers to do something about it. That is what they do not have. In addition, nor do Clauses 56 and 57—Clause 57 refers to remedial powers; I am perfectly well aware of what it says—secure that the water companies are required to pay attention to what happens. That is what is not provided in the later clauses.
The reason why the amendment is designed to be inserted before Clause 20 and refers principally to Clause 20 is because that clause is about enforcement in relation to the conditions of appointment of the water undertakings. That is where enforcement sticks. If their appointment is at risk, that is when they will pay attention to those who seek to secure adequate drinking water quality and adequate sufficiency. To insert it later is a recipe for delay, procrastination and inefficient and complex regulation. To insert it here, in or before Clause 20, makes sure that the water and sewerage undertakings will do something about the controls that are quite properly being exercised.
We do not think that the Secretary of State can effectively exercise those powers, which are essentially local powers. We do not think that he—or the present Minister of State—has any intention of doing so because he has already expressed a lack of confidence in the law and in European directives on this matter. We believe that these amendments are essential to secure the protection of consumers. It is on that basis that I ask the Committee to express an opinion.
3.42 p.m.
On Question, Whether the said amendment (No. 192ZA) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 97.

DIVISION NO. 1

CONTENTS

Addington, L.

Ewart-Biggs, B.

Amherst, E.

Ezra, L.

Ampthill, L.

Falkland, V.

Blease, L.

Galpern, L.

Blyth, L.

Graham of Edmonton, L.

Bonham-Carter, L.

Hanworth, V.

Broadbridge, L.

Hatch of Lusby, L.

Brooks of Tremorfa, L.

Hirshfield, L.

Bruce of Donington, L.

Howie of Troon, L.

Carmichael of Kelvingrove, L.

kearton, L.

Kennet, L.

Carter, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Llewelyn-Davies of Hastoe, B.

Cocks of Hartcliffe, L.

Davies of Penrhys, L.

Lock wood, B.

Dean of Beswick, L.

Longford, E.

Dormand of Easington, L.

McIntosh of Haringey, L.

Elwyn-Jones, L.

McNair, L.

935

Mason of Barnsley, L.

Soper, L.

Mishcon, L.

Stallard, L.

Mountevans, L.

Stewart of Fulham, L.

Mulley, L.

Stoddart of Swindon, L.

Nicol, B.

Strabolgi, L.

Northfield, L.

Taylor of Gryfe, L.

Peston, L.

Tordoff, L. [Teller.]

Phillips, B.

Turner of Camden, B.

Pitt of Hampstead, L.

Underbill, L.

Ponsonby of Shulbrede, L. [Teller.]

Wallace of Coslany, L.

Walston, L.

Reilly, L.

White, B.

Sainsbury, L.

Wigoder, L.

Sefton of Garston, L.

Williams of Elvel, L.

Serota, B.

Worcester, Bp.

Shepherd, L.

NOT-CONTENTS

Airey of Abingdon, B.

Hylton-Foster, B.

Alexander of Tunis, E.

Johnston of Rockport, L.

Annaly, L.

Kinloss, Ly.

Arran, E.

Long, V.

Balfour, E.

Macleod of Borve, B.

Belhaven and Stenton, L.

Malmesbury, E.

Belstead, L.

Mancroft, L.

Benson, L.

Marley, L.

Bessborough, E.

Merrivale, L.

Blake, L.

Mersey, V.

Blatch, B.

Middleton, L.

Boyd-Carpenter, L.

Morris, L.

Brabazon of Tara, L.

Munster, E.

Brougham and Vaux, L.

Nelson, E.

Bruce-Gardyne, L.

Norfolk, D.

Butterworth, L.

Norrie, L.

Campbell of Alloway, L.

Nugent of Guildford, L.

Cathcart, E.

Orkney, E.

Clinton, L.

Pender, L.

Coleraine, L.

Pennock, L.

Cottesloe, L.

Penrhyn, L.

Cranbrook, E.

Platt of Writtle, B.

Cullen of Ashbourne, L.

Radnor, E.

Davidson, V, [Teller.]

Rankeillour, L.

Denham, L. [Teller.]

Renton, L.

Dundee, E.

Rodney, L.

Effingham, E.

Romney, E.

Ellenborough, L.

St. Davids, V.

Elliot of Harwood, B.

Saltoun of Abernethy, Ly.

Elliott of Morpeth, L.

Sanderson of Bowden, L.

Erroll of Hale, L.

Shannon, E.

Ferrers, E.

Sharples, B.

Foley, L.

Skelmersdale, L.

Fraser of Kilmorack, L.

Slim, V.

Gainford, L.

Stockton, E.

Gardner of Parkes, B.

Strange, B.

Glenarthur, L.

Strathclyde, L.

Greenway, L.

Strathspey, L.

Gridley, L.

Swansea, L.

Hailsham of Saint Marylebone, L.

Terrington, L.

Teviot, L.

Halsbury, E.

Thomas of Gwydir, L.

Harmar-Nicholls, L.

Trafford, L.

Harvington, L.

Trefgame, L.

Henley, L.

Trumpington, B.

Hesketh, L.

Vaux of Harrowden, L.

Hives, L.

Wise, L.

Hood, V.

Wynford, L.

Hooper, B.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.50 p.m.
The Earl of Arran: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

The Rose Theatre
Lord Hesketh: My Lords, with the leave of the House, I shall now repeat the Answer which has been given to a Private Notice Question in another place. It is as follows:
"Archaeological work on the site of the Rose Theatre has been in progress for some five months. This work has been financed by the developers, Imry Merchant Developers plc, under guidance from English Heritage and the Museum of London. It has become clear in the light of the most recent discoveries that the remains are of greater importance than was previously thought.
"As a result, the developers and their architect have been working urgently on possible ways of ensuring that the excavated remains are properly preserved and displayed to the public. I invited them to a discussion this morning, together with English Heritage, who have advised us on this throughout.
"I am very glad to tell the House that Imry have agreed to delay work on the theatre site for up to one month. This is to enable them and their architect to work with English Heritage and with us on the various options. The roof will go back over the site immediately, so that the excavated remains are fully protected while these discussions continue.
"English Heritage, assisted by the Government, will be contributing financially to the cost of the delay.".
Lord McIntosh of Haringey: My Lords, I must thank the Minister for repeating that Answer given in another place. From what he has said, the Answer sounds encouraging. I was particularly encouraged to hear of the financial help from English Heritage and the Government to protect the Rose Theatre.
Can the Minister tell the House any more about the form which the protection is likely to take? As we understand it, the threat which was to take effect at 6 o'clock this morning but apparently was not carried out was that piles should be driven through both the body and the stage of the theatre established by Burbage on which Shakespeare's and Marlowe's plays were first performed. That would really have been an outrage. Is the Minister telling us that that threat no longer exists and that the stage and the body of the theatre will now be protected first from piling and secondly from backfilling, which was the other imminent threat which we understood hung over the theatre as of this morning?
Will the Minister express on behalf of the House, as I do now on behalf of these Benches, appreciation of those who by their demonstrations over the past few days and today have prevented what would have been irreparable damage to the theatre from taking place this morning?
Lord Bonham-Carter: My Lords, I should like to associate myself with the remarks of the noble Lord, Lord McIntosh, and say how encouraged I am, as I am sure are all other noble Lords, by the news that there will be a delay of one month before any action

937
is taken and—which is very important indeed—that the awning is to go back. We should however like further and rather more unequivocal assurances than we have yet received as to the plans envisaged by the developer in association with English Heritage and the Government.
As the noble Lord said, it is absolutely crucial that infilling does not take place. It is also vital that the piles are not driven through the stage and extremely important that when the plans are finally made they should allow the public to have access to this extraordinarily interesting site, which is of great importance in British theatrical history.
I wonder whether the noble Lord has had his attention drawn to a letter published today in the Independent from Mr. Ian Mackintosh, who is a trustee of the Theatres Trust appointed by the Minister. He is a designer of courtyard theatres, including the Cottesloe and the Wilde in Bracknell, and he makes practical suggestions as to ways and means by which the theatre could be preserved and made available to the public. In his opinion, if additional permission were given for an extra storey to be built on the building for which planning permission has been given, there should be no financial loss involved. I should very much like to hear from the Minister categorical assurances both that there will be no damage—not minimal damage—to what has been discovered and that the public will have access to this site.
Lord Hesketh: My Lords, I can answer some of the noble Lord's questions. First, there will be no backfilling taking place during this period. Secondly, at this moment there is no piling going through and alternatives are being considered. However, that of course is a matter for the architect. I certainly am no expert on that front.
If I understood him correctly, the last point made by the noble Lord, Lord Bonham-Carter, concerns the possibility of another floor, a suggestion as to which in this morning's Independent he drew to our attention. That would be a matter for the London Borough of Southwark, which granted planning permission in the first place. I know that your Lordships would not expect me to comment on that.
So far as concerns public access, as the Prime Minister said, we hope that all these remains will go back on public display.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that the Answer which he has repeated is in a considerable degree reassuring but that some noble Lords would like him to go a little further and indicate that it is the Government's intention that in the outcome this immensely interesting relic of our artistic and theatrical history will be preserved and in a form which will make it accessible to the public? Will the Government bear in mind that, apart from the strong feelings which many of us have as to the importance historically and aesthetically of this site, it offers a considerable contribution to our tourist industry?
Lord Hesketh: The purpose of the delay, as I have said, is so that English Heritage, who are contributing toward the cost, will, it is hoped, find and achieve a satisfactory outcome which will involve public access.
The Viscount of Falkland: My Lords, apart from the interest displayed by all noble Lords, I have a family interest in the theatre since my direct ancestor's brother was the Lord Chamberlain at the time when Shakespeare was working and writing for the Rose Theatre. Indeed my ancestor was his employer and protector, technically speaking, at that time. He used to go over to Somerset House to receive payment for himself and his company. Therefore, I think that in some degree a member of my family has been responsible for William Shakespeare's place as the most important figure in our literary tradition.
Of course I share the sentiments expressed by my noble friend Lord Bonham-Carter and other noble Lords. It seems to me to be inconceivable that in a country with a site such as this, which has been discovered recently and which relates to so much essential in our culture and literary history, all efforts should not be made to make sure that it is preserved and indeed made accessible to all members of the public so that they can be aware of this extremely valuable memorial of an important era in our literary and cultural history.
Lord Harmar-Nicholls: My Lords, I congratulate the Government on having had the courage and the good sense at this late stage to do something about the Rose Theatre. However, is not my noble friend a little disappointed that the advisers should have been so late in the day in coming to the conclusion which has brought about this change of mind? In the Statement he said that it was only during the period when the people of the theatre were making a stand in order to protect the site that the Government realised the full importance of it. Should they not have realised it earlier? Will it not add to the value of the compensation that may have to be paid as a consequence of it being so late in the day before the full importance of the site was taken into account?
Lord Hesketh: My Lords, that is why Imry Merchant in the first place allowed some four and a half months for the archaeological study to take place which resulted in the importance of the site being seen for what it was.
Lord Hatch of Lusby: My Lords, like other noble Lords I greatly welcome the Statement by the noble Lord and the action of delay by the Government. However, is this Statement not a little tardy, as the noble Lord opposite has just said? If, as the noble Lord told us, English Heritage has been advising the Government for four to five months, why is it only today, when construction work was due to begin, that the Government have taken this action? Had it not been for the protests made by prominent figures in the theatrical and literary world, would not the Philistine element in the Government—which likes to see mortar and bricks built at a profit rather than

939
the English heritage preserved—have gone ahead? Why has it taken the Government so long—right up until the last moment—to take action seen in many parts of this country as the preservation of a genuine British heritage?
Lord Hesketh: My Lords, I do not feel that I can usefully add to what I have already said on the subject.
Lord St. John of Fawsley: My Lords, is my noble friend aware that these curmudgeonly sentiments that have been expressed are not shared by many others in this field who are very grateful indeed for the Statement that has been made? With regard to the question raised by my noble friend Lord Harmar-Nicholls, does my noble friend agree that a death-bed conversion is just as welcome as an earlier one?
Lord Hesketh: My Lords, so long as it results in salvation.
Lord Cledwyn of Penrhos: My Lords, like everyone else I welcome the moratorium. However, can the noble Lord be more specific in informing the House precisely what will be going on during this month? First, will there be an architectural study? What will be the purpose of that study? Will it be to find out whether it is possible to leave the Rose Theatre untouched in the basement of the building? Will there be an opportunity to negotiate financially? To what extent are the Government committed to resolving a financial problem that may arise? How much of the money is expected to come from English Heritage? What percentage are the Government themselves prepared to give?
Lord Hesketh: My Lords, the amount of money is not yet certain. However, it will come through English Heritage. As regards structural and engineering problems, the reason we have the moratorium is that the architects are at the moment trying to resolve whether they can reposition the piles. I am not an architect, but I believe that that technical difficulty is the greatest problem facing them.
Lord Sefton of Garston: My Lords, will the Minister give an assurance that the Government will be just as sympathetic to the preservation of modern day amenities and listed buildings around the King's Cross area when that development takes place?
Lord Hesketh: My Lords, that is another Question for another day.
Lord Bonham-Carter: My Lords, may I press the Minister on one aspect of his answer? I understood him to say that there would be no backfilling at this stage. I would prefer him to give me a categoric answer to the effect that there would be no backfilling at any stage because backfilling will wreck the Rose Theatre.
Lord Hesketh: My Lords, Imry has agreed that it will not proceed with backfilling while the further discussions on the options continue.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that while we all welcome very much the Statement that he has made, some of us feel that the reply given to my noble friend Lord Hatch of Lusby was perhaps a little short? The point that my noble friend made was this. Had there not been a bevy of well known public figures—actors and the like—the bulldozers would have moved on to the site at six o'clock this morning. What will happen on other sites—they may not be the sites of former theatres but are just as important from many other aspects—if one does not have that bevy of public figures? That is what we are concerned about. The Government were not prepared to act: it required action by these public figures to bring about the very desirable result that the noble Lord has announced today.
Lord Hesketh: My Lords, I came to your Lordships' House today in order to repeat an Answer on a specific Question. I am not in a position to answer hypothetical questions.
Lord Howie of Troon: My Lords, at the risk of being thought curmudgeonly, are we not in danger of going overboard about this interesting matter? From remarks in the press and indeed in this Chamber, it might be thought that we were preserving the Rose Theatre, important no doubt though that is. Are we not preserving a footprint of the Rose Theatre? Is it possible that we are going too far to preserve a footprint rather than an artifact?
Lord Hesketh: My Lords, as the noble Lord said earlier, it depends slightly on whose footprint it was.

Water Bill
4.6 p.m.
House again in Committee.
Clause 20 [Orders for securing compliance with certain provisions]:
Lord Hesketh Lord Hesketh moved Amendment No. 192A:
Page 20, line 39, leave out ("subsection (5)") and insert ("subsections (2) and (5)")
The noble Lord said: In moving Amendment No. 192A I should like to speak also to Amendments Nos. 193B, 196A, 197A to 197C, 199A, 201ZA, 201ZB, 203A and 262A. These amendments arise from detailed discussions with the European Commission to put beyond doubt that this clause is fully consistent with European law.
Before describing the effect of the amendments it may be helpful to Members of the Committee if I first describe how the provisions in the Bill are structured so that the obligations imposed on a water or sewerage undertaker can be enforced. In order to give noble Lords a full picture it will be necessary to refer to some later clauses but I assure the Committee

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that there is no intention on my part to pre-empt later discussion of those clauses and I shall be as brief as possible in my reference to them.
I should like to draw the Committee's attention to three aspects of the enforcement provisions: the obligations themselves, the system of final and provisional enforcement orders and special administration orders. Let me assure Members of the Committee at the outset that the penalties for failure by an undertaker to fulfil its obligations are severe and could ultimately lead to the loss of the undertaker's appointment.
I turn now to the first of the three aspects, the obligations. The obligations to which this clause applies are to be found in a number of plages in the Bill. For instance, we have already debated Clause 8 on general environmental and recreational duties, and Clause 9 on environmental duties with respect to sites of special interest, both of which impose duties on undertakers enforceable under Clause 20 by the Secretary of State.
Perhaps the three most important duties which are enforceable under this clause are the duty of undertakers under Clause 37 to develop and maintain an efficient and economical system of water supply within their area, the corresponding duty under Clause 67 in regard to sewers and sewage disposal, and the duty under Clause 52 to supply for domestic purposes only water which is wholesome at the time of supply. In fact there are another 20 specific references in the Bill to duties enforceable under this clause. In each case a subsection specifically describes the duty as enforceable under this clause and by whom it is enforceable, whether it be the Secretary of State or the director.
As regards the second aspect—the system of final and provisional orders—I think it will be clearer to the Committee if for the moment I ignore the amendments and speak to the Bill. Subsection (1) provides that the Secretary of State or the director, whichever is the appropriate enforcement authority, as defined in subsection (8) may by a final order make the requisite provision for securing compliance with any condition of appointment or with any statutory requirement which the undertaker is contravening. Subsection (2) enables the enforcement authority to make a provisional order if, on the criteria set out in subsection (3), he considers that more appropriate. Essentially, a provisional order can be brought into effect immediately, but unless confirmed has effect at most for three months. The procedural requirements are set out in Clause 21 and need not concern us at this stage.
Clause 20(5) deals with the occasions when the enforcement authority does not exercise his powers, and I shall return to that point in describing the amendments.
The effect of an order is set out in Clause 22. I repeat that I do not want to pre-empt debate but merely to indicate to the Committee by a single example that the making of an order is no mere charade. Under Clause 22(7), compliance with an
942
order can be enforced by the relevant authority by an injuction or other appropriate relief.
I turn now to the last of the three aspects of enforcement; namely, the special administration orders. The Bill provides in Clause 23 that the High Court, on the application of the Secretary of State, or, with his consent, the director, may make a special administration order, if it is satisfied in relation to an undertaker of one or more of the grounds set out in subsection (4) of that clause. The purpose of such an order would be to transfer to another company so much of the undertaking as was necessary for its functions to be properly carried out and the carrying out of those functions pending the transfer. That brings me to the end of my general description of the enforcement provisions and I should now like to revert, as I indicated I would, to the circumstances in which the enforcement procedure is not brought into play.
Subsection (5)(b) of the clause provides for situations where it is not possible for undertakers to comply fully with certain of their obligations immediately and programmes of remedial action have been agreed with the Secretary of State or the director. These programmes will be made public and will have to be implemented if the company is to avoid enforcement action. But provided that programmes so agreed are being implemented properly, it would hardly make sense for the Secretary of State to take enforcement action. This part of the clause therefore provides a very effective means of achieving compliance.
The discussions that we have been having with the European Commission related to this subsection. The Commission was concerned, because of the discretion conferred by Clause 20 as currently drafted, that enforcement action to achieve compliance with the European Community drinking water directive might not be taken. That is certainly not the Government's intention, but to put it beyond doubt the Government have agreed to clarify certain points in the clause.
The effect of the amendments is that if the Secretary of State or the director general are satisfied of the matters set out in subsection (1) they are under a duty to make a final order, except in circumstances specified in subsections (2) and (5). Also, companies will now have to give and comply with undertakings concerning compliance programmes instead of entering into agreements. The remaining amendments are purely consequential. As I have already said, these amendments arise from detailed discussions with the European Commission to put beyond doubt that this clause is fully consistent with European law. Similar amendments will be tabled shortly for the Scottish provisions in Schedule 21.
The clause is particularly relevant to the EC drinking water directive. The standards set by the directive will be fully incorporated in regulations made under Clause 65 of the Bill, which will be laid before Parliament immediately after Royal Assent. Water undertakers will have a duty to comply with those standards under Clause 52. Clause 20(1), as amended, places the Secretary of State under a duty to take enforcement action against a water company

943
if it is contravening those statutory obligations. This duty is subject to Clause 20(5). The drinking water directive sets a large number of strict standards for drinking water quality. Some of these standards present difficulties, and the Government support moves by the European Commission to establish a regulatory committee to carry out a review in the light of recent technical progress. Notwithstanding these difficulties, the Government have welcomed the directive as a means of securing improved drinking water quality throughout the Community.
Drinking water in this country is of high standard already, and public water supplies are safe to drink. However, some water supplies do not yet fully comply with EC standards. Water suppliers are drawing up substantial investment programmes to bring about the necessary improvements and will undertake to carry out these programmes. These are the undertakings referred to in Clause 20(5)(b) and must be acceptable to the Secretary of State.
The Government are fully committed to complying with the drinking water directive. However, it must be recognised that investment programmes for achieving the necessary improvements cannot all be carried out overnight. At the same time, it will be essential to avoid severe disruption of water supplies or putting consumers' health at risk while works are being carried out. The speed of carrying out the necessary improvements may be limited by a number of factors. For example, time will be required to plan and design projects and to obtain the necessary approvals such as planning permission. In certain circumstances, it may be necessary to order priorities according to the seriousness of the deficiencies that need rectifying. The Secretary of State will give due consideration to the practicalities when assessing programmes and their time-scales and will only approve undertakings under Clause 20(5)(b) if they contain proposals for achieving compliance as quickly as possible taking the practicalities into account.
Officials are currently examining the compliance programmes put forward by water suppliers against this requirement. In due course we shall be presenting to the European Commission our proposed time-scale for compliance with the drinking water directive which will be incorporated in the resulting undertakings.
Returning to the amendments now before the Committee, I should like to restate the Government's belief that the existing draft is already consistent with European law and that it provides a clear and open procedure for ensuring compliance with European directives. Nevertheless, we are happy to put this beyond doubt by moving these amendments. I beg to move.
4.15 p.m.
Lord McIntosh of Haringey: This is clearly a statement of the utmost importance. I shall break precedent straight away by asking the Minister to let me have a copy of the speech he has just made as quickly as possible in writing because we are due to debate later on this afternoon a number of the issues which he has touched on in his wide-ranging review
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of the European Community directive and the Government's response to it. We should have a better informed debate if such a note of the speech were available, perhaps not only to myself but also to other noble Lords interested to have it. I do not know whether there is any precedent for this, but it would help us to debate matters more seriously and more effectively.
We can only welcome, so far as we can appreciate it, the new-found undertaking of the Government to comply with the European Community directive. I quoted within the last hour speeches made by the Minister of State in Committee in another place on this Bill in which he questioned the directives of the European Community on drinking water quality. He questioned whether they were sensible, whether they were too stringent. As I understand what the noble Lord, Lord Hesketh, has just said, the Government are no longer taking that position. Now, without any equivocation—if I am wrong in this interpretation no doubt I shall be corrected—the Government are taking the position that the European Community directive is to be complied with and the only issue is how quickly and in what form.
I am interested to see that in two amendments, Amendments Nos. 193B and 196A, the Government are seeking to do what they have always refused to do when we have introduced similar amendments. They are turning the word "may" into the word "shall". I have always thought that that was anathema to parliamentary draftsmanship. I am interested to find that the Government are willing to do that on behalf of the European Community but not on behalf of noble Lords. That shows where their priorities lie.
As I understand it, the key word in these amendments, as the noble Lord has reminded us, is in Clause 20(5)(b), which at present states that the company has agreed and is taking all steps to secure or facilitate compliance. It now states that it,
"has given, and is complying with, an undertaking to take all such steps".
Can the Minister tell me what is the difference in meaning between the two sentences? They appear to mean the same. Is it that one sentence is compiled in acceptable Euro-language or is there a subtle distinction in the English language that I do not understand?
It must be right that the Water Bill should be amended in order to comply with the Community directive on drinking water quality. The people of this country will require that and it is essential that the provision should be included in the prospectus for privatisation. Otherwise the risks of penalties for non-compliance would be too great. However, I must remind the Committee that the directive was originally made in 1980 and that response was required in 1982. The action required to correct the directive should have been completed by 1985.
In our discussion earlier on the Rose Theatre we heard reference to "deathbed conversions". This appears to be virtually a conversion beyond the grave. However welcome it may be, the fact of the matter is that, as a result of the Government's dilatoriness, for a number of years many British

945
people have been drinking water of a quality which is now agreed to have been unacceptable while the Government sat back and did nothing. The second point which must be made is that, although I am not a lawyer, I have no doubt that the wording now proposed complies with the Government's strict legal obligations to legislate for the improvement of drinking water quality. That is very different from actually improving drinking water quality.
I listened most carefully to that long section of the noble Lord's speech, which was full of qualifications. It was full of words such as "practicable", "timescale" and "various other considerations". It did not tell me when the people of Britain can expect to have drinking water which meets the European Community standards. If the noble Lord can help the Committee with that more than he was able to do in his speech I am sure that we shall be extremely grateful.
Lord Harmar-Nicholls: I believe that to ask for a transcript of my noble friend's speech is impracticable and unnecessary. I believe that it is without precedent; I have never heard of it. The noble Lord should know perfectly well that we are at the Committee stage only. If when speeches are printed in the normal way there is found to be something at variance with what the noble Lord believed was said, he can deal with the matter on Report. That is why we have such parliamentary procedures.
The noble Lord asks off the cuff for a speech to be put into writing to only one Member, or to a limited number. The whole idea of our organisation is that what was said is seen in print by everyone at the same time. I suggest to the noble Lord that if his remembrance of what my noble friend said appears to make some of his later amendments redundant or unnecessary he can withdraw them. If when reading Hansard he finds that what was said was not what he thought the matter can be dealt with. But I think it would be wrong to start such a precedent and it would send us down the road which would interfere with our normal parliamentary procedures in dealing with such matters.
Lord McIntosh of Haringey: Clearly the noble Lord is blessed with a photographic memory and has taken in every single word which the Minister said——
Lord Harmar-Nicholls: I did not say that.
Lord McIntosh of Haringey: I am not capable of doing that. We have a series of amendments which we could debate more effectively if we all had a photographic memory and were able to take account of what the Minister has said. Clearly it was a prepared statement and it may have been issued as a press release—I should not be at all surprised. Certainly it is expected that a statement of such importance will be made available to the press in order that it can be accurately reported on television and in the press.
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In those circumstances, and when we are dealing with such matters in detail in Committee as we are supposed to do, it is better that we should do so with the help of the best information available. The only objection that I hear from the noble Lord, Lord Harmar-Nicholls, is the classic objection that nothing should be done for the first time.
Lord Ezra: As the noble Lord, Lord McIntosh, has said, the statement made by the noble Lord, Lord Hesketh, is of the utmost importance. The gist is that the Government have taken most seriously the standards laid down in the European Community and will seek to do everything possible to carry them out. That being so, we on these Benches fully support the amendments.
Like the noble Lord, Lord McIntosh, we should like to read the Minister's speech in detail. If we cannot do so before, we shall wait until tomorrow to read in Hansard exactly what was said and decide whether any issues are raised in relation to subsequent amendments. The gist of what the noble Lord said today appears to us to be fully acceptable.
Lord Hesketh: I am sure that the noble Lord, Lord McIntosh, knows that I shall always try to be helpful. I hope that he will understand that temporarily—be it only for the next half hour—I feel most unhappy about being one who sets a precedent which he may regret. I am trying to do my best and hopefully I shall be able to say something a little later.
On Question, amendment agreed to
[Amendment No. 193 had been withdrawn from the Marshalled List.]
[Amendment No. 193A not moved.]
Lord Hesketh Lord Hesketh moved Amendment No. 193B:
Page 21, line 3, leave out ("may") and insert ("shall").
On Question, amendment agreed to.
[Amendment No. 194 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey had given notice of his intention to move Amendment No. 194A:
Page 21, line 15, leave out subsection (3).
The noble Lord said: This amendment would remove a subsection which I understand to be substantially altered. In the circumstances it would be better not to move it.
[Amendment No. 194A not moved.]
[Amendments Nos. 195 and 196 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 196A:
Page 21, line 23, leave out ("may") and insert ("shall").
On Question, amendment agreed to.
[Amendment No. 197 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 197A:
Page 21, line 34, leave out ("made a final order or make or confirm a provisional order in relation to any company") and insert ("be required to make a final order or provisonal order in relation to any company or to confirm a provisional order to made").
On Question, amendment agreed to.
[Amendments Nos. 197AB and 197AC not moved.]
Lord Hesketh Lord Hesketh moved Amendment No. 197B:
Page 21, line 39, leave out ("agreed to take and is taking") and insert ("given, and is complying with, an undertaking to take").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 197C:
Page 21, leave out lines 45 to 47.
On Question, amendment agreed to.
[Amendments Nos. 198 and 199 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 199A:
Page 22, line 2, leave out from ("considering") to ("is") in line 3 and insert ("the making in relation to the company of a final order or provisional order or the confirmation of a provisional order so made,").
On Question, amendment agreed to.
[Amendments Nos. 200 and 201 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendments Nos. 20IZA and 201ZB:
Page 22, line 12, leave out ("agreement entered into") and insert ("undertaking given").
Page 22, line 15, leave out ("exercise of powers") and insert ("order or confirmation").
On Question, amendments agreed to.
[Amendment No. 201A not moved.]
[Amendment No. 202 had been withdrawn from the Marshalled List.]
[Amendment No. 202A not moved.]
[Amendment No. 203 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 203A:
Page 23, line 6, leave out ("any requirement imposed on a water undertaker or sewerage undertaker by an agreement") and insert ("the requirement to comply with an undertaking given").
On Question, amendment agreed to.
[Amendment No. 204 had been withdrawn from the Marshalled List.]
4.30 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 204A:
Page 23, line 17, at end insert—

(" "trivial" means slight and inconsequential, and no such reference shall be taken to include circumstances giving rise to danger to health;").

The noble Lord said: This amendment is not trivial. I think that even Wittgenstein would say that it is not trivial because this is an attempt to put some sense into the word "trivial" used in Clause 20. We believe it to be used in a way that is imprecise, which Wittgenstein would think was imprecise and which does not actually provide the protection that should be provided. I refer specifically to subsection (5)(a), where the Secretary of State is not able to make or confirm a provisional order in relation to any company if he is satisfied that the contraventions
948
were or that the apprehended contraventions are of a trivial nature.
One can look up "trivial" in the dictionary and one can discover that it means "slight and inconsequential", and we have put that into our amendment. I do not believe that there need be any difficulty or controversy about that. I have no doubt that whether or not the Government wish to accept the amendment, they will accept that that is a reasonable exposition of the word "trivial". However, there is a more important point in our amendment; that is, that the word "trivial" should not be used in Clause 20 to include circumstances giving rise to any danger to health. That is a matter of some significance which deserves the attention of the Committee and the support of the Government.
It is unlikely that any of the conditions of appointments or statutory duties themselves will be regarded as trivial. In that sense I suppose that we do not expect severe contraventions. However, the interpretation of "trivial", although there are interpretations of other words in this clause, such as "final order", "provisional order", and so on, is left to the Secretary of State and to the director. I do not believe that that is satisfactory and I do not believe it is satisfactory to leave open the possibility that something which the Secretary of State or the director describes as trivial and therefore does not proceed to make or confirm a provisional order could involve danger to health.
We have had considerable discussion on the issue of the European Community directive on drinking water quality. Despite what the noble Lord said a few moments ago about compliance with the directive, the fact is that there have been derogations allowed from drinking water quality directives. For example, in 1986 the Department of the Environment told water authorities that they should ignore the pesticides standards set down by the Community and substituted its own values. As a result of that, the European Community issued a reasoned opinion and said that relaxation of drinking water sampling procedures was not acceptable and that the various relaxations which have been permitted over the period of years would not be acceptable in the future.
It is consistent with what the Minister has told us about the Government's acceptance of European Community directives that we should be assured that "trivial" cannot include any contravention which is dangerous to health. I move this amendment in the hope that the Government can assure us that that is the case. I beg to move.
Lord Ezra: I believe that the noble Lord, Lord McIntosh, is right in seeking to have a definition of the word "trivial" because otherwise we might run the risk that the Secretary of State or the director could give this a wider interpretation than we might give it. I believe that the interpretation as proposed is reliable. I hope that the Government will accept that, but if not, perhaps they will give their own interpretation of the word.
The Earl of Arran: This amendment proposed by the noble Lord, Lord McIntosh, is concerned, as he

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has just outlined, that a contravention of condition or requirement of circumstances giving rise to danger to health could be classed by the Secretary of State or the director as trivial.
The meaning of "trivial" is well understood and we do not consider that the proposed definition makes any useful contribution to our understanding. Clearly, it is extremely unlikely that circumstances giving rise to a danger of health could be properly regarded as trivial. I hope that the noble Lord, Lord McIntosh, does not regard this as a dusty answer to this amendment but we believe that the word "trivial" is clearly understood.
Lord Taylor of Gryfe: Is not "trivial" a somewhat subjective judgment? What is trivial to the noble Earl may not be trivial to me. Would it not be better to have clarification of the definition of "trivial" as suggested by the noble Lord?
The Earl of Arran: I should have thought that most people have a very good, commonsense understanding of the word "trivial".
Lord McIntosh of Haringey: The noble Earl's reply confirms my worst fears. All that he is able to say in response to a direct challenge is that it is extremely unlikely that a contravention which is "trivial" would be a danger to health. In other words, he is saying that there is a possibility of the Secretary of State being unable to secure, or to make or confirm, a provisional order that is necessary to stop a nuisance which is a danger to health.
That is not good enough. The noble Earl will have to assure the Committee more effectively than he has done that the Secretary of State will not be debarred by the use of the word "trivial" from taking effective action to deal with impure or unwholesome water which is a danger to health.
The Earl of Arran: The interpretation of "trivial" is ultimately a matter for the courts. The decision of the Secretary of State or the director general that contraventions are of a trivial nature could be a matter for an application for judicial review. I repeat that anything to do with health is never regarded as a trivial matter. It is regarded as a very serious matter.
Lord Harmar-Nicholls: I am certain that my noble friend is right. The word "trivial" has a meaning which is well understood by everyone who knows the English language. No one has suggested that there is any possibility of anything likely to give rise to danger to health ever being considered trivial. Why do we suddenly wish to show this disquiet about our procedures? Where there is any doubt about the matter, as the noble Lord on the Liberal Benches said, the courts are there to sort it out. I do not believe that it is necessary to give interpretations where the court would be able to take into account all the circumstances concerned. I can see the sense of including the words,
"no such reference shall be taken to include circumstances giving rise to danger to health".
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However, to try to give the meaning of the word, "trivial" merely by quoting what one of the dictionaries says is going outside the normal procedures. I believe that my noble friend should stand firm on this matter; otherwise, if we start giving interpretations of every word used in our statutes they will be even longer than they are now; and, heaven knows, we have too many of them already.
Lord McIntosh of Haringey: The noble Lord, Lord Harmar-Nicholls, appears to forget that Clause 20(5) is negative in effect. The Secretary of State or the director cannot make a final order or make or confirm a provisional order if the contravention is deemed to be trivial. In other words, the fail-safe position is the wrong way round. However, it is clear that we are not going to make any progress with the wording of the amendment so while reserving our rights to come back to it, I feel it better that I should beg leave to withdraw the amendment.
Before I do so, may I express my thanks to the noble Lord, Lord Hesketh, for making available to me a copy of his speech on Amendment No. 192A, or of that part of his speech which refers to the implementation of the directive on drinking water quality. I do not know whether he is proposing to do the same for other noble Lords who express an interest—it may be an innovation for the noble Lord, Lord Harmar-Nicholls—but it will help me and I have no doubt it would help other noble Lords in the consideration of subsequent amendments.
Lord Harmar-Nicholls: I was very interested in the words used by the noble Lord when he moved the amendment; but I cannot remember all the details and nuances which came from it, so I wonder whether he can let me have a copy of what he said so that when I am making a decision as to which is right I can be certain that I am on the right side. I think that that is fair under all the circumstances.
Lord McIntosh of Haringey: The noble Lord knows perfectly well from observation that I do not speak from notes. If he has seen Hansard reporters attempting to get notes from me he will know that they have always failed.
The amendment which I moved has no subsequent amendments to be debated in the Committee. In begging leave to withdraw the amendment I said that the matter would be referred to again at Report stage. The noble Lord will have an opportunity to read my speech before we return to the matter at Report stage. This is a very different issue from a ministerial statement, which will undoubtedly be circulated to the press.
Lord Harmar-Nicholls: It is absolutely against known parliamentary procedure for any speech to be read, whether it be from the Front Bench or the Back Bench. To suggest, as the noble Lord has, that there was no need for my noble friend to make a speech and he could have given us the notes is against the procedure. One is supposed to be talking extempore, even when one does have the use of notes. To put on record that in point of fact prepared

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speeches could be put in Hansard without their being spoken is against procedure. I think that my noble friend made a mistake, if he does not mind my saying so, if it is a precedent, in giving a copy of a speech that he made.
Lord Hesketh: In a way I am very excited that the noble Lord, Lord McIntosh, has a copy, but, to put at rest the mind of my noble friend Lord Harmar-Nicholls, I have to say that I do not know how the noble Lord, Lord McIntosh, came by it.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Strabolgi):The Deputy Chairman of Committees (Lord Strabolgi): Amendment No. 204B, Lord McIntosh.
Lord Harmar-Nicholls: I should like to pursue the last point before we proceed with the next amendment.
The Deputy Chairman of Committees: The amendment has been withdrawn. I have now called Amendment No. 204B. Perhaps I may suggest to the noble Lord that if he wants to raise this point, he should raise it on Clause 20 stand part, to which we shall come later.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 204B:
Page 23, line 24, at end insert—
("( 1 1) Where any notice is served under this section, a copy shall also be sent as soon as reasonably practicable to any local authority in the area covered by the appointed company.").
The noble Lord said: Amendment No. 204B pursues a line of thought—although it is slightly different in emphasis—which was the subject of our earlier debate this afternoon. This is the point which refers to Clause 56, where local authorities have the duty of taking such steps as they consider appropriate for being themselves informed about the wholesomeness and sufficiency of water supplies provided to premises in their area.
It is proposed in this amendment that there should be a new subsection to Clause 20, which is the clause dealing with orders for securing compliance with certain provisions, which would say:
"Where any notice is served under this section, a copy shall also be sent as soon as reasonably practicable to any local authority in the area covered by the appointed company".
The argument is familiar, but I hope it is not stale. If the local authorities have a duty to keep themselves informed, that duty becomes an effective duty only if those who know things about which the local authority should be informed have a duty to tell them about it. Under Clause 20 it is the duty of the Secretary of State and the director to prepare orders, and it seems that if the local authority is to carry out its duty under Clause 56 it would not be unreasonable for a copy of the notice served under Clause 20 to be sent as soon as reasonably practicable to any local authority in the area covered by the appointed company. Again, we are not being revolutionary in this amendment.
The use of the photocopier has transformed a number of bureaucratic and administrative
952
difficulties which might otherwise have been an objection to this amendment. It cannot possibly do anybody any harm, and it permits the local authorities to act in accordance with Clause 56 if this amendment is agreed to. I beg to move.
4.45 p.m.
Lord Renton: For once the noble Lord, Lord McIntosh, has a proposal which I find attractive. I shall not put it higher than that. Earlier I complained that the first amendment which we discussed today would have caused duality of responsibility. Another noble Lord said that it caused confusion. I am glad that we won the Division. I think that this is a useful suggestion for avoiding confusion and duality because—if I dare mention it prematurely—the local authorities have certain responsibilities under Clauses 52 to 60, and if they were kept informed of what the Minister is doing under Clause 20, it might even save some administration. I rather hope that one of my noble friends will give a word of encouragement on this matter, which is well worth considering.
The Earl of Arran: I am going to have to disappoint my noble friend regarding words of encouragement on the amendment, for reasons which I hope briefly to outline. We certainly agree that it is very important to inform those who have an interest in any enforcement action to be taken. We are aware that in the majority of cases local authorities will have sewerage agency arrangements with the sewerage undertaker. We are aware of the role of local authorities in regard to public health, to give just two examples of when the local authority should and, under the Bill as it stands, would be informed. However, we still consider the proposed amendment to be unnecessary for reasons that I shall now explain.
Clause 21 details the procedural requirements to be followed when enforcement action is to be taken. There are four stages of enforcement procedure where the Secretary of State or the director must publish the notice describing his intentions. They are: first, before making a final order or provisional order; secondly, as soon as practicable after making a final order or confirming a provisional order; thirdly, before revoking a final order or a provisional order which has been confirmed; and finally, if, having published notice of his intention to revoke an order, he decides against that action.
The key point in regard to the proposed amendment is that, as the Bill already provides, on each of those occasions the notice must be published in a manner which will bring the matters to which the notice relates to the attention of persons likely to be affected by them. The notice must specify a period of not less than 28 days in which representations or objections may be made. It would merely be a burden to local authorities for them to receive such a notice as one enforcing an undertaker to supply information to the National Rivers Authority which did not affect them. Every effort is therefore made to ensure that persons concerned with enforcement action are informed and given the opportunity to comment. That will include local

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authorities where appropriate. With that explanation, I hope I can persuade the noble Lord, Lord McIntosh, to withdraw the amendment.
Lord McIntosh of Haringey: I must confess I find that reply totally illogical and irrational. The Bill already makes provision for local authorities to be notified of applications and variations to appointments. How different is it now to ask for local authorities to be notified about information which is essential to the performance of their duties under Clause 56 and Clause 57, and probably under Clause 65, although I have not got that far in my exegesis? If they need to know about applications and variations of appointments, surely they also need to know about any subsequent failure of the undertakers to meet the appointment conditions? Would that not be a logical consequence of the distribution of information to local authorities, which is already a part of the Bill? I do not understand why that situation is so different.
The Earl of Arran: I do not think that I can add very much which will help the noble Lord, Lord McIntosh, other than to repeat the key point. As the Bill already makes provision for these occasions, the notice must be published in a manner which will bring the matters to which the notice relates to the attention of people likely to be affected by it. I should have thought that in these circumstances there is plenty of information which the local authorities need to have.
Lord McIntosh of Haringey: There is no more rationale in the Government's answer now than there was before. It is not a matter on which I seek to divide the Committee, although I am completely unconvinced by the answers given by the noble Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, whether Clause 20, as amended shall stand part of the Bill?
Lord Harmar-Nicholls: I wonder whether any decisions that have been made on this clause ought to stand in view of the movement away from the normal parliamentary procedures. I am not attacking the noble Lord or even being critical of him. However, the noble Lord said that he ought to have a copy of the statement in view of its importance to this amendment.
Lord McIntosh of Haringey: I did not say that I ought to have a copy.
Lord Harmar-Nicholls: The noble Lord said that he would like to have a copy, as it may affect the way in which he would deal with later amendments. That is a request that I have never heard of before and one which I have never heard being complied with. However, it was complied with. The noble Lord held up a piece of paper with words printed on it and said: "I have now got it". I did not see the noble Lord leave the Chamber; I did not see my
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noble friend leave the Chamber. I should like to ask how the noble Lord obtained it. Having asked that question, I should like to know how the noble Lord obtained a paper, which says "presumed to be an official report", and which states what my noble friend has said in the process of formulating legislation. I should like to ask the noble Lord whether he is 100 per cent. satisfied that it is right that he should have it in that form.
The noble Lord spoke about people having photographic memories. Can he guarantee that the words written on that paper are the words used by my noble friend? Can he guarantee that in the process of making his speech he did not leave a part out or put something extra in. It will be in Hansard tomorrow and everybody can then take it properly into account? The procedures of Parliament take that into account.
The idea of having a Committee stage followed by a Report stage is that people have time to find out the actual words that were spoken in order to make certain that that is how Parliament intended the legislation to be.
We have no official body presiding in this House that can give me an answer to this question. However, I should be grateful if somebody could tell me how and from where the noble Lord obtained the paper which he held up. The noble Lord said that it was a verbatim copy. My noble friend did not leave his position and therefore he could not have given it; the noble Lord did not leave his position in order to obtain it. This is not a trivial matter. It is an important matter if, by the drop of a hat, we suddenly move away from procedures which are tried and tested. There are many examples of things which are prepared as a statute that have been slipped through by accident because we have not kept to procedures. I have in mind the very important amendment which affected the homosexual situation which has worried the people of this country for many years. It was supposed to have been slipped in at 2 or 3 o'clock in the morning when someone did not follow the normal procedures to their ultimate. I have no doubt that, if one researched, there would be many other examples.
I am voicing a protest at this stage that we should deviate from the normal procedure, particularly when we are dealing with legislation which is not a general proposition but will be the law of the land. I hope that someone can give me the satisfaction of knowing the answer to this question so that the whole of the Committee will know how the paper was obtained. The noble Lord said: "I have got it." I think it is important that these things should not slip through, and I should like to know whether someone can give me an answer at some time.
Lord McIntosh of Haringey: I am very anxious not to widen the debate into a full procedural debate on this matter, I wish only to answer the direct question put by the noble Lord, Lord Harmar-Nicholls, and to say one thing with reference to the rules of debate in this House.
The direct answer to the noble Lord, Lord Harmar-Nicholls, is that I do not know how I got the paper. It was brought to me with my name on

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it. It is entitled "Speaker's Notes". I assure the noble Lord that if there is anything which would cause him concern—it does not cause me concern—I shall not in subsequent debates refer to it as if it were a verbatim record. I shall simply be grateful for the fact that a very complicated Statement made by a Government Minister has been made available for a more informed discussion on this matter.
I should like to make a procedural point by reading from Item (vi) of the Rules of Debate in the Companion to Standing Orders:
"The reading of speeches is alien to the custom of the House and is an obstacle to good debate. It is recognised, however, that on some occasions, for Ministerial Statements, it is necessary to read from a prepared text".
On this occasion the Minister was assuring the Committee that the Bill conformed to the requirements of a specific EC directive. It is a matter of the utmost importance and it is of the utmost importance to be precise about our terms. I did not say that I ought to have the statement, but I asked whether it would be possible to have it in order that I may be able to respond in a more accurate and intelligent way. My poor brain is not up to the requirements which would otherwise be made of it. I think that it was asked for and offered in good faith, and I hope that the debates in your Lordships' Committee will benefit as a result. In my view there will certainly not be any breach of the Rules of Debate in this House and I will not use what I have been given in any way which would breach the Rules of Debate.
Lord Harmar-Nicholls: I should like to say one word and then I shall not pursue the matter further. The noble Lord has confirmed everything that I have said concerning the rules of procedure regarding reading of speeches. He said that there could be an exception with regard to Ministerial Statements. This was not a Ministerial Statement; this was dealing with an amendment in the normal way. There should not even be that excuse.
The noble Lord has said that he does not know how he got the statement. I wonder if my noble friend knows he got it. These things do not drop out of the sky.. Since it is a breach of the normal procedures, I should like to know how the noble Lord's name appeared on the piece of paper and was delivered to him in the way that it was.
5 p.m.
Lord Ezra: I believe that the noble Lord, Lord McIntosh, made a perfectly reasonable request. He did not demand anything, but merely said that it would be helpful if he got the information. I believe the Government are to be commended for providing him with the information that he required and that our debates will gain as a result of that.
Lord Hesketh: Perhaps I may intervene. The fact of the matter is that the Government did not send it and the reason that they did not is the reason that I gave. I was extremely cautious about the fact that precedent and procedure are most important to the Committee. That is why I did not do it. I do not know how the noble Lord, Lord McIntosh, came to
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have the information. I assure the Committee that the reason that I was unwilling to make a commitment was because I did not know the answer.
Lord Harmar-Nicholls:Lord Harmar-Nicholls: Someone must know how he got it.
Lord Nugent of Guildford: My noble friend is good at procedure and plays a large and helpful part in debates in this Committee. I believe that he is straining at a gnat here. It does not seem to be a matter of vast significance. I am holding up only half of the Bill and we have a great deal to go through. We have talked about trivialities but in my view this really is trivial. The explanation that the noble Lord, Lord McIntosh, gave was a perfectly reasonable one. Whether the paper floated down from the ceiling or where it came from, I do not know. I believe that the example he gave was a very good one. My noble friend Lord Harmar-Nicholls has so much experience and provides such tremendous value in the cut and thrust of this Committee that I hope he can see that this is not a matter that we should pursue. I believe that we should get on with the Bill.
Clause 20, as amended, agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 204C:
After Clause 20, insert the following new clause—

("Local Registers of drinking water quality

.—(1) For the purposes of facilitating the enforcement provisions of section 20 above, the Secretary of State shall make regulations for the establishment by local authorities of local registers of breaches of the drinking water quality requirements of this Act by any undertaker.
(2) Such registers shall be open for inspection at all reasonable times, and no charge shall be made for such inspection.
(3) The Director shall be required, as specified in the regulations, to secure that adequate resources are made available for the establishment and maintenance of such registers.").
The noble Lord said: This amendment is a continuation of the same line of argument that we have been putting forward so far. We have already noted that local authorities have very considerable obligations under this Bill as regards drinking water quality. What we are asking for in this new clause is that their obligations to participate in the scrutiny process of drinking water quality should be matched by an obligation to be open to the people in their areas. We are proposing that, in order to help the enforcement of the provisions in Clause 20, local authorities should be required by regulation made by the Secretary of State to established local registers of breaches of drinking water quality and to make those registers open for inspection at all reasonable times. In addition, the local authorities should secure that adequate resources are made available for the establishment and maintenance of these registers.
I believe that this is an example where some local authorities will say that I am not speaking on their behalf because what is imposed here is an additional obligation on them. The maintenance of a register of the breaches of drinking water quality is not a trivial matter; it requires staff time, space and access for the public. It is something that would help to

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convince people in all local authority areas not only that action was being taken but that it was being seen to be taken and that breaches of drinking water quality were being brought to their attention.
In response to an earlier amendment, the noble Earl, Lord Arran, described the requirements of the Bill for publicity and publication of the various enforcement procedures. What is proposed here is something that is in line with existing obligations of local authorities as regards other matters of public concern.
People expect to go to their local authorities to obtain information about matters that they are concerned with. It would be common sense for the public to go to the local authority information point, whatever that may be. As regards some local authorities the Citizens' Advice Bureau provides the necessary information concerning drinking water quality as it does about so many other matters. I believe it will be for the convenience of water consumers that local authorities should perform this service on their behalf even if it is not necessarily for the convenience of the local authorities themselves. It is in that spirit that I move this amendment.
Lord Addington: This amendment will effectively make sure that the local authorities register what goes on with water, especially when something goes wrong. Also, public access will be available to that information. I cannot see any real harm being done in having this new clause as part of the Bill. Surely the people who drink the water have a right to know if there is something going wrong with it. Also a local authority is a tier of local government that is very close to the people and is probably the best organisation to make sure that the appropriate information is available.
Lord Hesketh: The effect of this new clause would be to enable the Secretary of State to make regulations to establish local registers of drinking water quality which would be open for public inspection free of charge. I am glad that this new clause has been moved as it gives me the opportunity to explain how the regulations we are now preparing under Clause 53 will ensure that full information about drinking water quality is made public. Although I recognise and appreciate the noble Lord's intention, I hope that when he has heard my explanation he will realise that the new clause is unnecessary.
First, the regulations will require each water undertaker to publish an annual report giving a fair and true picture of water quality in its area. This report must provide information on how far compliance with the quality standards has been achieved and what progress is being made towards compliance. A standard format for presenting the information will be set out in the regulations. Secondly, each local authority in the water undertaker's area will receive a copy of the report and a further report including further information about the supplies in the local authority's area. Thirdly, the regulations will state that for each supply
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zone a water undertaker shall keep a record of the results of all samples of drinking water quality taken for the purpose of the regulations in that zone. These records are to be made available for public inspection by anyone free of charge, at offices of the undertaker open to the public.
In this way customers will be entitled to free information about the general quality of water supplied to their property. All the analytical data for their supply zone which has come from samples taken in accordance with the regulations, and as up-to-date as reasonably practicable, must be made available to them. If the water is not up to standard, information on progress towards compliance must also be available. This is a very important new provision. People should have the right to know whether the water they are being supplied is up to standard. All this information will also be available to the drinking water inspectorate.
Legal obligations will thus be laid on all water undertakers to provide this full and clear information under provisions already in the Bill. I hope that with this assurance the noble Lord, Lord McIntosh, will feel able to withdraw the new clause.
Lord Ezra: I shall be much happier with what the noble Lord has said if we can resolve this matter of "shall" and "may" that we have referred to many times. The noble Lord has referred to Clause 53. Subsection (3) states:
"The Secretary of State may by regulations require a water undertaker to publish information",
and so on. I believe that he will give us a complete answer to what we are talking about if the word "may" in this context is replaced with the word "shall".
Lord Hesketh: I am sure that after the Government's change of heart earlier this afternoon there will be a strong feeling that we should have progress on a broad front on turning "may" into "shall". However, I fear that I shall have to disappoint the noble Lord on this point. After an initial burst of enthusiasm it has not stayed with me quite long enough.
Lord McIntosh of Haringey: It is sauce for the goose but not apparently for the gander. I shall not ask the noble Lord for a transcript of his speech. What he said has given me sufficient indication, despite the lack of the word "shall" which would be reassurance on the face of the Bill, that the Secretary of State intends to bring in appropriate regulations so that the information we require will be made available to customers free of charge.
I shall read very carefully what the noble Lord has said before considering what amendments are necessary, if indeed any amendments are necessary, at another stage. With that return to what the noble Lord, Lord Harmar-Nicholls, would call the traditions of parliamentary procedure, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Procedural requirements]:
[Amendment No. 205 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 205A:
Page 23, line 44, at end insert—
("(1A) No provisional order shall be suspended, or modifications made to a provisional or final order under this section, where—

(a) the effect could reasonably be expected to create any injury to health; or.

The noble Lord said: This amendment is a serious and I hope an effective attempt to deal with delays which seem to be inevitable in the provisional order procedure., Perhaps I may remind the Committee that after a provisional order has been made there is a 28-day period for representations and objections. There is a subsequent period for the Secretary of State to consider any representations or objections. When the Secretary of State has reached a conclusion at the end of those two periods there is the possibility of a 42-day period for appeals to the High Court. It is possible that the lodging of such an appeal would suspend the effects of any order until such a time as the matter could be heard.
It may well be that in some circumstances this delay will not matter, but where there is a risk of, as we say in the amendment, injury to health or damage to the public interest we feel strongly that the delays in the procedure, towards which in other respects we are sympathetic, should not permit the suspension of a provisional order or modifications to a provisional or final order. In other words, we should have fail-safe procedures where if anything goes wrong public health rather than administrative or legal convenience is the first consideration.
I have already given the example of Camelford. I apologise for my lack of imagination in returning to it. Camelford was a real problem where something happened very quickly. It took some time for people to realise what was happening. A good deal of damage was done to the drinking water by the action of a tipper truck driver. The health of hundreds and perhaps thousands of people suffered as a result. It took a considerable time before the water authority concerned recognised that anything was wrong and it has taken an even longer time—up until today—for an admission that there is any legal obligation as a result. By saying "until today", I mean that as far as I know there has been no acceptance of a legal obligation.
There should be a fail-safe procedure to prevent the suspension of a provisional order to prevent modifications in these specific circumstances where there could be injury to health or damage to the public interest. In the absence from the Committee of many lawyers, I hope that those who feel especially prickly about times available for representations will not feel that this is an unreasonable improvement to the Bill. I beg to move.
5.15 p.m.
Lord Hesketh: The intention of this amendment is to ensure that a provisional or final order cannot be revoked or modified where to do so would be
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injurious to health or any delay caused would be adverse to public interest.
It would indeed be worrying if the circumstances envisaged by this proposed amendment were possible but we consider that the operation of the provisions of the Bill would prevent such an occurrence. The Bill contains some 25 requirements and regulations enforceable under Clause 20, some of which are related to standards necessary to avoid injury to health. The enforcement authority, where he is satisfied that a company is contravening a requirement and has initiated enforcement action, could not then agree to modify or revoke orders when this,
"could reasonably be expected to create … injury to health",
since this would be to allow the contravention to continue.
The reference to delay in the second part of the proposed amendment is presumably related to the modification of a final order. It is true that modification requires a period of consultation but in circumstances where urgent action is required—for example, where delay would result in a damaging effect to the public—then a provisional order requiring immediate action would have been made rather than a final order. Indeed Clause 20(3) requires the Secretary of State or the director to have regard in particular to the extent to which any person is likely to sustain loss or damage when considering whether to make a final order or a provisional order. A provisonal order would remain in force for up to three months. If necessary, it may be confirmed within this time when notice of that intention and consideration of representations would be required. For those reasons I hope that the noble Lord may see fit to withdraw the amendment.
Lord McIntosh of Haringey: That reply is in part reassuring but our amendment specifically says that:
"No provisional order shall be suspended".
I did not hear in the noble Lord's speech any reference to the suspension of provisional orders. I wonder whether he can help me on that point.
Lord Hesketh: If an undertaker makes an application to the courts under Clause 22, the provisional order would not be suspended but would remain in force and in operation until the High Court itself decided to do so and quashed it.
Lord McIntosh of Haringey: That seems to make sense. I shall read carefully what the noble Lord has said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave,withdrawn.
[Amendments Nos. 206 to 215 had been withdrawn from the Marshalled List.]
Clause 21 agreed to.
Clause 22 [Validity and effect of orders]:
[Amendments Nos. 216 to 218 had been withdrawn from the Marshalled List.]
Clause 22 agreed to.
Clause 23 [Specific administration orders in relation to water or sewerage undertakers]:
[Amendments Nos. 219 to 220 had been withdrawn from the Marshalled List.]
Lord Benson Lord Benson moved Amendment No. 221:
Page 27, line 34, leave out second ("section") and insert ("sections (special administration orders in relation to companies) and").
The noble Lord said: With the permission of the Committee I should like to speak at the same time to Amendment No. 222, because both amendments relate to the same subject. I speak not only for myself but I also represent the views of the three chartered bodies of the accountancy profession and also of the Association of Insolvency Practitioners. The amendment arises when three conditions exist. The first is when an order has been made under Clause 23(2). The clause is designed to protect the position of creditors. The second condition is that the company can pay its debts in full; and thirdly, that there are creditors existing at the date of the order.
As the Bill is presently drawn the professional bodies are advised—I have been at pains to consult the same authorities—that it may not be possible for the administrator who is appointed to pay the creditors existing at the date of the order although the company has the resources to pay its debts in full. The problem is that the Bill includes some sections from the Insolvency Act and it is extremely difficult to decipher the precise meaning of the Bill when those sections are included in it.
I need hardly say that the professional bodies, in accordance with their usual practice, raised the matter at departmental level some weeks ago. However, I am advised that the difficulty is that the two departments involved—the Department of the Environment and the DTI—have differing views on this subject. The legal advisers to the professional bodies feel that the matter is so confused especially as regards the difference of view between the two departments that the only possible way out of the difficulty is this amendment.
For the removal of doubt I should say that creditors after the date of the order under Clause 23 will of course be paid in full because the administrator will be responsible for so doing. We are speaking only of creditors at the date of the order when the company has the money to pay them. It would be most helpful if the noble Lord in his reply would say that he was willing to arrange for the three contesting parties to meet together in a room so that they could agree exactly what the Bill, with the inclusion of the insolvency sections, means. When they had agreed that issue, if necessary, an amendment could be put forward to give effect to what had their combined approval. I beg to move.
Lord Hesketh: The grounds on which the courts may make a special administration order are set out in Clause 23(4) of the Bill. A special administration order may be made in respect of an appointed company on the grounds of its insolvency, or likely insolvency. An order may also be made on other grounds in respect of a solvent company. The proposed new clause would expressly empower a
962
special administrator to make payments to creditors where a solvent company is the subject of a special administration order.
We believe that the proposed new clause is unnecessary. Let us look at what the special administration order is. The Bill provides that it is an order of the High Court directing that while the order is in force, the affairs, business and property of the company are to be managed by a special administrator appointed by the court in order to achieve the purposes of the order and, so far as is consistent with those purposes, with a view to protection of the interests of members and creditors of the company.
The special administrator is under a duty to manage the affairs, business and property in accordance with proposals prepared by him, subject to any directions from the court. In the case of a solvent company, it is likely to to be consistent, for the purposes of the order, for the special administrator to make payments to creditors whether or not the debts or liabilities in question were incurred prior to making the order.
There are two purposes attached to a special administration order: first, to transfer to one or more new appointees as a going concern so much of the appointed company's undertaking as is necessary in order to ensure that the new appointee or appointees are able to properly carry out the functions, and secondly, to keep essential water and sewerage services operating until the transfer is achieved. Necessarily, the continuation of those services will require payments to be made to many creditors. As we are dealing with a solvent company, the company should carry on making the payments it would normally be required to make. We believe that the amendment is unnecessary; we hope that the noble Lord, Lord Benson, will feel able to withdraw it.
Lord Benson: I am most grateful for the explanation. However, I wonder whether the noble Lord can help me. Is he saying that the administrator has the power to pay creditors existing at the date of the order if the company is solvent? That is the issue.
Lord Hesketh: I believe that I am correct in saying that.
Lord Benson: In the light of that answer, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Lord Benson Lord Benson had given notice of his intention to move Amendment No. 222.
After Clause 23, insert the following new clause:

("Special administration orders in relation to companies.

.Where an order under section 23 above is for the time being in force in relation to a company the person appointed may pay debts or liabilities incurred prior to the time of the making of the order, unless the company is or is likely to be unable to pay its debts.").
The noble Lord said: As I have just withdrawn Amendment No. 221,I do not propose to move this amendment.
[Amendment No. 222 not moved.]
The Earl of Cranbrook The Earl of Cranbrook moved Amendment No. 222A:
After Clause 23, insert the following new clause:

("Compensation for loss of assets.

.—(1) It shall be the duty—

(a) of a special administrator exercising the powers contained in order under section 23 above; and

(b) of the Secretary of State or Director on making any appointment under section 11 above,

to ensure that the existing appointee receives a fair price for its assets and undertakings which are to be transferred to the successor appointee.
(2) In exercising the powers contained in an order under section 23 above the duty of a special administrator under subsection (1) above shall be satisfied by making the transfer to the successor appointee subject to the payment of the fair price by the successor appointee to the existing appointee. If the special administrator is unable to find a company prepared to pay the fair price, the special administrator shall either—

(a) request the Director to re-assess the fair price. If the existing appointee disagrees with the re-assessment the dispute shall be referred back to the Monopolies Commission; or

(b) request the Secretary of State or Director to amend the terms of the appointment so as to enable the special administrator to achieve the fair price.

(3) On making an appointment under section 11 above the duty of the Secretary of State or Director under subsection (1) above shall be satisfied by making the appointment subject to the condition that the successor appointee pay the fair price to the existing appointee.
(4) In this section—

"existing appointee" has the same meaning as in section 13 above;

"fair price" means such price as the existing appointee shall agree with the Director. Any dispute shall be referred to the Monopolies Commission for determination;

"special administrator" means a person appointed under section 23 (2) above;

"successor appointee" means the company appointed under section 11 above to succeed the existing appointee or the company to which the assets and undertakings of the existing appointee are transferred by an order under section 23 above.").

The noble Earl said: Like the noble Lord, Lord Benson, I wish through this amendment to look at the working of the regime imposed by the Bill when it comes into force, the Bill provides that appointed water and sewerage undertakers will face the possibility of losing their appointment. An undertaker's licence may be terminated on 10 years' notice and that notice is not to expire before the year 2014. The notice will normally be given only when the undertaker is in serious breach of its obligations under the Bill. However, it could in theory be given when the undertaker is not actually in default.
The possibility of termination of appointment raises serious implications for consumers and for potential investors. The proposed new clause seeks to ensure that an existing appointee will receive fair value for its assets if it loses its appointment.
If, in the year 2004—which, incidentally, is one year after my driving licence expires—an undertaker is given notice that its appointment will terminate in 10 years' time, what will happen during the subsequent 10 years? Further, what will be the implications for the undertaker's long-term capital and maintenance expenditure? It seems likely, first, that the undertaker will be inclined to make no more
964
than the minimum expenditure necessary to comply with its obligations. That cannot be in the long-term interest of the consumer.
There is protection provided by Clause 23—the clause to which we have just agreed. However, it is not in the consumer's interest for the undertaker's performance during those 10 years to sink to such a low level that it is inevitable that a special administration order is made under that clause. Moreover, in the harsh world of finance, if 10 years' notice of termination of appointment has been given, the undertaker may have difficulty in obtaining finance for continuing long-term investment unless proper rules exist for the protection of the assets which may be its only collateral.
Thus, unless the assets are safeguarded in the long term in some manner, the fact that an undertaker's appointment may be terminated—indeed, there is no long-term certainty of any appointment continuing—must be of serious concern to potential investors. The proposed new clause suggests one way in which such problems might be tackled.
The present water authorities own a network of assets—including reservoirs, treatment works, pumping stations, supply mains, sewers and so on—which enable them to supply water and to provide sewerage services. Those assets transfer to the undertaker on appointment under the provisions of the Bill. The assets are of no use to anyone except an undertaker holding an appointment. The purpose of the proposed new clause is to ensure that the existing appointee—that is, the current undertaker—receives a fair price for its assets from the successor appointee.
The fear of those in the water authorities, thinking about the nature of the regime which the Bill imposes, is that one appointee should be unable to receive a fair price for its assets from a successor appointee. If there were to be no competition for the appointment, without the new clause the existing appointee, on termination, would be unlikely to receive a fair price for its assets. There might even be a ring against it, as it were, when it would be offered no more than a trivial sum.
The clause may seem rather long, but its effect is simple. Both the special administrator, when making an order under Clause 23, and the Secretary of State or director on making an appointment under Clause 11, would be under a duty to ensure that the existing appointee receives a fair price for its assets. The fair price would be agreed between the director and the existing appointee. Any dispute can be referred to the Monopolies and Mergers Commission. Any transfer under an order under Clause 23 would be subject to the condition that the successor appointee pay a fair price to the existing appointee.
If the special administrator were unable to find a company prepared to pay a fair price, he would have to ask the director to reassess the fair price or request the Secretary of State or the director to amend the terms of the appointment so as to enable the special administrator to achieve the fair price.
On making an appointment under Clause 11, it would be the duty of the Secretary of State or the director to make it a condition of the appointment

965
that the successor appointee pay a fair price to the existing appointee. The problem is serious. I hope that the Government have considered the implications of the provisions in the Bill which lead to the termination of an undertaker's appointment. The potential repercussions are serious, both for the long-term interests of the consumer in the successful operation of a privatised water industry and for the flotation. I beg to move.
5.30 p.m.
Lord Hesketh: The amendment would come into effect where a special administration is in force, for the purpose of transferring from the existing appointed company the necessary assets for the operation of water and sewerage services to a new appointee and is intended to ensure that a fair price is obtained for an appointed company's assets.
I have considerable sympathy with the intent of the amendment. The appointed companies will need to plan the substantial investment necessary in the water authorities' successor companies on a long-term basis and will anticipate an appointment lasting 25 years. Termination on 10 years' notice or following default has raised the fear that there would be scope for choosing as the new appointee the one who would accept the lowest value charging formula but would therefore offer the lowest price for the assets.
I accept that that could have serious disadvantages. For example, the company could be likely to minimise capital and maintenance expenditure. That would create serious regulatory problems and could not be in the long-term interests of the consumer. Moreover, the prospect that little consideration would be paid for assets transferred could also cause financing problems as any creditor might be concerned about repayment.
However, the amendments proposed by my noble friend Lord Cranbrook do not provide a market solution. The suggested definition of fair price has nothing to do with what potential incoming appointees might be prepared to pay. If the price were not met, the existing appointee could languish indefinitely in the hands of a special administrator, moving the company from normality, and with a further disadvantage to creditors and shareholders, the very people whom the amendment is intended to protect. I should therefore like to consider whether other more appropriate amendments could provide a solution which, subject always to the general duties imposed upon the Secretary of State and the director by Clause 7, would permit a transfer of assets on terms which are fair to customers and companies alike.
The Earl of Cranbrook: I heard my noble friend clearly say that he had taken on board the concerns which I voiced when moving the amendment. I am grateful to him for agreeing to consider the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 5 [TransitionalProvision on Termination of Appointments]:
[Amendments Nos. 223 to 227 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 228:
Page 199, line 46, after ("provisions") insert ("and without further assurance").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendments Nos. 229 and 230:
Page 200, line 32, at end insert—
("(5A) The provision that may be made by virtue of sub-paragraph (2)(b) above includes—

(a) provision for treating any person who is entitled by virtue of a scheme under this Schedule to possession of a document as having given another person an acknowledgement in writing of the right of that other person to the production of the document and to delivery of copies thereof; and

(b) provision applying section 64 of the Law of Property Act 1925 (production and safe custody of documents) in relation to any case in relation to which provision falling within paragraph (a) above has effect.").

Page 201, line 16, at end insert—

("(f) that disputes as to the effect of the scheme between the existing appointee and the new appointee, between either of them and any other appointee or between different companies which are other appointees are to be referred to such arbitration as may be specified in or determined under the scheme;

(g) that determinations on such arbitrations and certificates given jointly by two or more such appointees as are mentioned in paragraph (f) above as to the effect of the scheme as between the companies giving the certificates are to be conclusive for all purposes.").

On Question, amendments agreed to.
Schedule 5, as amended, agreed to.
Schedule 6: [Special Administration Orders]:
[Amendments Nos. 231 to 239 had been withdrawn from the Marshalled List.]
Schedule 6 agreed to.
Clause 24 [Restriction on winding-up etc. of water or sewerage undertaker]:
[Amendment No. 240 had been withdrawn from the Marshalled List.]
Clause 24 agreed to.
Clause 25 [Government financial assistance where special administration orders made]:
Lord Benson Lord Benson moved Amendment No. 241:
Page 28, line 35, at end insert—
("( ) Where an order is made under section 23 above, the Secretary of State shall make such grants or loans or give such guarantees under this section as shall ensure that any losses incurred in carrying on the company's business after the time of the making of the order do not result in a reduction in the amount which can be paid to creditors of the company in respect of debts and liabilities owing to them at that time.").
The noble Lord said: There would be three conditions which would bring the amendment into effect. The first is where an order has been made under Clause 23, and I repeat that Clause 23 is designed to protect creditors; secondly, that there are creditors existing at the date of the order; and,

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thirdly, that it is necessary to keep the company, or the business, in being in the public interest under Clause 37, which envisages just such a situation.
Clause 25 also envisages just that situation because it provides that the Secretary of State shall provide grants, loans or other financial arrangements to enable a company to continue in being in the public interest.
Creditors arriving after the date of the order are not in jeopardy because the administrator will have to deal with them, but the creditors existing at the date of the order are in trouble, or in possible jeopardy, because they may see losses being incurred, year after year or for a considerable time, using up their assets, and they can do nothing to stop those losses frittering away the assets which would have been available to pay their debts.
I should make the point that, but for the order, creditors existing at the date of the order could stop those losses frittering away their assets; they could do that by demanding repayment of their debts, by issuing a writ or by putting the company into liquidation. They cannot do that because of the order, and so it is necessary that they should be protected as regards the assets existing at the date of the order which would be available to pay their debts. I beg to move.
Lord Hesketh: The effect of the amendment is to require the Secretary of State, where a special administration is in force, to make grants or loans or give guarantees, to ensure that the amount payable to creditors is not less than it would have been if an administrator had been appointed under the Insolvency Act 1986.
The comparison with the appointment of an administrator under the Insolvency Act 1986 is misleading. It ignores the vital difference in circumstances between other companies and the water authorities' successor companies appointed to carry out the water and sewerage services. The special administration procedures are uniquely necessary to the water industry because the fixed assets of the undertaker (pipes, sewers, treatment plants, etc.) cannot be replaced except in the long term, and the continued function of water and sewerage services is vital to the health and economic well being of the community and cannot be allowed to lapse even in the short term.
Any other insolvent company would be wound up and would cease trading, but a water or sewerage undertaker would not be wound up because of the vital importance of continuity of services. Instead a special administrator would be appointed to ensure continuity of services and to carry out the transfer of the existing appointee's assets to a relacement appointee. The provisions in the Bill are derived by adaptation of the administration order provisions of the Insolvency Act 1986.
The proposed amendment implies creditors may lose more money than they would otherwise have done because of the special administration procedure. We believe, because of the particular nature of the water or sewerage undertakers' assets, that that is not necessarily the case. The continuation
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of the company as a going concern is a necessity for the well-being of the customers, but it may well also benefit the creditors. The special administrator has a duty to protect the interests of members and creditors, but this is secondary to the purpose of the order.
The benefit to creditors will result from the likelihood that the business may well have a higher value if sold as a going concern than it would if it were sold piecemeal. Individual assets may be fairly worthless independently of the appointment. Therefore, if the company is sold as a going concern the creditors are more likely to be paid in full than if the company were immediately put into liquidation.
The proposed amendment also raises the difficult question of who should pay for the inefficiencies of an appointed company. Should it be the customer, the creditor, or, as is implied by the amendment, the taxpayer? It would clearly be unfair for the customer to suffer through reduced services, as would be the case if the company were in default, and those same customers then be subject to higher charges to put the default right. Nor can it be acceptable for the inefficiencies of a company to be paid for at a national level, by the taxpayer. I can only reach the conclusion that insolvency is a commercial risk that every trader is aware of and the creditors of water authority successor companies should be fully aware of the special administration order when they commit themselves to business with those companies. It is for those reasons that I hope the noble Lord, Lord Benson, will be able to withdraw his amendment.
Lord Benson: I am grateful for the explanations which have been given. I shall take them away and consider what effect they might have.
We have heard a great deal about fixed assets and I wonder whether the noble Lord could help me on what would happen in a certain situation. Suppose there were a fund of cash at the date of the order of, let us say, £2 million available to pay creditors existing at the date of the order. What will happen in practice is that the administrator will use that fund of cash to keep the business in being in the public interest. Maybe losses will be incurred. Does the noble Lord have in mind that that should be allowed to happen, that the fund of cash which is available to pay the creditors at the date of the order should be used and should be allowed to be used while the company makes losses for some unspecified time in the public interest? That could not be reasonable.
5.45 p.m.
Lord Hesketh: The position is that the priority is for the continuation of the water and sewerage business. However, I have tried to make clear that we believe that a very reasonable case could be made that protection is given on the basis of having the administration rather than having a traditional insolvency.
Lord Benson: I am not satisfied with that explanation but it is not a matter for dividing the Committee at the moment. I shall take back what

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the noble Lord said to see whether we can find some other solution, perhaps at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clause 26 [Director's duty to keep matters under review and to consider certain matters]:
[Amendment No. 242 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 242A:
Page 28, line 45, leave out from ("Director") to third ("to") in line 46.
The noble Lord said: In moving Amendment No. 242A I wish to speak also to Amendment No. 244A. Clause 26 and the succeeding clauses deal with what is coyly called,
"Review of certain matters and investigation of complaints".
I wish to make clear that we see the review of certain matters as being of considerable importance because it is the basis on which a number of items dealing with the protection of consumer interests can be given effect.
Clause 26(1), dealing with the director's duty to keep matters under review, says that the director shall,
"so far as it appears to him practicable from time to time to do so, keep under review the carrying on both in England and Wales and elsewhere of activities connected with the matters in relation to which water undertakers or sewerage undertakers carry out functions".
I think that I understand that. Our objection is to the phrase,
"so far as it appears to him practicable from time to time to do so".
It is not a matter of the convenience of the director that these reviews should take place. As the heading to the sequence of clauses makes clear, the reviews are there in order to protect consumer interests. There ought to be something much firmer about the timing of the reviews and the insistence on reviews than there is in the subsection as drafted at present. We have made the point on a number of occasions that the director general has the responsibility for regulation and not just for consumer interests. But that is not a good reason why, where his activities are for the purpose of protecting consumer interests, they should be subject to this kind of qualification and weakness.
We are not proposing in the amendment any particular period for review. I suppose it is conceivable that without putting in any alternatives the Government might argue that there could be less frequent reviews under our amendment than under the clause as drafted. But I do not think that that is the case. If we look back at previous legislation we see that the regular review of the activities of the bodies being regulated—in this case the water undertakers or the sewerage undertakers—is a common feature in legislation and one which deserves protection and enhancement in the Bill. To take the earliest example of which I am aware,
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the Fair Trading Act 1973 contains provisions for review. The same is also true of the Telecommunications Bill—the Telecommunications Act—and the Gas Act. I apologise for continuing to refer to legislation as Bills. That is the way we see it and it is difficult to believe that Bills take the form of Acts after they have left us.
There are particular reasons why the regular review of water and sewerage undertakings is important. First, those undertakings are natural monopolies. It is the Government's argument—a flawed argument in my view, but nevertheless an argument—that comparative competition will exist and permit an assessment to be made of their efficiency, from the point of view both of the public interest and of the shareholders.
Secondly, the price review procedures—with which we have not yet finished dealing and which I hope will not remain in the same inadequate form that they are in at the moment—allow for only very infrequent price reviews. It is intended that prices should stay on the same formula for up to 10 years. That is a quite unsatisfactory situation and one which means that reviews of the undertakings as a whole should take place more frequently than is proposed for price reviews.
The third reason is that the water industry is perhaps unusual in that innovation does not really take place at the level of individual water undertakings. It is much more likely that innovation which will cause an improvement, either in quality of the service provided by water or sewerage undertakings or in a reduction in price, will be at an industry level rather than at an undertaking level.
One of the obligations of the director general is or ought to be the encouragement of best practice so that the innovations should be available to all the undertakings. After all, we are not dealing here with cut-throat competition between one water company and another. They are all providing or are supposed to be providing a comparable service. The only difference is that it is to different parts of the country. There is no reason why the companies should not share any information they have with each other and with the statutory water companies and their successor companies, in order to improve that service. So the director general has an interest in securing adherence to best practice and securing the dissemination of technical innovation, managerial innovation or indeed innovation in financial procedures or distribution procedures which would help to provide a better service.
For all those reasons it is necessary that the director should have as strong a duty as possible to review the activities of the undertakings. We believe that the phrase,
"so far as it appears to him practicable from time to time to do so",
is a classic example of weasel words. It enables the director general, if he were so minded—I cast no aspersions on the director general designate himself—to neglect that duty. The duty should not be for him to decide; it should be concerned with the benefit of the consumers.
Amendment No. 244A is closely related to that point. It deals, in another sense, with the independence of the director and the relationship between the director and the Secretary of State. We all understand that the Secretary of State is responsible to Parliament; in other words, he holds the responsibility for the political priorities to be imposed on the director. In this amendment we seek to secure that the director general has operational independence and that he has the resources to implement any priorities that he sets for his activities. I believe that in another place in Committee the phrase "the persuasive authority of the Secretary of State" was used. I do not think that is a clear enough definition of the distinction between the responsibilities of the Secretary of State and those of the director general if we are to achieve what is sometimes called a level playing field. I find some difficulty with the phrase "level playing field", partly because I went to grammar school in High Wycombe. Those who know Wycombe Wanderers will know that the pitch of that team in the Rye slopes not up and down from one end to the other but from one side to the other. One's position in the team rather than the side one is on determines whether one has an easy or a difficult task. Therefore the phrase "level playing field" has always meant something diffierent to me than to other people.
If we are to have a level playing field between the director general and the Secretary of State, the director general must have the responsibility for establishing his own regulatory priorities and also for having regard to the political priorities set by the Secretary of State. Unless he has the reponsibility for setting his own priorities and for giving a sufficient amount of his own financial and staff resources to that, he will not be able to do the job properly. I remind the Committee that the director general will have a staff of only 80 to deal with 39 water and sewage undertakings. In other words, he will have scarcely more than two members of staff per undertaking. Unless there is an improvement in his position, he will be running a very tight ship. He will have great difficulty in asserting his own priorities—the priorities of the independent regulatory body—over any political priorities which may be set by the Secretary of State.
It is quite possible that the Secretary of State could set so many priorities that the director general would have no chance to do anything as regards his own priorities. That does not seem to us to be a satisfactory way to deal with the relationship between them. These amendments have been tabled for the purpose of clarity and for asserting the independence of the regulatory body, and the director general as the head of that regulatory body. I hope they will find favour with the Committee. I beg to move.
The Earl of Arran: Clause 26 places a duty on the director general to keep himself informed about how both the appointed companies and water and sewerage undertakers abroad carry out their functions. The director also has a duty to collect information about the carrying out of the functions of the water and sewerage undertakers and about
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the companies themselves. Amendment No. 242A would remove the qualification from subsection (1) that he should only collect such information,
"so far as it appears to him practicable from time to time to do so".
The director is best placed to judge what is practicable and it surely would not make sense to expect him to go further. He will in any case judge for himself the information he requires so that he can properly carry out his Clause 7 duties, and will seek out the information he requires rather than just reacting to situations as and when they arise.
The director will in any case receive information on a regular basis from appointees. In addition to his duties under this clause, the model instrument of appointment puts an obligation on the appointees to provide the director with a wide range of information. This may be an annual requirement, for example, to satisfy the director that each year's charges have been fixed in accordance with the charges formula in condition B, to provide regulatory accounts under condition E or to provide information on standards of performance under condition I. Alternatively the appointees will be obliged to provide information on request, such as concerning undue discrimination under condition D or any general information the director requires under condition L.
The noble Lord, Lord McIntosh of Haringey, talked about previous legislation. The qualification,
"so far as it appears to him practicable from time to time to do so",
is well precedented in the Fair Trading Act 1973, the Telecommunications Act 1984 and the Gas Act 1986. The Committees scrutinising those Bills wisely decided not to impose an unlimited requirement for the director to go to any lengths to collect information.
We firmly believe that the intention of the duty is perfectly clear. It would be unreasonable to expect the director to go to any lengths to collect information. We believe that the amendment therefore is unreasonable and ineffective. I therefore urge the Committee to reject Amendment No. 242A.
I now turn to Amendment No. 244A. Clause 26 also provides that the Secretary of State may give general directions to the director about considerations he should have regard to when determining his priorities for collecting information under subsections (1) and (2). Amendment No. 244A seeks to prevent such general directions limiting these duties of the director to keeping himself informed.
Subsection (3) allows the Secretary of State to indicate in general terms considerations he thinks the director should take account of in his information gathering. This would be relevant if an issue arose to which the Secretary of State considered particular regard should be paid; for example, a matter of national or social or economic importance. The subsection would allow the Secretary of State to draw such matters to the attention of the director and the director would have a duty to have regard to those directions, but he would not be barred from taking into account other relevant considerations. I

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can assure the Committee that the Secretary of State's power in no way dilutes the director's obligations under the clause. It is for those reasons that I ask the Committee to reject this amendment.
Lord McIntosh of Haringey: I shall read very carefully what the noble Earl said. However, it appears to me at the moment that he managed to misunderstand both of my amendments. He talked about an unlimited obligation on the director to collect information. However, the collection of information is referred to under subsection (2), not subsection (1). I have not proposed any amendments to subsection (2).
Amendment No. 242A is concerned with keeping under review the functions and activities of the water and sewerage undertakers, and not with the collection of information. I certainly agree that it is up to the director to collect such information as he considers practicable, so that he can carry out any duty or power that is conferred or imposed upon him. However, the fundamental duty to carry out a review is something which should not be subject to qualification. I do not think that the reply of the noble Earl adequately reflected that fact.
Similarly, in Amendment No. 244A we were not in any way proposing to limit the power of the director. We proposed to limit the power of the Secretary of State to give directions to the director, which is rather different. However, these are matters which deserve further consideration.
Lord Trafford: I follow the noble Lord's argument and I think that I understand it, but I wonder to what extent the amendments reinforce the powers of the director, bearing in mind that he already has certain specific duties under Clause 7 which we have already discussed. It seems to me that it is unnecessary to include these amendments. The noble Lord has not convinced me of the need.
Lord McIntosh of Haringey: I think that the noble Lord, Lord Trafford, has the same problem I have owing to the fact that references to the director general are to be found scattered throughout the Bill in many different places. It would be enormously helpful if there were at some stage a résumé of the role of the director general and his duties, powers, and responsibilities as well as the resources which will be available to him. Perhaps the noble Lord, Lord Trafford, would like to join me in putting down a suitable amendment at Report stage to clarify the position.
In the meantime, I do not believe that that is a sufficient argument against the amendment. My amendment properly comes at the beginning of a series of clauses which purport to deal with the investigation of complaints and, in Clause 27, with the protection of customer interests. That is the purpose for which I understand the review to be required. That is why I believe that the review should have particularly strong statutory force.
Lord Trafford: I agree with what the noble Lord says about the duties of the director being scattered throughout the Bill. It would be nice if they were all to be found in one place so that we knew exactly what he is supposed to do. However, with respect to the noble Lord, he has not convinced me that the amendments are necessary to reinforce the general duties outlined under Clause 7. Therefore I cannot see in what way they advance the powers, independence or duties of the director. That is the point on which I hoped he would persuade me.
Lord McIntosh of Haringey: Clearly the Government consider they are necessary; otherwise they would not have included a separate clause dealing with the review. If Clause 7 was adequte for the purpose, then the extensive provisions in Clauses 26 and 27 would not be necessary.
These are matters which deserve further consideration. Without necessarily yielding to the arguments of the noble Lord, Lord Trafford, and certainly without yielding to the arguments from the Government Front Bench, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 243 and 244 had been withdrawn from the Marshalled List.]
[Amendment No. 244A not moved.]
[Amendment No. 245 had been withdrawn from the Marshalled List.]
Clause 26 agreed to.
6 p.m.
Clause 27 [Protection of customer interests]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 245A.
Page 29, line 35, at end insert—
("( ) to make representations to the Director and any other relevant body on any matters as the committee considers appropriate;").
The noble Lord said: In moving Amendment No. 245A it may be for the convenience of the Committee if I also speak to Amendments Nos. 245B, 246A, 248A, 250A, 253A and 256A. These amendments are designed to strengthen the role of the customer service committees. I am bound to say, vis-à-vis the previous debate, that that is somewhat difficult because, although they fall under Clause 27, the references I shall use have their genesis in Clause 6.
As the Committee will be aware, Clause 6 deals with customer service committees. Clause 6(1) states:
"The Director may establish and maintain committees, to be known as customer service committees, for the purpose of carrying out the functions which are assigned to those committees by this Act and of carrying out such other functions as they may be required to carry out by the Director".
The purpose of the amendments is to put some flesh on the bones of the functions assigned to those committees by the Bill. That is the right of all oppositions. We are anxious to see that what we wish to happen is written on the face of the Bill rather than left to the good intentions of people like the director.
Amendment No. 245A would enable the customer service committees,
"to make representations to the Director and any other relevant body on any matters as the Committee considers appropriate".
The Minister may tell us that there is no need to write that on the face of the Bill because what we propose is what is expected to happen. If the committees were able to make such representations, that would be fine.
However, I should like the Committee to reflect for a moment on the kind of committees that would exist and the reputation they would have if their powers were very restricted. Clause 27, which has the rubric in the margin "Protection of customer interests", states in subsection (1):
"It shall be the duty of a customer service committee to keep under review all matters appearing to the committee to affect the interests of the persons who are customers or potential customers".
However Clause 27(3) states:
"The only remedy for a breach by a customer service committee of a duty imposed on it by subsection (1) above shall be the making of such a complaint to the Director as is
mentioned in subsection (2)(e) above".
If one relates Amendment No. 245A with the subsequent amendments with which it is grouped our intention becomes clear. In Amendment No. 250A we are seeking to ensure that the function of the committees will be,
"to provide effective and aggressive representation for consumers in the investigation of any complaint as is mentioned".
By that we mean that we want those bodies to be seen to be willing to take on—and I mean "take on" in every sense of the phrase—on behalf of consumers the complaints which are drawn to their attention.
In Amendment No. 250A we also propose that the committees should,
"disseminate advice and information to consumers of water or users of sewage services".
The Minister may well say that there is no need for that to be written on the face of the Bill because that responsibility will be within the committees' purview. If the noble Lord can say that all the information on water and sewerage services which the customer service committees consider should be disseminated will be disseminated, he will go a long way to meeting our case.
In Amendment No. 256A we seek to make it a duty of the director,
"to make such arrangements as he considers appropriate to secure that the level of staffing, and other resources available to a customer service committee are adequate to the rigorous fulfilment of its functions under this section".
We have expanded the functions under that subsection. We are not sufficiently daft as to believe that one can expand functions without willing the resources in order to carry them out. If the Committee accepts that it is right and proper to expand the functions, the resources—which, in effect, will be adequate numbers of staff—should be provided.
The Committee will recall that, in a debate reported in cols. 343 to 345 of Hansard on the second day of our Committee proceedings, the Government rejected in principle the idea that the customer
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service committees should appoint their own staff. That argument was lost, but we return to the general issue of what resources will be made available to the committees. It should not be assumed that the committees will have adequate staffing. We want the Minister to tell us what he envisages to be adequate staffing and how he intends to consider the matter generally. He must face up to a number of problems in that respect.
Perhaps I may draw the Committee's attention to a debate that took place in this Chamber last Friday. In that debate, there was a reference to a document which has just become available, entitled A Review of the Crown Prosecution Service. One may well ask what that has to do with the Water Bill. If one asks me that question, one extends what I intend to say because it serves as an illustration of my argument. When the CPS first saw the light of day and the case for it was made, the House was told that it was anticipated that a staff of about 2,500 would be required. However, by the time it saw the light of day and became a fact, that figure was 3,500; it is now 4,500. The original estimate to staff a very important element of our judicial system went up from £70 millionto £170 million.
The point I am making is that it is one thing to pooh-pooh the idea that one needs to bother about the level of staffing at this stage and another to find out later whether the job can be done properly. Is it the Minister's intention that the committee's job will be done properly? We want some idea of the number of staff and whether the Government have given any thought to the matter. We believe that it will be worse than useless if one creates a body that has the aura of being—to use a cliche—a consumer or customer watchdog but which is neutered from the beginning, has little to oversee and has limited powers. At the end of the day, it may say that it could do more but does not have the staff required.
I very much hope that the Minister will help us. We on this side of the Committee consider that aspect of the Bill—to ensure that the customer feels that his complaint will be dealt with seriously and pursued aggressively—to be an aspect that he should feel satisfied is part of the privatisation system. I beg to move.
Lord Addington: I wish to speak to Amendment No. 245A. I believe that we have here the nub of the argument with regard to this group of amendments. We are talking about how effective the consumer committees can be. If there is any limitation regarding whom they can go to with any complaints, we place a serious restriction on them. If they are to be truly effective, they must have the ability to go to whomsoever is considered appropriate with whatever complaint or question they have.
6.15 p.m.
Lord Hesketh: Amendment No. 245A would make it a duty of a customer service committee in protecting customer interests to make representations to the director and any other relevant body on any matter that the committee considered appropriate. Amendment No. 248A is a consequential amendment to Amendment No. 250A which seeks to impose three further duties on those

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committees. First of all, the amendment requires that not only should these committees be effective in investigating customer complaints but they should also be aggressive in so doing. Secondly, they are to be effective and aggressive in representing customers in any investigations carried out by the director or any other body. Thirdly, they are to disseminate advice and information to customers.
Amendment No. 245B would make it a duty of a customer service committee to approve, with or without modifications, a disconnection code of practice relating to the area served by that committee. Amendment No. 246A would enable a customer service committee to take enforcement action itself under regulations issued by the Secretary of State for a contravention of the company's appointment.
Amendment No. 253A would omit the reference to the only remedy for a breach by a customer service committee of a duty imposed under subsection (1) of the clause, being a complaint to the director general. Amendment No. 256A seeks to impose a duty on the director to make such arrangements as he sees appropriate to ensure that staffing and resourcing of customer service committees is adequate for them to perform their functions—in terms suggested by the wording of the amendment—with rigour.
These amendments would drive a wedge between the customer service committees and the director general, and would make for confrontation between the committees and the companies that have been allocated to them. The amendments ignore the benefits of the arrangement in the Bill under which the customer service committees are appointed by and report to the director general. The committees carry that much more weight in their investigations of complaints through such an association. Any divorce between him and those committees would therefore weaken rather than strengthen them.
The committees are able to report to the director general under Clause 36(1)(b) on any matter which appears to them to affect the interests of customers of companies allocated to them. The director needs their advice in order that he can properly be able to protect the customer. Their views will be all the more valuable for the balance of interests represented on those committees—the local authorities, industrial, commercial and farming interests and, most of all, domestic customers.
As the noble Lord well knows, we utterly repudiate the suggestion that the director general will not be able to protect customer interests and that in some way the Bill requires him to place the interests of companies above the interests of customers. I cannot think of anything better designed to encourage confrontation with the appointed companies than the reference in Amendment No. 250A to aggressive representation of customer interests. What is surely important is that there should be effective representation of customer complaints. That is often best achieved through co-operation rather than confrontation.
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I quite agree, however, that the: CSCs have a role in providing information to customers in relation to their existing duties under the Bill. That is provided for through the public being able to attend meetings, on those being reported in the press and through publication of customer service committee reports.
I also agree about the importance of customer service committees' comments being taken into account in the preparation of the disconnection code and any revisions to it. Where a customer service committee was established at the time of preparing those codes of practice, the director will be able to take its views into account prior to approving the code. Furthermore, the appointed company has, under condition G of the model instrument of appointment, to consult the customer service committee in carrying out any review or making any substantial revision to the code before submitting any revision to the director for his approval.
It is appropriate that it should be the director who approves those codes. As the economic regulator, he has knowledge of conditions throughout the industry and the necessary powers to enforce the procedures as set out in the codes. By enabling the customer service committees to take enforcement action under regulations issued by the Secretary of State, as Amendment No. 246A would provide, there arises the obvious difficulty of inconsistency in the use of those powers to which I referred in an earlier debate this afternoon. It would also create an over-elaborate framework of regulation which would be fragmented and less effective. We regard it as self-evident that, since the director is responsible for appointing the customer service committees, for their staffing and also for their budgets, he should consider complaints made against them.
Finally, on the financing of these committees, under the financial provisions in paragraph 5(2) of Schedule 4, the customer service committees have to prepare financial statements each year in respect of the expenses they expect to occur. The director must ensure when approving those statements that the committee can probably and properly undertake the duties imposed in the Bill. I emphasise, as my honourable friend the Parliamentary Under-Secretary of State said in another place, that it is in the director's interest to ensure that sufficient members of staff will be available to assist him and the customer service committees and that funds will match that requirement. Furthermore, the budget of the Office of Water Services, out of whose expenses they are financed, is itself subject to parliamentary approval and scrutiny and will be kept under review.
In closing, perhaps I may reply to the noble Lord, Lord Graham, who asked when an announcement would possibly be made on the increased budget for the Office of Water Services as sought by the director general designate. No final decision on the budget of the Office of Water Services has been made but we hope that an announcement can be made by the end of next month. I emphasise that this reconsideration of the budget is proceeding along the lines indicated by my honourable friend the Parliamentary Under-Secretary of State in another place. Therefore it is not anything exceptional and

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indeed there is a danger of too much being read into it.
Having made those points, I hope that the noble Lord will feel able to withdraw this amendment
Lord Graham of Edmonton: I appreciate that the Minister has given a very full reply. However, at the outset I must tell him that it does not satisfy me. He constantly talks about the totality of these amendments driving a wedge between the customer services committees and the director and between the customer services committees and the companies. Frankly, I am appalled by the idea that the ambition of a consumer committee to be more aggressive, more visible, more busy and perhaps to make itself more of a nuisance is the raison d'etre for driving a wedge between that committee and the people whom it serves—between the companies and the director on behalf of the consumer.
This series of amendments is intended to indicate not only to the consumer—and perhaps I laid too much stress on the consumer and the customer—but also to the director and the companies that these bodies mean business. They do not intend to be supine or passive. Perhaps the opposite of aggressive is pacific; in other words, wanting to be passive in these matters. There may be a better word to use than "aggressive". I do not believe that it is the only possible word or even the best word to use but it conveys to me the kind of stance that I wish to see these bodies take. The Minister sought to imply that we seek to give these committees powers that go beyond those of the director and perhaps usurp his authority and functions. Nothing could be further from the truth.
Amendment No. 245A seeks to give the committees power,
"to make representations to the Director and any other relevant body".
It says "representations". What a stick, what a power, what awkward bodies such committees will be! They are asking for the power to make representations, not idly but in the light of their experience and the complaints that they investigate. For the Minister to say that there is only one channel out of this committee and that it leads to only one place—namely, the director—is a churlish way of looking at the good sense of those people.
Of course they rely on the director, who will lay down duties and, I hope, encourage them to be an effective part of the new machinery. I am certain too that that relationship will evolve over time, and whether one is thinking in terms of a period of 12 months, or whatever, those individuals must work out their procedures. In other words, we want to beef up the role of the customer service committees—nothing more and nothing less.
However, the attitude of the Minister clearly demonstrates that he does not want the committees to be beefed up and have a higher profile. In effect, he wants them to be part of a cosy relationship with the director. We cannot accept that and we invite the Committee to express its view.
6.24 p.m.
On Question, Whether the said amendment (No. 245A) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 85.

DIVISION NO. 2

CONTENTS

Addington, L. [Teller.]

Llewelyn-Davies of Hastoe, B.

Airedale, L.

Ampthill, L.

Lockwood, B.

Attlee, E.

Longford, E.

Blease,L.

McIntosh of Haringey, L.

Boston of Faversham, L.

McNair, L.

Broadbridge, L.

Mason of Barnsley, L.

Brooks of Tremorfa, L.

Mayhew, L.

Carmichael of Kelvingrove,L.

Mishcon, L.

Mountevans, L.

Cledwyn of Penrhos, L.

Nicol, B.

Cocks of Hartcliffe, L.

Peston, L.

David, B.

Phillips, B.

Davies of Penrhys, L.

Pitt of Hampstead, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L. [Teller.]

Dormand of Easington, L.

Elwyn-Jones, L.

Prys-Davies, L.

Ewart-Biggs, B.

Ross of Newport, L.

Galpern, L.

Stoddart of Swindon, L.

Graham of Edmonton, L.

Strange, B.

Gregson, L.

Taylor of Blackburn, L.

Grey, E.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Turner of Camden, B.

Hughes, L.

Underhill, L.

Irving of Dartford, L.

Wallace of Coslany, L.

John-Mackie, L.

Walston, L.

Kilbracken, L.

White, B.

Kilmarnock, L.

NOT-CONTENTS

Arran, E.

Lauderdale, E.

Balfour, E.

Lawrence, L.

Beaverbrook, L.

Long, V.

Belstead, L.

Lucas of Chilworth, L.

Bessborough, E.

Lyell, L.

Blatch, B.

McAlpine of Moffat, L.

Blyth, L.

Mackay of Clashfern, L.

Boyd-Carpenter, L.

Macleod of Borve, B.

Brabazon of Tara, L.

Malmesbury, E.

Brougham and Vaux, L.

Mancroft, L.

Butterworth, L.

Marley, L.

Carnock, L.

Marshall of Leeds, L.

Clinton, L.

Merrivale, L.

Coleraine, L.

Mersey, V.

Cox, B.

Mottistone, L.

Craigavon, V.

Munster, E.

Cranbrook, E.

Napier and Ettrick, L.

Cullen of Ashbourne, L.

Nelson, E.

Davidson, V. [Teller.]

Norfolk, D.

Denham, L. [Teller.]

Norrie, L.

Dundee, E.

Nugent of Guildford, L.

Eden of Winton, L.

Onslow, E.

Elliott of Morpeth, L.

Orkney, E.

Ferrers, E.

Penrhyn, L.

Fraser of Carmyllie, L.

Platt of Writtle, B.

Grantchester, L.

Radnor, E.

Greenway, L.

Rankeillour, L.

Hacking, L.

Reay, L.

Hailsham of Saint Marylebone, L.

Rees, L.

Renton, L.

Halsbury, E.

Rodney, L.

Hanson, L.

Saltoun of Abernethy, Ly.

Henley, L.

Sanderson of Bowden, L.

Hesketh, L.

Shannon, E.

Hives, L.

Sharples, B.

Hooper, B.

Skelmersdale, L.

Hylton-Foster, B.

Stanley of Alderley, L.

Jenkin of Roding, L.

Strathclyde, L.

Johnston of Rockport, L.

Thomas of Gwydir, L.

Kinnoull, E.

Trafford, L.

On Question, amendment agreed to.

Trefgarne, L.

Wyatt of Weeford, L.

Trumpington, B.

Wynford, L.

Vaux of Harrowden, L.

Young of Graffham, L

6.34 p.m.
[Amendment No. 245B not moved.]
[Amendment No. 246 had been withdrawn from the Marshalled List.]
[Amendment No. 246A not moved.]
[Amendments Nos. 247 and 248 had been withdrawn from the Marshalled List.]
[Amendment No. 248A not moved.]
[Amendments Nos. 249 and 250 had been withdrawn from the Marshalled List.]
[Amendment No. 250A not moved.]
[Amendments Nos. 251 to 253 had been withdrawn from the Marshalled List.]
[Amendment No. 253A not moved.]
[Amendments Nos. 254 to 256 had been withdrawn from the Marshalled List.]
[Amendment No. 256A not moved.]
Clause 27 agreed to.
Clause 28 [Functions of Director with respect to competition]:
The Earl of Arran The Earl of Arran moved Amendment No. 257:
Page 31, line 7, leave out ("services provided by water undertakers or") and insert ("supply of water by water undertakers or the provision of sewerage services by").
The noble Earl said: The effect of this amendment is to define the existing wording "services provided by water undertakers" more clearly as "supply of water by water undertakers or the provision of sewerage services by" sewerage undertakers. This is simply a drafting amendment to ensure that the clause works as intended by the Fair Trading Act 1973. I beg to move.
Clause 28, as amended, agreed to.
Clause 29 [Mergers of water or sewerage undertakings]:
Lord Elliott of Morpeth Lord Elliott of Morpeth moved Amendment No.257A:
Page 32, line 41, leave out paragraph (b).
The noble Lord said: with this amendment I speak to Amendments Nos. 257B to 257D. This group of amendments seeks to extend the Government's mergers policy as set out in Clause 29 to all water undertakings and not just those over the current fair trading gross asset value, which is at present £30 million. I declare an interest as chairman of a statutory water company that has assets of over £30 million. I am also a vice president of the Water Companies Association.
When the Secretary of State announced his policy in another place on 11th January of this year he explained that the measures set out in Clause 29
982
are necessary to protect the basis of comparative competition and to assist the effective regulation of the water industry. The Water Companies Association has been of the view that if the customer is to receive the undoubted benefits of transferring the water authorities into the private sector there must be as few as possible impediments to competition, including that of takeover. However, the association has recognised the need for a structure of comparative competition through regulation, and the danger that coalescence of undertakings would erode this.
The association had been making representation about this for some months before January. I took part in some of them. The Water Companies Association welcomes these measures to protect comparative competition. However, for reasons that I shall indicate, we feel that the adoption of the Fair Trading Act limit—which was devised for circumstances where monopoly was not absolute and the need for regulatory competition therefore not crucial—would reduce the effectiveness of the measure in its correct attempt to protect the interests of customers.
Sixteen of the 29 statutory water companies are below the £30 million asset value limits. It will therefore be seen that this clause as presently drafted makes a presumption that only 23 of the 39 scheduled water undertakings are required for comparative competition purposes. I believe that this presumption in the clause—whether or not it was intended to be in the clause—is a bad one. It has the effect of ossifying the structure of comparative competition. As I see it, it entitles those above the £30 million limit to believe that the chances of being taken over are slim. The need to retain them as comparators in practice will override other considerations. The pressures on them therefore to perform to the best of their ability will be reduced.
As I attempted to suggest in my Second Reading speech, it would be far better for this clause to apply to all water undertakers. If it did, it would give the Monopolies and Mergers Commission a totally free hand in considering the structure of comparative competition. All water undertakings would know that unless their performance made them valuable to the director general as comparators, they would be abandoned to the normal exigencies of commercial life. That would make comparative competition much more effective in particular in those areas—and there are quite a number of them—where the only competition to the new large service plcs will be provided by statutory water companies, quite a number of which, as I have already indicated, have less than £30 million asset value.
There is another very practical reason that I should add to my argument. The efficiency studies carried out on all water undertakings for the Government have, I believe, revealed that some undertakings of less than £30 million gross asset value perform better than their larger colleagues. In these circumstances is it not sensible for this measure to be drawn in such a way that the director general will have the benefit of all companies as efficiency comparators? Again, if the provisions are applied to all water

983
undertakers this will enable the Monopolies and Mergers Commission and the director general to judge whether a company should be retained in independent ownership on the basis of performance rather than asset avalue.
Finally, the asset value of limits of the Fair Trading Act was surely not conceived in the context of a monopoly industry where regulation will essentially be the most important form of competition which will protect the customer. I believe that it is appropriate in these circumstances that all companies should be included for the reasons that I have given. I beg to move.
Lord Renton: Will my noble friend be so good as to elaborate a little on what he means by "performance"? I can see the importance of performance in this context, but it could mean one of several different things. Could he explain what he means by the performance of the companies in this context?
Lord Elliott of Morpeth: Simply the performance which the statutory companies have always sought to give. The statutory water companies have always asked that they be compared with other statutory water companies, not so much with the regional water authorities because that would be somewhat unfair as there is a difference. We have always asked to be judged on our efficiency, on our prices and on the way in which we have served the customer. I believe that that comparison must continue, after the Bill is enacted and that the comparison can be made but can be made fairly only if all companies are included.
Lord Renton: I thank my noble friend very much.
Lord Hesketh: My noble friend Lord Elliott of Morpeth, who has been involved in the UK water industry for many years, has argued eloquently in favour of water merger control regime applying to all appointed water undertakers. His amendments seek to remove the £30 million assets value test for automatic reference of water company mergers to the Monopolies and Mergers Commission.
Amendments Nos. 257A and 257B would remove the subsections precluding a reference if the asset value of the target company does not exceed £30 million, or the bidder owns no other water enterprises with assets worth more than £30 million. Amendments Nos. 257C and 257D are consequential. They would remove subsections 29(5) and (6) which define the basis on which asset value is to be calculated. The overall effect of my noble friend's proposals would be to bring all water company mergers within the scope of the merger provisions, irrespective of the size of the companies concerned.
Since the merger provisions are to apply to all qualifying mergers taking place after 11th January, they would also call into question any mergers involving smaller statutory water companies that have taken place since that date.
We have considered very carefully the case made by my noble friend, which was foreshadowed in his
984
Second Reading speech. We understand his concern to see that smaller statutory water companies are not disadvantaged compared with the larger enterprises. But to talk of advantage and disadvantage in this context does not seem to us to be appropriate.
I should perhaps remind the Committee of the purpose of the special water mergers provisions. Because water is a natural monopoly in the product sense, after privatisation competitive forces will consist chiefly of rivalry for the management of companies. Privatisation will create a market for corporate control of water companies in which less efficient managements can be replaced by more efficient ones. The Government see this corporate rivalry as a key advantage in the privatisation of the water industry. In general therefore we wish to minimise obstacles to takeover.
The pressure towards corporate efficiency is relevant also to the role of the director general as regulator of the privatised water industry. He will need to be in a position to make comparisons between the performance of competing managements in assessing their relative efficiency, for example in carrying out his price setting functions. But the director general, in making his comparisons will need to distinguish between factors outside managements' control, such as those inherent in geographical variations, and those, such as managing capital inputs economically, which are within their control. Against this background, there needs to be a cross-section of observations provided by independent water interests across England and Wales, to allow an objective assessment of variations in performance to be made. Undue concentration of ownership in the industry would have a detrimental effect on the ability of the director general to make yardstick comparisons. If a significant proportion of the industry were to come under the control of a few dominant owners who adopted common management practices, the true scope for efficiency improvements throughout the industry would be concealed.
The special provisions for water mergers should be seen against this background. Their object is to ensure that there is both competition in management, and an adequate number of independently owned and managed companies to afford a range of comparisons to the regulator.
My noble friend has argued that the special water mergers provisions should apply not just to companies with assets exceeding £30 million, but to all 39 water undertakers. We do not share his view that the provisions should apply to all water company mergers, regardless of the size of the companies concerned. There is not a case, we believe to set the present structure of the industry in stone, and remove the incentives to better management performance that private sector disciplines—including the possibility of takeover—will bring. It is not necessary for the purposes of securing the information the director general needs to have all 39 appointed undertakers in independent ownership.
My noble friend has also argued that the asset value of a company is not a measure of a company's efficiency. The £30 million asset test in the water mergers' provisions is drawn from existing fair

985
trading legislation. It is a threshold above which the new provisions apply, and not in itself a test of efficiency. It will ensure an adequate number of comparators, without exposing to merger reference companies too small to be vulnerable to reference on asset size gounds under existing legislation.
In closing, we do not consider it necessary for the director general to be able to carry out his functions to have automatic reference of mergers across the water industry. Indeed, we see the possibility of takeover as a positive spur to management efficiency. I know that this is not in line with the desires of my noble friend, but I hope that he will see fit to be able to withdraw his amendment.
6.45 p.m.
Lord Elliott of Morpeth: I thank my noble friend for that full response. I am sure he is not surprised that I find it very disappointing. I believe that a good part of his argument on comparison is in fact in support of the amendments. I point out to him once again that the Government inquiry into the efficiency of all statutory companies has shown that some of the smaller companies are very efficient indeed. I know from my own observations in associating with them that a number of small companies are not all that small. They are just under £30 million in some cases.
However, I hope that my noble friend may possibly give some further consideration to this matter. I thank him for his full reply, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 257B to 257D not moved]
Clause 29 agreed to.
Clause 30 [Reference under section 29]:
[Amendment No. 258 had been withdrawn from the Marshalled List.]
Clause 30 agreed to.
Clause 31 [The Director's register]:
[Amendments Nos. 259 to 262 had been withdrawn from the Marshalled List.]
Lord Hesketh Lord Hesketh moved Amendment No. 262A:
Page 35, line 47, leave out ("agreement entered into") and insert ("undertaking given to and accepted").
[Amendments Nos. 263 and 264 had been withdrawn from the Marshalled List.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 264A.
Page 36, line 4, leave out ("or the commercial interests of any person").
The noble Lord said: In moving Amendment No. 264A, I should also like to speak to Amendments Nos. 264B and 264C. Clause 31 is concerned with the director's register—I hasten to say not a register of directors, but a register maintained by the Director General of Water Supplies, which has the
986
purpose of performing both a regulatory function and a public function. The regulatory function is that the director should keep a proper record of all the major events affecting the performance of his duties, whether they come from him, from the Secretary of State, from the Monopolies and Mergers Commission or from the undertakers themselves. The public function under subsection (4) provides that the contents of the register shall be made available under certain conditions.
Subsection (2) contains the details which are to be given in the director's register. It is worth saying a word or two about this matter, because it is a finite list. It is not a list containing a range of items from which the director may subtract or add to. All these matters must be on the register so it will be recognisable with a fixed index giving access to a fixed range of information. First, paragraph (a) requires to be registered,
"every appointment … every termination or transfer … every variation of the area"
for any company. Paragraph (b) requires that the register must contain,
"every direction, consent or determination given or made under any such appointment by the Secretary of State, the Monopolies Commission or the Director himself".
Paragraph (c) requires,
"every final order… every provisional order… every revocation of such a final or provisional order and every notice under subsection (6) of that section"
That is a reference to Clause 20.
Paragraph (d) requires,
"every agreement entered into by the Secretary of State … for the purposes of subsection (5)(b) of that section".
The Committee will recall that the wording of Clause20(5)(c) was amended by a government amendment agreed to by the Committee this afternoon.Paragraph (e) requires,
"every special administration order and discharge of such an order".
These are not only finite items of information. They are also items of information, each of which, it can be argued—and I do argue—are matters of public concern from which no derogation should be possible. Yet somehow in subsection (3) we have the phrase,
"or the commercial interests of any person"
which enables the Secretary of State to direct the director not to enter that provision in the register; that is, not to enter the details of an appointment or termination or transfer of the area, not to enter directions given under such an appointment by the Secretary of State or the Monopolies Commission, not to enter final orders, provisional orders or agreements in accordance with Clause 20(5)(b) dealing with the information required in order to comply with European Community regulations, and not to enter special administration orders or discharges which are of great interest and must be made available, certainly to shareholders if not more widely.
They are all matters of public interest. The condition,
"or the commercial interests of any person"

987
is not applicable in those cases. I can conceive of no example of a case where the commercial interest of any person should override the interest of disclosure of matters which are almost certainly of public knowledge or their inclusion in the register.
Earlier this evening Members of the Committee on the Government Front Bench made considerable point of the fact that the director has very wide duties to publish information coming to him and the decisions that he makes. Why should the Secretary of State have the power under subsection (3) to direct that information should be excluded from the register on the grounds that it is against the commercial interests of any person? I could understand if it was against the public interest but for it to be against the commercial interests of any person appears to be quite inappropriate. Amendment No. 264A would remove that condition.
I ask Members on the Front Bench whether this is a left-over phrase from some time in the dim and distant past in another place when the register was more widespread or when there was an additional provision stating, "such other information as the director sees fit". However, with a finite list, all of it information which ought to be public knowledge and in many cases already is, though perhaps in a less convenient place, it appears to be quite inappropriate to have that caveat and the possibility of excluding information.
Amendments Nos. 264B and 264C appear a little clumsy but they come to the right point. We are confirming that the contents of the register shall be made available to the public, as stated in the subsection. However, the amendment states that such availability should not be subject to the payment of charges. In our view it is perfectly proper to make charges for a copy. That is common in central and local government and elsewhere. But actual inspection of the register without taking a copy appears an inappropriate occasion for making charges. It appears to diminish the value of the register as an indicator of public confidence. We hope that the Government will see fit to accept these two amendments and agree that access to the register should be without charge. I beg to move Amendment No. 264A.
The Earl of Arran: 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, terminations, variations of appointments and of modifications of conditions of appointment. It will also hold information about directions, consents and determinations given by the director and details of enforcement orders made by the director and undertakings given by the appointed companies under Clause 20. Subsection (3) of the clause empowers the Secretary of State to direct the director, in certain circumstances, not to include a particular entry if he considers it to be against the public interest or against the commercial interest of any person. Amendment No. 264A seeks to exclude this latter consideration.
The amendment takes an unreasonable view of commercial interests. The protection provided by
988
the Bill as drafted would apply to either an appointed company on which an entry was to be made in the director's register or to any other company or individual whose interests could be damaged.
This does not mean that where disclosure is not to be made in the register the commercial interests of the company are to be put before the public interests. The company is not protected in the sense that it will be allowed to withhold the relevant matters from the director on the grounds of their commercial sensitivity. Matters which must be disclosed to the director will be so disclosed whether or not they are to be included in the register.
The Clause as drafted gives the Secretary of State a discretion to issue directions. It is for him to judge whether information should be publicly available. Both the Secretary of State and the director can of course take relevant unpublished information into account in taking their decisions.
The amendment is therefore unfair. And as the subsection as it stands is in line with comparable provisions with the gas and telecommunications Acts I see no reason why the Water Bill need be different.
I turn to Amendments Nos. 264B and 264C. Subsections (4) to (7) of Clause 31 set out the practical or, if you like, housekeeping requirements of making the register available to the public and providing for certified copies to be made of the contents of any parts of, or extracts from, the register. The effect of Amendments Nos. 264B and 264C would be to remove from subsection (4) of Clause 31 the power for the Secretary of State to make an order which would allow the director to make a charge to the public for access to the register and to require that such inspections should be free of charge.
While we envisage an order under subsection (5) setting a fee for providing copies of documents of 10p per page, subject to a minimum charge of £1, we do not at present envisage charging for simply inspecting the register. It may be that, as the registers grow in size and we obtain a clearer picture of the burdens placed on the Office of Water Services by inquirers seeking particular documents among the 39 appointments, we shall have to review that position.
I am not agreeing that the clause should be amended. However, in the first instance we propose to view access to the register as a part of the cost of running the water services office recoverable through fees to appointees. It is for those reasons that I ask the noble Lord, Lord McIntosh, to withdraw the amendments.
Lord Graham of Edmonton: The fact that the Minister and the Government are only replicating provisions in previous Bills is no justification for putting them in this Bill. The Minister must tell us a lot more about the kind of entry which is held by the director to be against the commercial interest of an applicant and which therefore should be excluded. That seems to be an extraordinary matter. The fact that that is in gas legislation and other measures is no justification here.
We do not doubt that all material information will be made available to the director, but the Minister

989
invites the Committee to say that some of that information may be deemed by the director—and nobody else—to be against the commercial interest of the company. Surely it is up to the public to decide whether details about directors are helpful or unhelpful. Can the Minister perhaps give us a short list of about 10 illustrations of the kind of information that is given by an applicant and which is deemed by the director to be against the commercial interest if published? We need to have some information. Otherwise, the Minister is not treating the Committee with the respect that it deserves.
I can understand that some information will be very sensitive, but that must be of an extraordinary character before this Committee should accept that the director shall decide that that which is known to him and the company shall not be made known to the public. The Minister must know that all sorts of tales will get about. It would be a terrible situation if, sadly, one day that company is found derelict in some way and it is then revealed publicly that some evidence of a past misdemeanour or malpractice not only took place but was furnished to the director and that he or she in his or her wisdom decided to withhold it and that that could have materially stopped people from investing in the company. I hope that the Minister can satisfy the Committee on the points that I have raised.
The Earl of Arran: With regard to the exclusion of information from the register, I can tell the noble Lord, Lord Graham of Edmonton, that we shall consider this carefully and if we cannot identify a convincing example we shall return with an amendment on Report.
Lord McIntosh of Haringey: That sounds a rather better answer than that which we received earlier and I am content to leave it at that. I cannot imagine how any of the items in paragraphs (a) to (e) could possibly give rise to the need for the proviso contained in the phrase which Amendment No. 264A removes. I shall be very interested to see what examples the department comes up with. Of course, who is convinced is another matter. What may convince the Minister may not convince us.
Lord Renton: Before the noble Lord withdraws his amendment, perhaps I may ask my noble friend to seek advice between now and the Report stage on an entry which was against the commercial interest of the particular person but which nevertheless would be in the public interest to include in the register.
Lord McIntosh of Haringey: The noble Lord, Lord Renton, has made my point much more succinctly and better than I was able to do. We look forward to hearing what the department has to say with great anticipation but without any necessary assurance that we shall agree as to what is a convincing example. In the meantime, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn
[Amendments Nos. 264B and 264C not moved.]
[Amendments Nos. 265 to 267 hadbeen withdrawn from the Marshalled List.]
Clause 31, as amended, agreed to.
The Earl of Arran: I hope that Members of the Committee will feel that this is an appropriate moment at which to break for dinner. I suggest that we do not return to the Committee stage of the Bill until five minutes past eight. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Disabled Persons (Northern Ireland) Bill
7.3 p.m.
Lord Blease: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Blease.)
On Question, Motion agreed to.

Scrabster Harbour Order Confirmation Bill
7.4 p.m.
Considered on Report.
Viscount Long: My Lords, I beg to move that the House do now adjourn until five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 7.5 to 8.5 p.m.]

Water Bill
House again in Committee.
Clause 32 [Duty of undertakers to furnish information to the Secretary of State]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 268:
Page 36, line 48, at end insert—
("( ) The information required to be furnished under this section to the Secretary of State shall also be furnished to the Director.").
The noble Earl said: I am intrigued as to why the director has not been included in this clause. Of the 25 clauses that make up Chapter I, this is about the only one from which he has been excluded. Furthermore, as my noble friend Lord Hesketh said at the beginning of today's proceedings, under Clause 20 the director is the enforcement authority. Clause 32(5) refers to Clause 20 but in this case makes the Secretary of State the enforcement authority.
To enable the director to carry out his functions it is essential that he be included in this clause, because he will need to have the information that the Secretary of State has the right to ask for under Clause 32. Equally, the director will need the power to require information in the following clause, Clause 33. Although my drafting may not be very good, with those few words I beg to move.
The Earl of Arran: With a few more words I hope to be of assistance to my noble friend.
The purpose of Clause 32 is to enable the Secretary of State to obtain certain information which he may need from water and sewerage undertakers. This amendment would require such information to be copied to the director general. In practice, the director general will be able to obtain all the information which he needs under Clause 33, where there is a potential enforcement issue, or under the various conditions of the licence. For example, under condition B of the licence the appointee must provide various information in relation to the director general's functions of price control. There are other information provisions in conditions D, E, I and K of the licence.
We are satisfied that such powers will enable the director general to obtain all the information that he needs for his functions. We do not think that we need to burden him by providing him automatically with copies of information which the Secretary of State might wish to obtain by using the powers in the clause for purposes of no interest to the director general.
I hope that those words will be sufficiently convincing to enable my noble friend to withdraw the amendment.
The Earl of Balfour: I thank my noble friend for that reply. I may say that have been a little surprised by it, and tomorrow I shall carefully read what he said in Hansard. With that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Clause 33 [Power to require information etc. for enforcement purposes]:
[Amendments Nos. 269 to 275 had been withdrawn from the Marshalled List.]
Clause 33 agreed to.
Clause 34 [Publication of information and advice]:
Lord McIntosh of Haringey Lord McIntosh of Haringey, moved Amendment No. 275A:
Page 38, line 11, at end insert ("including information concerning the functions of any undertaker under section 8").
The noble Lord said: Clause 34 is a curious clause. It refers to the publication of information and advice. It provides that the Secretary of State may arrange for the publication, in such form and in such a manner as he considers appropriate, of information relating to any matter as may appear to him to be in the public interest to publish.
If we are going to have this amendment at all, it seems to us that the amendment ought to be a little less all-embracing and a little more precise about what should be included. We have no objection to publication. I think that is obvious. We do not think that the Secretary of State should not be empowered to arrange for the publication, although I have known very few Secretaries of State who have waited for statutory authority in order to publish such matters as they think appropriate. The present Secretary of State for the Environment has got himself into certain trouble with the courts for publishing information—or some might say misinformation—about the so-called poll tax. I have not been watching the tape to know what the courts have said about that matter, but the publication of information which the Secretary of State authorised did not require a clause in the Local Government Finance Bill to force him to say so. However, we have the clause and we have the provision for publication of information and advice. In so far as it is there, I suppose that we have to welcome it and look to improving it.
What is interesting therefore is that although it is all permissive and the Secretary of State can do what he likes—which is a theme of this Bill as of most legislation these days—what it does not do is to specify that the most important information so far as concerns most people in this country should be included in the information on environmental and recreational duties included in Clause 8. We take the view that it is in the public interest that environmental and recreational information should be included in the provisions of Clause 34, and that that should be spelt out in the clause. This would give the Secretary of State all the encouragement that he may need to be open with the public about the environmental and recreational effects of water privatisation. I beg to move.
Lord Ross of Newport: This amendment is well worth pursuing. It is wide open for the Secretary of State and the director general to do exactly as they like with regard to public information. Let us tie it down a bit more. We know that the Government are bringing forward an amendment at Report stage to deal with the concerns that have been expressed earlier about environmental problems, areas of outstanding natural beauty and national parks. Let us tie it down a bit more by accepting this amendment. It seems to me to make a great deal of sense and to put some vim into the Bill.
Lord Hesketh: The purpose of this amendment is to secure that the power of the Secretary of State in Clause 34 to arrange for the publication of information connected with the performance of the functions of water and sewerage undertakers covers information related to their duties under Clause 8.
I can assure the House that we believe that the amendment is not necessary. The power to secure publication of information about performance of Clause 8 duties is already there in Clause 34. The term "functions of the undertakers" refers to all those things which the companies are required by the Bill to carry out, and the duties in Clause 8 are included among them.

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The noble Lord, Lord McIntosh of Haringey, said that in his opinion Clause 8 was the most important clause with regard to the functions. We are talking about a general provision in Clause 34 which covers all functions of the undertakers. It would be unfortunate to refer to one particular function, for we believe that the effect would be to cast doubt upon the generality of the provision. It is for those two reasons that we urge the noble Lord to consider withdrawing his amendment.
Lord McIntosh of Haringey: I am interested to hear what the Minister says; but he has not answered the question with which I introduced the discussion on this amendment. What is it that the Secretary of State could not do with regard to publication or advice which would not be available to him without the existence of this clause? What powers would he be denied if this clause were not to stand part of the Bill?
Lord Hesketh: As I said in the second part of my reply, it is a general provision and required as such in order to clarify for the purpose of the various undertakings.
Lord McIntosh of Haringey: The phrase "a general provision in order to clarify" has a sinister ring. It reminds me of an answer which the noble Earl, Lord Caithness, was obliged to give in a debate on an amendment last week. He said that the provision had no extra effect on the Bill and was only required for the purposes of clarification. Since clearly it did not clarify the Bill, it left the Government open to the charge that the provision that he was then talking about was a bit of waffle and not required at all.
I suspect that the whole of Clause 34 is waffle and that if we were to carry a Motion that Clause 34 should not stand part of the Bill, the Government would not turn a hair because there would not be a single piece of information or advice which the Secretary of State could not give without this clause. I accuse the Government in this case of unnecessarily prolonging the Bill and putting into it material which sounds good, because it seems to conform with ideas of freedom of information, but which has no effect whatsoever. I am reinforced in that view by the Government's earlier refusal to agree with our amendments to Clause 31, although I concede that the Minister gave a very valuable undertaking to see whether he could come up with any examples of what should not be published under Clause 31.
This clause has no real effect. In the circumstances, I suppose that amending it in this way to draw attention to the most important information which ought to be included is probably not of the first rank in importance in our amendments. Therefore I am prepared to ask leave to withdraw it. However, I ask the Government to look back at the clause to tell us what it says, whether it is necessary to the Bill and whether it brings anything to it other than "a general provision for clarification". That is not the way to produce legislation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 agreed to.
Clause 35 agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 279A:
After Clause 35, insert the following new clause:
("Publication of reasons for application to change price formula.
.—(1) Where any application is made lo the Director by a company holding an appointment under this Chapter, relating to a proposed variation in charges to consumers, the company shall publish a statement, and send a copy to the relevant customer services committee.
(2) A Statement published under this section shall include reasons for the proposed variation, and ari assessment of the likely effect on—

(a) levels of consumption of water or other services; and

(b) charges to persons on low incomes.").

The noble Lord said: This amendment standing in the name of my noble friend Lord McIntosh of Haringey deals with the publication of reasons for applications to change the price formula. It would require any undertaker making an application to the director for a variation of the charges paid by consumers under the formula in the appointment to publish a statement of the reasons for the proposed variation and to send a copy to the relevant customer services committee. The statement should also include an estimate of the effect on levels of consumption of water or the other services affected by the charges and an estimate of the impact of the new charges on persons on low incomes.
The reason for the first requirement is simply that no statement has ever been forthcoming from the Government as to whether this Bill is intended or expected to increase, decrease or keep at the same level the current levels of consumption of water. This is not an idle question. Apart from the needs of the water supply industry to meet demand, the level of flow in the sewerage and flooding systems can have a significant effect on the efficiency of those systems. If flow diminishes, particularly with broken sewers, the effect can be increased blockages.
As regards subsection (2)(b) of the amendment relating to persons on low incomes, it is obvious that an increase in charges will impact most severely on those with the least ability to pay. The amendment is couched not only in terms of the financial effect on such persons but more seriously in terms of public health arising from the possible under-consumption of water by those least able to afford it in a metering situation. Some people might say that we are painting too black a picture and stretching the point that no one is going to deny himself water which is needed for domestic or personal use. If it is needed people will get it and pay for it.
The evidence is that that is not the case. There are people who should buy food of a certain kind in order to maintain their health and that of their children. But sometimes that does not happen. There are other illustrations. For example, a prudent person would not deny himself certain facilities because they are needed for health. I am not going to speak about poverty having been eradicated or say that there is no such thing. I shall not push the John Moore line on this subject except to say that genuinely and to my knowledge in the community

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in which I live I can go to a number of areas and a number of people who in my view will be hard put to decide whether the money required for an increased water charge should have the first call on their purse or whether it should go towards something else; for example, food, clothes, entertainment or transport.
I ask the Minister to accept the point that in order to ensure that people understand why the charges have been increased or varied we need some assessment of the impact of the increase or variation on the users of water. I beg to move.
Lord Hesketh: Amendment No. 279A would insert after Clause 35 a new clause requiring an appointed company to publish, and to send to the relevant customer services committee, a statement giving the reasons for any application to the director relating to proposed increases in charges. The statement would also have to include an assessment of the likely effect on the levels of consumption of water or other services and on charges to persons on low incomes. The intention of the amendment is referred to in the descriptive side-heading to the clause:
"Publication of reasons for application to change price formula".
As drafted the clause does not refer to a price formula, so the clarification of intention is important.
Condition B of the model instrument of appointment of the water and sewerage undertakers, published last December, sets out details of the intended charging formula. Increases in a basket of charges will be limited annually to no more than an amount linked to the retail prices index.
As has been explained in earlier debates, the condition provides for the Director General of Water Services to adjust the limit to reflect changes in the obligations of the undertakers imposed; for example, by new regulations or a decision to impose tighter controls on discharges from sewage treatment works where there are such imposed obligations. It is reasonable that the cost of services to customers should reflect the change in the task of the companies. Similarly, if there are other substantial changes in external circumstances outside the control of the companies given that the appointed companies have no option but to continue to discharge their functions, it is reasonable for such changed circumstances to be reviewed by the director general with a view to adjusting the level of charges where necessary. The condition of appointment accordingly makes provision for applications to the director general to determine what change should be made to the charges limit.
The director general will check carefully what change there is in the circumstances affecting the company, the change in the costs they are required to meet, and assess the change to be made to the charges limit. In the case of imposed obligations this will be an essentially technical matter. In the case of other changes in circumstances the director will again face largely technical matters but he will also be guided by his duty in Clause 7 of the Bill (which we have discussed at some length in earlier debates) to ensure that companies are able to discharge their
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functions properly. His determination will be in the form of a change to K in the RPI plus K limit, not controls over specific tariffs. The ban on undue discrimination in condition D of the model instrument of appointment will ensure that individual tariffs are fair to the various types or classes of customer.
The proposed new clause does not match up well to this process. The director's considerations will rightly be focused on costs and the ability of companies to continue proper discharge of their functions. However, these will not usually be matters on which he can be helped by expressions of views. It will be for the director to ensure that he does take account of customers' interests and he can publish material or undertake consultations in appropriate cases.
As regards those on low incomes, no government, including the last Labour Government, have ever accepted that a system of rebates, for example, should be available to help low-income households to pay their water charges. If rebates were available the cost would have to be recovered from customers as a whole. Water undertakers operate budget payment plans to help customers pay their bills and the revised disconnection codes of practice give additional emphasis to this. Those on low incomes can also apply for income support. When the income support levels were set in April 1988 the total amount spent in supplementary benefit for water charges, uprated to 1988–89 estimated expenditure, was included in the money available. Therefore, income support does take account of water charges although the amount to cover water charges in each personal allowance is not separately identifiable. For those reasons I hope that the noble Lord, Lord Graham, will see fit to withdraw the amendment.
Lord McIntosh of Haringey: When the Minister says that our amendment does not match up well with the procedure under the RPI plus K formula, I take that as a compliment because that formula is so patently flawed (as we have seen in discussions in Committee) that anything that matched up well with it would itself be flawed. What astonishes me is that the Minister sees fit to describe this as a technical matter. It is far from that. We have a price-setting regime under privatisation which in effect allows the water company undertakers to appeal to the director general and the Secretary of State for increases in water prices almost without let or hindrance and at any time they see fit. There is to be no appeal against increases in water prices on behalf of the consumers.
It is suggested in this amendment—and it is a modest proposal—that those who are applying to take more money from their captive customers (that is what these monopolies are doing) should give their reasons for doing so. In reply to that, the Minister read out a rigmarole of objections even to that simple proposal. It beggars belief that the Government can seriously object to an amendment of this kind.
8.30 p.m.
Lord Graham of Edmonton: I have listened very carefully to the Minister and I do not dispute for a

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moment that the director will be very careful in discussions with the companies to examine and make sure that the charges they wish to revise are reasonable, prudent and careful. All I am asking is for the noble Lord to show as much concern for the interests and welfare of the lowly paid and the poor as he will be showing for the companies. The companies will be coming to the director from time to time to put the case for increasing the charges. The director quite properly will have to examine it. The case will be made; I imagine that the director will accept it. He will make sure that the welfare and wellbeing of the company is protected when it is detrimentally affected. The amendment asks for the reasons to be published and for the impact of the increases on the lower paid to be borne in mind.
The noble Lord has failed to deal with a point. We honestly believe that the cost of water will increase. The Minister sought to allude to the fact that action had not been taken by a previous administration in the way of rebates. The cost of water then was infinitely lower than it is now and infinitely lower than it will be next year and the year after. The impact of the Bill on costs and on services will be great. It would be terrible if people were to wash less frequently or if things such as street cleansing were to happen less frequently. That will be the case when the cost of the service increases.
I do not dispute that there will be reasons for the cost increases, not least because of the burdens placed upon the companies to meet obligations imposed by the Government and by the EC. We are asking for the reasons to be published so that people can understand. The Minister is a little squeamish. He wants to protect the companies from having to justify to the public what he will ensure they justify to him. That is not the way to get the public to understand. Does the noble Lord believe that if the public knew exactly why the increases had been made they might think they had been conned? However, that is not the case we are making.We say that the public who pay ultimately should know precisely what and why they are paying. The noble Lord has certainly not satisfied me. I shall read carefully what he said and perhaps at a later stage we shall come back with another amendment. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36 [Reports by customer service committees]:
[Amendments Nos. 280 to 282 hadbeen withdrawn from the Marshalled List.]
Baroness Strange Baroness Strange moved Amendment No. 283:
Page 39, line 20, leave out ("The Director may") and insert ("Subject to subsection (4) below, the customer service committee may require the Director to").
The noble Baroness said: In moving Amendment No. 283 I should like also to speak to Amendments Nos. 285 and 286. The object of these amendments is to give the customer service committees the power to publish their reports. The clause as it stands gives the director complete editorial control over the
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publication of CSC reports, allowing him to decide whether or how to publish them. We are back to the daisy petals again.
My honourable friend the Minister for Water and Planning said in December 1988 at the National Consumer Council's conference on regulation of the public utilities:
"The director general's task will be to hold the balance between consumers, the licensed water companies and their shareholders".
Clearly, this will be a difficult balance to strike. But it is important that all these interests should be taken into account when fixing ceilings to company charges and monitoring the quality of operational performance and long-term asset planning. From time to time he may be balancing the interests of the shareholders rather more than those of the customers. There could be occasions when interests conflict. I am proposing these amendments in case at any time, this should occur. My noble friend the Minister, who is sadly not here, has told me that we are pre-supposing disagreements between the director and the CSCs. I can only say that this is an imperfect world and I have not yet met anyone who never disagreed occasionally. The amendments mean that the CSCs would not be left muzzled and unable to publish their reports. This would be as effective as employing a doberman to warn off intruders and then muzzling him so that he could not bark.
It may be of interest to the Committee to compare the independent Gas Consumers Council, which regularly publishes disconnection figures, reports and press releases on matters of concern to gas customers, with the telecommunications advisory committees, which have amazing names like ENACT—the English national advisory committee on telecommunications—and DL, relating to disabled and elderly people, which hardly publish anything at all. Customers of water and sewerage services need to be certain that their interest in important and indeed vital issues such as charges, metering, water quality standards, compensation, sewerage and the control of disconnection will not only be promoted but will be seen to be promoted. It is no use feeding the geese on the Capitol with sherry-soaked raisins. They must have their own voice which they can use. I beg to move.
Lord McIntosh of Haringey: I should like briefly to express my support not only for the content of the amendment but for the way in which the noble Baroness moved it. She was both concise and poetic, as is her wont.
The whole issue of the customer service committees, their powers and responsibilities, is one we have addressed on a number of occasions as we have been dealing with the Bill. I am far from satisfied that we have dealt with it adequately yet. We have approached it on several separate occasions but we have not reached the heart of the matter. Whatever the noble Baroness may decide after listening to the Minister it is appropriate that I say now that we on these Benches will certainly want to return at a later stage to the powers of the customer service committees.
Lord Addington: I wish to add my support to the noble Baroness's amendment. In doing so I should like to reiterate much of the sentiment contained in her speech. The customer service committees are the effective redress between a monopolistic supplier and the consumer. Water is a natural monopoly. There must be some redress for the consumer. The voice of the consumer should be as independent as possible and should have as much access to the public as possible. I wholeheartedly agree with the amendment.
Lord Renton: I should like to support my noble friend Lady Strange. I join noble Lords opposite in congratulating her on the way she moved the amendment. A customer service committee is somewhat analogous to the users' consultative committees that were set up under the nationalised industries' legislation. Each of those committees used to publish an annual report. There was never any question about it. They were required to publish an annual report.
I do not know quite what incidence these reports will have. Clause 36(1) says:
"A customer service committee shall prepare a report on any such matter as the Director may require".
That indicates that there will be reports on specific and perhaps quite detailed matters. Under subsection (2) there will be an annual report which must be prepared and sent to the director—a copy of it, at any rate—and it would be very surprising if that annual report could not be published. However, it may be of great importance to local consumers of water to know that any complaints which they have referred, either to the director or the customer service committee, are being properly dealt with and with what result.
Therefore, although it may be that my noble friend on the Front Bench is not in a position simply to say, "Yes, we agree with these amendments", I hope that he will not give a negative reply. I also hope that he will undertake, in any event, to have the matter considered between now and the Report stage. I say that because to me it is unthinkable that if the customer service committee considers that a report should be published, that should be prevented by statute.
Lord Hesketh: It may be helpful if I first explain the nature of these reports. They will be of three main types: first, a report on any matter on which the director requires advice of a customer service committee; secondly, a report on any matter which appears to a committee to affect the interests of customers of a company allocated to it; and, thirdly, the annual report of a customer service committee on its activities. All three types of report will be of considerable assistance to the director, providing him with the advice he needs in order to protect customer interests and in helping him to ensure that those committees are properly carrying out their functions.
I fully appreciate the strong feeling all round the Committee this evening as regards these three amendments. As my noble friend Lord Renton is fully aware, I am limited to what I can commit
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myself to. However, I am willing to say that I should like to take the matter away and consider it, though not necessarily all three amendments. I should like to read what noble Lords have said and to consider the matter without commitment. I hope that that is acceptable to my noble friend Lady Strange.
Baroness Strange: I thank the Minister very much for his unexpectedly encouraging reply. I am indeed glad that I shall not have to divide the Committee at this late hour because otherwise I should certainly have done so. However, if we do not receive a satisfactory reply I shall certainly return to the matter on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 284 had been withdrawn from the Marshalled List.]
[Amendments Nos. 285 and 286 not moved.]
[Amendment No. 287 had been withdrawn from the Marshalled List.]
Clause 36 agreed to.
8.45 p.m.
Clause 37 [General duty with respect to water supply]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 287A:
Page 39, line 32, after ("of") insert ("wholesome").
The noble Lord said: In moving Amendment No. 287A I should like to speak also to Amendments Nos. 287B and 288B.This is the occasion when we return to the question of the European directive on drinking water quality which was debated earlier this afternoon and on which the Minister made such an important statement about compliance therewith. Without quoting directly from what he said, I note his claim—which I do not doubt—that it is agreed that the legislative framework for compliance with the EC directive has been established by amendments to the Bill. If there are subsequent opinions which lead me to doubt that claim, I have no doubt that we can return to the matter at a later stage of the Bill's proceedings. However, at the moment I have no reason to suppose that that is wrong.
I should, however, remind the Committee about the declaration of the reasoned opinion, which, by the way, the Secretary of State wanted to keep hushed up. Indeed, he said in a Written Answer at col. 414 of the House of Commons Official Report on 24th April:
"The deposit in the Library of the recent reasoned opinion would be a breach of … confidentiality".
The reasoned opinion was by that time winging its way round the country. However, leaving that to one side, the conclusion of the reasoned opinion—I assure the Committee I shall not read the whole document—is that the United Kingdom has failed to adopt within the permitted time the laws and regulations necessary to comply with Council Directive 80/778/EEC, and has not respected the

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maximum permissible concentrations with respect to nitrates and lead. The opinion states:
"the United Kingdom has failed to fulfil its obligations under the Treaty. Pursuant to the second paragraph of Article 169 of the EEC Treaty the Commission requests the United Kingdom to take the necessary measures to comply with the reasoned opinion within two months".
Let us agree, for the sake of this amendment, that the Government have now adopted the laws and regulations necessary to comply with the Council directive, or that they will do so when this Bill receives Royal Assent. However, what the Government are consistently refusing to do is comply with the second part of the requirement in respecting the maximum permissible concentrations as regards nitrates and lead.
I turn back to the Written Answer given by the Secretary of State when he was responding to questions about the Commission's reasoned opinion. He said:
"The Water Bill and the regulations to be made under it will incorporate the provisions of the directive directly into domestic law".
That is agreed, so let us move on from there. He continued:
"We are fully committed to compliance with the EC directive as soon as practicable. Those supplies which regularly fail to meet a standard are being improved and should comply in the next year or two".
When we ask the Government to put a timetable to compliance with the EC directive—in other words, when we ask for the protection of the people of this country, or parts of this country, from excessive concentration of nitrates and lead in our water—we are not given any direct answer. We are given answers comparable to those which the Minister gave the Committee this afternoon. He said that there were all sorts of practical difficulties about the timetable; that a number of factors may limit the speed of carrying out the necessary improvements; that there is a requirement to plan and design projects; to obtain approval, such as planning permission; and that we must order priorities according to the seriousness of the deficiencies which need rectifying.
Whatever we may think about those words, the conclusion that the consumers of water must come to is that the Government are not prepared to commit themselves to a timetable for putting matters right. It is not as if this is a new issue; it is an issue which has been around since 1980. The directive was agreed in 1980 and was to be incorporated into law by 1982. Well, we are there, presumably, only seven years late. Compliance was to be achieved by 1985. Is it too much then to demand that Parliament should take the lead in the matter now; and, as the Government have not done a good enough job, that Parliament should lay down what the timetable should be in order to ensure that our people are protected from an inadequate drinking water quality?
It is not as if such matters are not already under discussion. Indeed, in his Written Answer the Secretary of State said that the United Kingdom has already submitted the water authorities' programmes on nitrate and lead. Therefore the
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discussion is already under way. However, he then went on to say that the compliance programmes will be in the prospectuses for the new water companies. That is the worst sticking point; so far as I am concerned. We are being told that Parliament is not good enough to know what the timetable will be and that people do not deserve to know what the timetable will be. It is only in the interests of shareholders, after the Bill has received Royal Assent, that we shall be told what the timetable will be for bringing our drinking water up to standard. That is what sticks in my throat and what I find totally unacceptable.
Therefore in the amendments we propose that there should be a time, between now and the end of the year—that is more than six months—when the Government will have an opportunity to agree with the European Commission a timetable for the improvement of water quality. They should be able to do that. The negotiations are in progress. The Secretary of State has told us so. I cannot believe that it can be difficult for them to do that and to reach agreement before 31st December. If they fail to do that we propose that there should be a generous period of four years—I confess that we thought of making it a shorter period—before compliance must be achieved, with or without agreement with the European Commission. I do not for a moment believe that it will be satisfied with what is proposed in the Bill.
As the Bill reaches a late stage in its passage through Parliament, the people of this country are entitled to the straight answer which they have not had in the past. Compliance should have been completed in 1985. Is it unreasonable now to demand that there should be a timetable (agreed if possible and imposed if not possible) for the period during which compliance should be obtained? I beg to move.
Lord Addington: I shall refer to Amendment No. 288B. I cannot see any objection to having the timetable. We are trying to bring ourselves up to a standard. We are setting ourselves a timescale within which to reach a standard. It is a generous timescale, as the noble Lord, Lord McIntosh, said. The point that strikes me is that if we are part of the EC, we should surely take every opportunity to bring ourselves up to EC standards. In order to ensure that we must have a timescale in which to do it. We from these Benches are keen about the EC, and thus we believe that this measure is wholly commendable and we give it our full support.
Lord Trafford: I sympathise with what the noble Lord, Lord McIntosh, said about compliance with the EC directives with regard to water supplies and what he said about lead and nitrates. Those are two examples only. I declare an interest because I am more interested in the effect of aluminium. It so happens that when in water aluminium causes dementia, serious bone disease and so forth in patients with whom I am connected. That is neither here nor there. It happens to be but a small interest compared with this major measure.

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I should have been concerned, and might well have given much more support to the noble Lord and his amendments, until a few months ago. My reason for that is, first, as I understand it—I am subject to correction—the Government have moved considerably towards meeting the necessary requirements with regard to the EC directives on the quality of water. In other words, for whatever reason—the noble Lord is entitled to draw what conclusions he likes about that—the Government have done that. The second fact is that a programme has now been put forward. We do not know whether total agreement will be reached with the EC. The noble Lord, Lord McIntosh, said that he did not believe that it would be because the timescale being offered by the Government would not be satisfactory to the Commission. He is better informed than I am, because I have no idea whether the timescale will be satifactory to the Commission. I too hope that within two or three years something considerable will have happened.
However, I am aware, mainly I must confess through my connections in this field, that it is not an easy matter. There needs to be considerable investment to change the quality, standards and so forth of water. There is not a Member of this place—perhaps with the exception of those from the Liberal Benches—who can claim to be free of all blame in this matter. Investment in the water industry in previous years was not that high and it has not been so during the time of what we call the nationalised water industry. I remember that we received almost no notice of the various changes that it had made which caused us serious problems with regard to the quality and so forth of water.
As the noble Lord, Lord McIntosh, said, it stuck in his throat that the Government are going to put this information in the prospectus and not before Parliament. If the Government are moving in that direction and if the timescale is being worked out, unless they publish the information separately, I cannot see how they will produce it, if the negotiations are not complete before the Bill goes through this place, it having been through the other place. It seems to be not unreasonable. I do not see why that fact should stick in the noble Lord's throat. It is not, let me hasten to add, that I am against the fact that we should have standards of water as high as anything requested in the EC directive. It is not that we should not produce a proper programme. It is that we should not be forced by any ill-advised manoeuvre to take what might be, in a technical field, the wrong steps.
It is most likely that during the course of the next weeks or months the Government will come to a reasonable arrangement with the EC, satisfactory to the Commission and the Government, practical for the water industry and satisfactory therefore ultimately to the consumers of this country.
Lord Ross of Newport: The noble Lord, Lord Trafford, pleads eloquently for us not to set firm dates, but the directive goes back to 1980. Surely our job in this place is to look after the interests of consumers and to be honest with investors who may wish to take shares when the authorities are
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privatised. It is more honest to put the dates into the flotation documents. If the dates are considered by the Government, the Director General of Water Services and the authorities not to be reasonable, because they cannot abide by them, let us have some alternative dates from the Government. At the moment they are prevaricating. It is our job to get something firm set down in the Bill so that we all know where we stand.
Lord Renton: Of course we all want to ensure that we get water supplies of improved quality in the years to come, but I must confess that I drink tap water all over the United Kingdom, and have done so for years, without so far any visible ill effects. This is important, and it is dealt with in Clauses 52 and 53. The side note to Clause 52 states:
"Duties of water undertakers with respect to water quality"
and the side note to Clause 53 states:
"Regulations for preserving water quality".
Therefore I should have thought that if there were to be an attempt made—these amendments are such an attempt—to strengthen the Bill with regard to the question of wholesome water, the right place for it to be done would be in Clauses 52 and 53. There is nothing in those clauses to prevent the noble Lord, when we reach them, from referring to the matter in some way or other, or by means of a question asking what the Secretary of State proposes to do about the EC directive mentioned in Amendment No. 288B.
I hope that I have got the technical position right, but the noble Lord is moving an amendment to Clause 37 which deals in general terms with the general duties with respect to water supply, and to try to introduce prematurely the question of quality at that stage seems to me to be likely to lead to repetition in the Bill.
9 p.m.
Lord Hesketh: The effect of these amendments would be to make the EC drinking water directive standards a standard of performance, contravention of which would entitle customers to a payment whenever the standard was contravened. The contravention would not apply immediately but after a date specified by the Secretary of State which has either been agreed with the European Commission or is no later than Ist September 1993.
Perhaps I may first refer Members of the Committee back to the statement I made earlier today during the course of our discussion on the amendments to Clause 20 tabled by the Government. I was very interested that the noble Lord, Lord McIntosh, addressing me for the first time during the passage of the Bill in your Lordships' House, went to some lengths to say that this was a major statement by the Government. He then proceeded to rubbish it a few hours later. I am not quite sure where one stands on that. I then made it quite clear——
Lord McIntosh of Haringey: Perhaps the noble Lord will forgive me for intervening. I then had the opportunity to read the statement, for which I am grateful to somebody, which enabled me to be more critical about it than I was at the beginning.
Lord Hesketh: Members of the Committee have also had a chance to listen to it. I then made it quite clear that the Government were committed to complying with the drinking water directive and that a timescale for the programmes would be presented to the European Commission in due course. I am sure that the same proposal is supported by all Members of the Committee. The programmes are now being assessed, and their timescales will be made known when the assessments have been completed later this year.
Water undertakers will need to convince the Secretary of State that they are doing all that they can to comply speedily with the directive. They will have to give formal undertakings which are acceptable to him and keep those undertakings, otherwise the Secretary of State will be obliged to take enforcement action. We must also convince the European Commission that these programmes are acceptable because of its role in ensuring that European legislation is properly implemented.
Contrary to what the noble Lord, Lord McIntosh, said earlier on this amendment, we believe that the programmes will be acceptable. However, we immediately run into problems if we start trying to incorporate a compliance date in the legislation, as Amendment No. 288B proposes. That would contradict the date in the EC drinking water directive. It might also signal a much longer timescale for compliance in some cases than was really necessary.
The amendments are also inconsistent with other aims. The basis of the guaranteed standards scheme is that it should be simple to operate, easy for the customer to understand and provide a no-nonsense form of redress. If the scheme were to be extended to include a breach, however small or insignificant, of any of the EC directive standards, that would immediately introduce a major subject for dispute and lead to serious practical implementation difficulties. For example, if the lead standard were exceeded, the customer could argue that this was due to the undertaker's lead pipe. The undertaker could argue that it was due to the customer's lead pipe which in most circumstances is longer. As no sample can be taken at the point where ownership of the pipe changes, there is no obvious resolution. Another example is the unexpectedly heavy use of water from a particular main because of a serious fire in the area. That could stir up deposits temporarily and breach the standard for the colour of the water.
Furthermore, the noble Lord, Lord McIntosh, happily stated that the Government had made no effort to comply with the EC standards. Of course we complied with the standards and for five years the EC said that they were perfectly all right. Then the EC decided to change the method of measuring the standards. So to say that we have made no effort is just not true.
Planning permission is a subject which is often hotly discussed from the Benches opposite. Now it appears to be gaily thrown away—any works, large or small, will be erected without worrying about planning permission because we must get the job
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done. There seems to be no interest in improving the technology, even if there are medical implications. There is an assumption which we strongly criticise and with which we disagree that the European Community will not be satisfied with the statement which the noble Lord, Lord McIntosh, described earlier today as "major and important". I very strongly hope that the Committee will resist the temptation to accept these amendments.
Lord McIntosh of Haringey: I am afraid that the Minister has totally failed to convince me that the fears which I expressed at the beginning are not real fears. He talked about the history of efforts to improve the situation and to secure compliance. I did not say that there had been no efforts; I said that compliance had not been achieved. It is not a matter of making efforts. Even if efforts had been made—which I beg leave to doubt—it is already four years since the date by which compliance should have been achieved. I agree with the noble Lord, Lord Trafford, that the legislation should go wider than nitrates and lead. We have nowhere near reached the stage where the Government are even willing to set a time on compliance.
Parliament has greater rights than that. We are told by the Secretary of State that the compliance programmes, together with costing and timetables, will be included in the prospectuses to be published later this year. That is still possible under our amendments. Parliament must say that agreement must rapidly be reached by the Government and the European Community before the end of this year, even though it is at least four years—indeed it is seven years—since agreement ought to have been reached.
Failing that, there should be a definite period which everybody knows is the end. After that no failure to reach the required standard of drinking water will be permitted; otherwise we will be subject to all the penalties which may be imposed. As the matter stands, the Government are not only resting on their laurels, having secured the legislative requirement; they are going further and refusing to implement the second and the most important part of the EC directive. The people of this country will not be satisfied with legislative compliance; they want to see drinking water made better. Only by this amendment can we force the Government towards a realistic timetable for compliance. I commend the amendment to the Committee.
9.6 p.m.
On Question, Whether the said amendment (No. 287A) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents,47.

DIVISION NO. 3

CONTENTS

Addington, L. [Teller.]

Blease, L.

Airedale, L.

Bonham-Carter, L.

Ampthill, L.

Boston of Faversham, L.

Ardwick, L.

Briginshaw, L.

Attlee, E.

Brooks of Tremorfa, L.

Birk, B.

Bruce of Donington, L.

Blackstone, B.

Callaghanof Cardiff, L.

On Question, amendment agreed to.

Campbell of Eskan, L.

McGregor of Durris, L.

Carmichael of Kelvingrove, L.

McIntosh of Haringey, L.

McNair, L.

Cledwyn of Penrhos, L.

Mason of Barnsley, L.

Cobbold, L.

Mayhew, L.

Cocks of Hartcliffe, L.

Meston, L.

David, B.

Milner of Leeds, L.

Davies of Penrhys, L

Molloy, L.

Dean of Beswick, L.

Monkswell, L.

Dormand of Easington, L.

Murray of Epping Forest, L.

Elwyn-Jones, L.

Nicol, B.

Ennals, L.

Northfield, L.

Ewart-Biggs, B.

Ogmore, L.

Falkender, B.

Phillips, B.

Falkland, V.

Pitt of Hampstead, L.

Galpern, L.

Ponsonby of Shulbrede, L. [Teller.]

Graham of Edmonton, L.

Harris of Greenwich, L.

Prys-Davies, L.

Hatch of Lusby, L.

Rea, L.

Hooson, L.

Rochester, L.

Houghton of Sowerby, L.

Ross of Newport, L.

Hughes, L.

Russell, E.

Irvine of Lairg, L.

Scanlon, L.

Irving of Dartford, L.

Stallard, L.

Jenkins of Hillhead, L.

Stoddart of Swindon, L.

Jenkins of Putney, L.

Strabolgi, L.

John-Mackie, L.

Taylor of Blackburn, L.

Kilbracken, L.

Tordoff, L.

Kirkhill, L.

Turner of Camden, B.

Llewelyn-Davies of Hastoe, B.

Underhill, L.

Wedderburn of Charlton, L.

Lloyd of Kilgerran, L

Whaddon, L.

Lockwood, B.

White, B.

Longford, E.

Williams of Elvel, L.

Macaulay of Bragar, L.

Wilson of Rievaulx, L.

NOT-CONTENTS

Ailesbury, M.

Hives, L.

Arran, E.

Hooper, B.

Balfour, E.

Jenkin of Roding, L.

Belstead, L.

Johnston of Rockport, L.

Blatch, B.

Killearn, L.

Blyth, L.

Kinloss, Ly.

Brabazon of Tara, L.

Long, V. [Teller.]

Brougham and Vaux, L.

Lucas of Chilworth, L.

Butterworth, L.

Lyell, L.

Carnock, L.

Macleod of Borve, B.

Clinton, L.

Mersey, V.

Cranbrook, E.

Renton, L.

Davidson, V.[Teller.]

Rodney, L.

Dundee, E.

Saltoun of Abernethy, Ly.

Eden of Winton, L.

Sanderson of Bowden, L.

Elliot of Harwood, B.

Skelmersdale, L.

Elliott of Morpeth, L.

Stanley of Alderley, L.

Ferrers, E.

Strathclyde, L.

Fraser of Carmyllie, L.

Thomas of Gwydir, L.

Grantchester, L.

Trafford, L.

Greenway, L.

Trefgarne, L.

Harvington, L.

Trumpington, B.

Henley, L.

Wynford, L.

Hesketh, L.

Resolved in the affirmative, and amendment agreed to accordingly.
9.14 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 287B:
Page 39. line 33, at end insert—
("(aa) for providing water of a standard of wholesomeness prescribed under section 38(2A) or (2B) below").
[Amendment No. 288 had been withdrawn from the Marshalled List.]
Clause 37, as amended, agreed to.
9.15 p.m.
Clause 38 [Standards of performance in connection with water supply]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 288ZA:
Page 40, line 8, leave out ("may") and insert ("shall").
The noble Lord said: With this amendment we return to the familiar issue of "may"or "shall". In this case we are concerned with the regulations which the Secretary of State may make under Clause31 which will be pivotal in determining the application of the duty to supply requirements of Clause 37.
The regulations which the Secretary of State may make concern, first, the extent to which breaches of detailed duties to supply as set out in Chapter 11 are breaches of the general duty to supply contained in Clause 37; and, secondly, whether that duty needs to be supplemented by establishing overall standards of performance. As the matter stands, the Secretary of State has a discretion in these matters. That does not seem to us to be very satisfactory.If Parliament is legislating then Parliament surely has a duty to ensure that it has an opportunity to be clear about the effect of the legislation which is produced. If the remaining proposals of this chapter are to have any clear connection with the general duty in Clause 37, it is essential that we should understand whether the regulations will be made or whether they may be made.
In their own amendments moved earlier this afternoon the Government have accepted that it is proper to say in legislation that the Secretary of State "shall" make regulations. They have done so at the behest of the European Community rather than at the behest of the Opposition. So be it, we accept our defeat in that matter with a good grace, as I hope that we all do under such circumstances. We accept that in the past the Government have put forward a powerful case against the substitution of the word "shall" for the word "may". In this case there is no such excuse. The Government having delegated to regulation the clear duty which is required of them in the whole of Chapter II and in particular in Clause 31, surely it is the duty of Parliament to secure that the effect of this legislation is produced and that the Government introduce the regulations which are specified.
I hope that the Minister will feel that it is prudent as well as right to agree to the amendment. I beg to move.
Lord Hesketh: Amendment No.288ZA would replace the power of the Secretary of State to make regulations under Clause 38(1) with a duty to make such regulations.
Clause 37 sets out the general duty of a water undertaker to develop and maintain a system of water supply, and to ensure that such arrangements as are necessary to meet its specific obligations under Chapter II of Part II of the Bill have been made. Clause 38(1) enables the Secretary of State, on the application of the director under subsection (4), to make regulations setting out requirements which, if breached, are to be treated as breaches of the general duty in Clause 37.

1009
That power, and a similar power in Clause 68 relating to sewerage duties, are intended to back up the powers which the director will have under conditions of appointment of the undertakers. Conditions I and K in the model instrument of appointment of the water and sewerage undertakers, published in December 1988, provide models for those powers. The director will, under the powers, obtain the information he needs about the overall quality of service and investment in the underground assets in order to judge what is necessary to protect customers' interests in the quality of the undertakers' services. Where he takes the view that those interests cannot be protected without specific enforceable requirements being imposed upon the undertakers he will apply to the Secretary of State to make regulations under Clause 38(1).
The Secretary of State will be responsible for judging whether such obligations should be imposed. As new obligations may impose additional costs and ultimately higher charges for services the Government take the view that the Secretary of State should be accountable to Parliament for his decision, through the making of regulations as provided for in Clause 38. To convert the Secretary of State's power to make regulations into a duty to do so would cut across his general duties under Clause 7 of the Bill. Under those duties, he would be able to balance, in particular, the interests of customers in higher quality services and lower charges in deciding whether to make regulations as proposed by the director. The amendment should be rejected because it would remove that important discretion. For those reasons, I hope that the noble Lord, Lord McIntosh of Haringey, will consider withdrawing the amendment.
Lord McIntosh of Haringey: I am sorry that we have returned so quickly to the repetition of what I still consider to be quite inadequate reasons for retaining the powers of the Secretary of State to do what he likes in regulation, rather than placing matters, as they should be, on the face of the Bill. I feel strongly that, when we consider legislation of this kind, we should have a clearer idea than we do from the Bill as drafted of what the effect of the legislation will be. However, I understand the last point that the Minister made about the discretion of the Secretary of State. It is a matter that I want to look at more fully. Without prejudice to any undertaking not to bring it back at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 288ZB:
Page 40, line11, leave out ("may") and insert ("shall").
The noble Lord said: This is a very similar amendment. I move it in the hope that the Minister may find that it has more virtue in his mind than the previous one. It seems that this is a clearer case, where the standards of performance in connection with the provision of supplies of water is something that everyone can understand and which is desirable. It is necessary for those standards to be prescribed
1010
and for water undertakers to pay compensation if the prescribed standard is not achieved. I should have thought that this was without doubt a case where the Minister would be able to tell us that the Secretary of State would prescribe standards of performance. I rather think that he will have to do so if he is to continue to keep the law in accordance with European Community directions. If the Minister is to tell us that the Secretary of State will do that, he may feel inclined to accept the amendment and accept "shall" instead of "may" on the face of the Bill. I beg to move.
Lord Hesketh: Amendment No. 288ZB would replace the power of the Secretary of State to make regulations under Clause 38(2) with a duty to make such regulations. Subsection (2) enables the Secretary of State, on the application of the director under subsection (4), to make regulations which will prescribe standards in day-to-day relations between the water undertakers and individual customers. If those are not met, then these will entitle the persons affected to payment by the undertaker.
The draft regulations which are to be made under subsection (2) are already out for public consultation. These are known as the guaranteed standards scheme and provide for automatic entitlement of domestic customers to the £5 cash payment of credit from the appointed company for each day or event that certain standards are not achieved. Copies of the draft regulations were placed in the Library on 26th April. We therefore believe that it is not necessary to make it a requirement that such a scheme shall be produced. For those reasons, as the noble Lord, Lord McIntosh of Haringey, again correctly surmised, we do not believe that the amendments are necessary.
Lord McIntosh of Haringey: The Minister tempts me! I was well arare that the draft regulations were published in April. That was why I wanted the Minister to say, as I believe he has done, that the Secretary of State will introduce regulations to that effect. Is there then any conceivable reason why, faced with the possibility of defeat, he might not agree to "shall" instead of "may"? Is there anything whatsoever to be lost by agreeing to the amendment?
Lord Hesketh: If the noble Lord, Lord McIntosh, is right in his assumption, and he very well may be, one could equally argue that there is no reason for it to appear on the face of the Bill.
Lord McIntosh of Haringey: I think it is called a stand-up. It is clear that the Government will do the right thing. I do not think that the Committee would appreciate our pursuing the matter to a Division at this stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 288ZC:
Page 40,line 15, after second ("prescribed") insert ("for the purpose of providing full compensation").
The noble Lord said: This amendment relates to Clause 38. For the benefit of the Committee it may

1011
be helpful if I read out the subsection that we are seeking to amend:
"The Secretary of State may by regulations prescribe such standards of performance in connection with the provision of supplies of water as, in his opinion, ought to be achieved in individual cases; and such regulations may provide that if a water undertaker fails to meet a prescribed standard, it shall pay such amount as may be prescribed".
This amendment simply seeks that a sum may not be prescribed unless, in being prescribed, it is:
"for the purpose of providing full compensation".
The Minister and others who closely follow these matters, and certainly the Committee, will be aware that there can be an aggravating difference between the prescribed sum and the total hurt which needs to be compensated. I should like to hear the Minister explain why the Government have not put on the face of the Bill words which would allow the full cost. We know the meaning of the word "prescribed" in these matters, but what do the Government have in mind as likely to be the prescribed amount? Why in fact is it prescribed at all?
We do not want a gimmick. We do not want to be told, as one has been told, for instance, that the Government in general have been talking of about £5 a day for a compensation scheme. We do not want that. We do not want any razzmatazz or ballyhoo about this payment. We simply want people who have suffered hurt to be recompensed in full for that hurt. Why should someone have to meet part of the cost of an injury which has occurred through no fault of their own? Why should the undertaker not bear the whole of the cost? Why should he be let off? The undertaker should be expected to pay the full cost of any loss or loss of enjoyment suffered by a consumer whose supply has failed to meet the prescribed standards. I beg to move.
Lord Hesketh: Amendment No. 288ZC would provide that under the regulations made under subsection (2) there would be payments for the purposes of providing full compensation for failure to meet a prescribed standard.
In putting forward this amendment, I feared that the noble Lord may have misunderstood the purpose and scope of the guaranteed standards scheme. This scheme is there necessarily to apply where it is feasible to guarantee a clearly defined standard to achieve which, if not met, will automatically entitle the customer to a cash payment or credit. The scheme focuses on those aspects of day-to-day relations between companies and customers where at present the customer is not entitled to any compensation for the inconvenience caused as a result of service standards not being met.
The scheme is in addition to existing and new individual statutory rights to civil redress provided under the Bill. Any customer is free to pursue civil redress for loss or damage sustained as a result of breach of the specific water supply and sewerage duties owed to the individual customer under the Bill. It is right and proper that the courts should determine the size of "full compensation". The guaranteed standards scheme is clearly inappropriate on that score.
1012
I suggest that the difficulty which the noble Lord, Lord Graham, is concerned with is the cost of taking civil action. I should reiterate that a new raft of offences will be available. There is also the guaranteed scheme.
On the cost of taking civil action, the noble Lord, Lord Graham of Edmonton, is essentially raising a much more general issue which should be addressed to my noble and learned friend the Lord Chancellor rather than to myself on an amendment to the Water Bill. For that reason I hope that he will be able to withdraw his amendment.
9.30 p.m.
Lord Renton: Before the noble Lord replies, I wonder whether it would help if I point out that it is clear from the terms of the subsection, made even clearer by the statement of my noble friend Lord Hesketh, that the regulations will not prescribe compensation. In other words, damage does not have to be proved before the entitlement—and I must call it this, because it looks as though it will be so—to a contribution by way of penalty arises. If the noble Lord introduces the concept of compensation into the scheme that is in the subsection, he may sometimes be depriving people of a contribution by way of penalty that they would receive if there were no reference to compensation.
As my noble friend has said, compensation is something that the courts will decide. Damage or injury will have to be proved before the compensation can be paid. If the courts find it proved, they will then award full compensation in damages. However, on reflection, I think that the noble Lord will find that his amendment is self-defeating.
Lord Graham of Edmonton: If the noble Lord, Lord Renton, is inviting me to save myself from my own logic, I am certainly willing to reflect on the issue. However, can the Minister answer the point that I raised? The Bill provides that if a water undertaker fails to meet a prescribed standard it shall pay such amount as may be prescribed. Can the Minister inform us what kind of matters would be included and in what amount? Are we talking of, for instance, £10 or £100? Is there a scale? I should like to know more about what the words on the face of the Bill mean.
Lord Hesketh: The condition of an automatic scheme is that the payment must be prescribed. That is why we fixed it at the £5 level for the guaranteed standard scheme.
Lord Graham of Edmonton: The figure is £5. The idea of such amount being prescribed means that it can be changed by order. The £5, for instance, could become £3 or £10. I think that the Minister must agree that £5 is a nominal sum. It is not a derisory sum. However, in the context, can the Minister tell us a little more about what the £5 compensation would cover? What is worthy of just £5 compensation?
Lord Hesketh: The scheme covers delays beyond the period notified by the company for restoring water supplies following a planned interruption of supply; delays of more than 24 hours in restoring water supply following an unplanned interruption which has been notified to the company and 72 hours in the case of a burst strategic main; appointments which are not kept on the day specified by the company to the customer; failure to provide the answer to written inquiries about bills or requests for alternative methods of payment within 20 and 10 working days; and failure to respond to written complaints about water supply or sewerage services by providing an answer within 10 working days and a substantive answer within 20 working days if the matter requires a site inspection or further investigations.
The key is that the fine is £5 per day. I am sure that many Members of the Committee would be very grateful if they were able to receive a similar form of compensation in respect of various other services.
Lord Graham of Edmonton: I am most grateful to the Minister. He has refreshed our memory, not that he has given any new information. I can recall having heard that information. I am saying that as a consequence of any of those derelictions the cost to the consumer can be measured not just as £5 but in terms of hundreds of pounds. As a consequence of delay or of waiting for someone to call, one may give up a day's work or lose a day's pay and so on. The Minister is telling us that this is a global basic minimum figure of £5.I say that it is a gimmick and part of the sales package that the public is being asked to buy. I do not deny what the Minister has said. His colleagues behind him agree. This has not happened before. It is a new element in the way in which the consumer will get some redress.
I shall read what the Minister has said. I reserve my right to come back at a later stage and in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lloyd of Kilgerran Lord Lloyd of Kilgerran moved Amendment No.288A:
Page 40, line 16, at end insert ("Provided that nothing in regulations made under this section shall derogate from any right of action or other remedy (whether civil or criminal) in proceedings instituted in respect of a failure to meet a prescribed standard.").
The noble Lord said: The amendment is concerned with the subsection of Clause 38 which has been described so fully by the noble Lord, Lord Graham of Edmonton. I have listened carefully to what the Minister has said about the previous amendment. I now understand that in the regulations prescribed under the clause—the word "prescribed" is defined in Clause 182—there is the compensation sum of £5 a day. The Minister is nodding his head in agreement.
I strongly support what the noble Lord, Lord Graham of Edmonton, said, that in some circumstances such compensation will be totally inadequate as a result of the failure of an undertaker to comply with the regulations. There is an old case which I hope the Committee will allow me to mention. It is the case of Atkinson v Newcastle and
1014
Gateshead Waterworks Company of 1877. Under the Waterworks Clauses Act 1847 compensation of £10 was laid down as a kind of penalty. As a result of a breach of the Waterworks Clauses Act a fire caused considerable damage, but the court said that as the sum prescribed was £ 10 that was all that the person concerned was entitled to.
The facts of that case are irrelevant—except for the penalty—to the submission that I am making because other clauses of the Bill deal with undertakers having to supply water to put out fires. That is dealt with in later clauses.
The Government have prescribed the small sum of £5 a day and in some circumstances that compensation might be much higher. The Minister said that, without citing them, some clauses in the Bill preserve the civil rights of persons who have been injured or damaged as a result of the breach of regulations. I have been unable to find clauses which are sufficiently general to cover the position that I am adumbrating. My amendment reads simply:
"Provided that nothing in regulations made under this section shall derogate from any right of action or other remedy (whether civil or criminal) in proceedings instituted in respect of a failure to meet a prescribed standard."
The noble Lord gave the general indication that the present Bill contains clauses to meet civil rights arising from damage caused to a person as a result of the failure to meet prescribed standards where that damage was more than £5 a day. I believe therefore that it is simpler and clearer to introduce into the Bill at this stage the general addition to Clause 38(2). It is that although the sum is prescribed in the Bill under the regulations there may be cases where the compensation should be much higher. Therefore the terms of my amendment cover that position and reserve the rights for the person concerned which arise from the failure to meet prescribed standards. I beg to move.
Lord Renton: Whatever else may be said in the Bill about preserving the rights of compensation and so forth in the courts, I feel bound to remind the noble Lord—and he made a most interesting speech from his experience as a lawyer—of the rule of interpretation. It is a very ancient and constant rule. It is that you cannot take away people's rights under the common law or their rights of action without express words in an Act of Parliament.
The noble Lord is trying to put right something that does not need to be put right because his amendment states that:
"Provided that nothing in the regulations made under this section shall derogate from any right of action or other remedy (whether civil or criminal)".
I have always thought of civil remedies and criminal penalties. However, that is a small point.
There is no suggestion that the regulations to be made give to the Secretary of State a power—an express or implied power even—to derogate from any right of action or other remedy. Unless the statute were absolutely plain and express in giving him a power to do so, the amendment would be unnecessary. I hope that my noble friend will not agree to these unnecessary words being introduced.
Lord Hesketh: Amendment No. 288A seeks to ensure that nothing in the regulations provided for under Clause 38 should prevent the customer from taking legal proceedings in respect of a failure to meet a prescribed standard. This would cover both breaches of standards to be achieved in individual cases under subsection (2) and breaches of the overall standards of performance under subsection (1).
The amendment is defective since breaches of these prescribed standards are not subject to legal proceedings. Under the Bill, however, there are specific water supply obligations which are owed to the individual customer and which are subject to civil liability. An example would be for breach of the duty to supply water for domestic purposes. I assume therefore that the intention of the amendment is to avoid such proceedings for breach of these obligations being qualified in any way by regulations made under this clause.
We have already provided for this in subsection (6). This makes clear that the obligations imposed on a water undertaker in the following provisions of Chapter II of Part II and any remedies for contravention of those obligations are not affected by any obligation or remedy available by virtue of Clauses 37 and 38.
I should add that the draft regulations under subsection (2) of Clauses 38 and 68, the guaranteed
1016
standards scheme, make clear that payments under the scheme do not affect the other legal rights or liabilities of the undertaker or of the customer. With those words, I hope that the noble Lord, Lord Lloyd of Kilgerran, will feel able to withdraw his amendment.
Lord Lloyd of Kilgerran: Perhaps I may say how obliged I am to the noble Lord, Lord Renton, for giving me a very interesting and well-known indication of the law concerning the safeguards for individuals on the taking away of rights.
I now find myself rather confused because in his reply the Minister said that these safeguards of civil rights are in this Bill so that under the arguments of the noble Lord, Lord Renton, certain parts of the Bill are totally unnecessary. Whether or not that is the case, I am not in a position to give any views at present because the Minister referred to regulations which I do not have before me—and I apologise for that. I did not quite gather the relevance of the clause which he mentioned on a quick look at the matter; but as it is getting rather late, I shall read what the Minister said. I shall again read what the noble Lord, Lord Renton, has so kindly introduced into this debate, and I may raise the matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.45 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 288B:
Page 40, line 16, at end insert—
("(2A) Without prejudice to the generality of the duty conferred by subsection (2) above, regulations under that subsection shall include in any standard of performance a requirement for an undertaker to achieve the levels of drinking water quality specified in EEC Directive 80/778 by a date not later than the date specified by the Secretary of State under subsection (2B) below in respect of each undertaker.
(2B) The date or dates to be specified by the Secretary of State by order under this subsection shall be that or those which either—

(a) Not later than 31st December 1989, have been agreed by the Secretary of State and the European Commission; or

(b) Where no such agreement has been reached by the date referred to in paragraph (a) above, 1st September 1993.

(2C) Where, before the date specified in an order under subsection (2B) above, any further terms of a Directive by the European Commission relating to drinking water quality are introduced, the Secretary of State shall, in consultation with the Commission, by regulations establish the shortest timetable for compliance by each water and sewerage undertaker as he considers to be reasonably practicable.").
[Amendments Nos. 289 and 290 had been withdrawn from the Marshalled List.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 290A:
Page 40, line 28, leave out paragraph (d).
The noble Lord said: The amendment probes the Government as to why subsection (3)(d) enables performance standards regulations for water supply to include circumstances in which a water undertaker is to be exempt from such requirements.
Throughout this Bill and on this issue it is essential for the Government to explain to the Committee where it seems that their broad statements of intent are heavily qualified; this is certainly one of them. Amendment No. 290A is all of a piece with other amendments.
Paragraph (d) states:
"prescribe circumstances in which a water undertaker is to be exempted from requirements of the regulations".
The Minister has already tried to persuade the Committee that matters contrary to the commercial interests of some directors of the companies should be free from publicity without the public knowing precisely what they are. Of course, the Government do not idly put matters like this into a Bill but I believe that the Committee is entitled to an explanation as to the circumstances in which those prescribed circumstances would be considered. Perhaps the Minister can help the Committee in that respect. I beg to move.
Lord Hesketh: By providing for an automatic entitlement it would be unreasonable on the undertaker if there were not certain exceptions provided when circumstances outside his reasonable control prevented the service standard being met. That is the main set of exemptions set out in the draft regulations. There are also a number of other exemptions to assist the practical operation of the scheme. For example, where a customer informs the
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undertaker that he no longer wishes to pursue a complaint, the undertaker will be exempt from having to pay the £5 where he failed to respond to the complaint within a specified standard time.
Without such exemptions, we should be imposing an unreasonable burden on the undertaker which would increase the cost to all water and sewerage customers. However, I believe that it would probably be helpful to the Committee if I explained the sort of exemptions which we are talking about. They are of a similar nature to those rights under the guaranteed scheme—that the undertaker has cancelled the appointment giving the customer not less than 24 hours' notice of cancellation; that the undertaker holds a record signed by a representative who was instructed to make the visit; that the visit was made on the appointed day and the customer has not established that the record is incorrect; or that the customer has cancelled the appointment.
I suspect that we are not talking about particularly onerous duties. We are referring to reasonable conditions which, when not met, provide a rational reason for having an exemption.
Lord Graham of Edmonton: I am grateful to the Minister. I understood, as he did, that if there are minor and major matters, these are minor. Again, I am satisfied that the director who will be closely watching such things will not lay himself open to a charge that there are matters that would allow an undertaker to escape great responsibilities. I shall read very carefully what the Minister has said and I may return to the matter later, but in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38,as amended, agreed to.
Clause 39 agreed to.
Clause 40 [Requisitioning of water mains]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 298:
Page 42, line 7, leave out ("or parts of buildings").
The noble Earl said: I was very concerned about "or parts of buildings" because of the risk of frost. I am in favour of a mains pipe being inside a building that is reasonably draught proof, but the words "or parts of buildings" mademe think that the undertaker was being asked to put a main through a building where it could get frozen. Although the words "parts of buildings" appear elsewhere, I feel that they are misleading.
Perhaps I may draw the Committee's attention to page 79, Clause 70(1)(b), which is the corresponding passage of Clause 40 which we are considering. That clause states:

"(i) premises on which there are buildings; or

(ii) premises on which there will be buildings when proposals made by any person for the erection of any buildings are carried out".

Those are better words than the words in Clause 40. This is a drafting point. One must be aware of frost, which can do immense damage to people's supply of water if pipes burst. That is.why I dislike the expression "or parts of buildings". I beg to move.
The Earl of Arran: The effect of my noble friend's amendment would be to prevent the owners or occupiers of parts of existing buildings from requisitioning a mains supply of water. This could adversely affect, for example, the owners or occupiers of flats where a house has been converted, or of rooms above a shop or office adapted for residential use.
It is our intention that all owners and occupiers within a water undertaker's area should be able to requisition a mains supply of water. My noble friend Lord Balfour is, as he has just mentioned, concerned that the provision will require a water undertaker to connect parts of buildings directly to a mains supply and that there may be attendant risks of frost damage. Presumably he has in mind supplies to outhouses and suchlike. I can assure him that that will not be the case.
The purpose of this clause is to enable water mains to be requisitioned to provide a general mains supply of water to a particular locality. The provisions in Clauses 42 to 44 set out the quite separate requirements on undertakers and owners and occupiers for connecting individual premises to the mains.
For completeness, I might add that an undertaker will quite properly be required to take reasonable precautions against frost damage by, for example, ensuring that its pipes are laid at a sufficient depth. Equally, where an unusually severe frost may cause pipes to burst and lead to a supply failure, an undertaker has the defence in any subsequent proceedings brought against it for breach of duty that it took all reasonable steps and exercised all due diligence to avoid the breach. I think that this meets the noble Earl's underlying concern.
This amendment would deprive certain owners and occupiers of an important right. We do not believe that that is the noble Earl's intention, and I hope that he will be persuaded not to pursue the amendment.
The Earl of Balfour: I am most grateful to my noble friend for his explanation that the risk of frost is not as serious as I had thought. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 40 agreed to.
Clause 41 agreed to.
Clause 42 [Duty to make connections to water mains]:
The Earl of Arran The Earl of Arran moved Amendment No. 303A:
Page 46, line 20, leave out ("in question") and insert ("consisting in the building or part of a building in question together with any land occupied with it").
The noble Earl said: In moving Amendment No. 303A, I should like to speak to Amendments Nos. 303B, 304A and 305.
Clause 42 places a duty on a water undertaker to connect a service pipe to any premises with one of the undertaker's mains for the purpose of providing a supply of water for domestic purposes.
Amendments Nos. 303A, 303B and 304A are technical amendments to clarify the provisions of subsections (3) and (4) which deal with the work that an undertaker is required to carry out in particular circumstances. Amendment No. 305 is a further technical amendment to clarify that in cases where a water undertaker is required to connect a service pipe to a water main, he cannot be required to make that connection by means of a connection to somebody else's service pipe. I beg to move.
The Earl of Arran The Earl of Arran moved Amendment No. 303B:
Page 46, line 21, leave out ("it") and insert ("the main").
The Earl of Balfour The Earl of Balfour moved Amendment No. 304:
Page 46, line 25, leave out ("in") and insert ("outside").
The noble Earl said: I should like to explain what I mean by a stopcock. A stopcock is the means of turning water off with a key. Usually a 90 degree turn will turn the water off. It is usually buried well into the ground and fixed on to the service pipe. That stopcock should, in my opinion, be outside the building and not inside. There should be a hand valve inside the building which the house owner can turn off to carry out repairs or maintenance etc.
I realise that there is a general recommendation that from the main any lead-off should have a stopcock at that point. In theory, that sounds very nice, but in many cases the mains pipe runs down the middle of a street and, because of heavy traffic, the street is often being repaired so that any stopcock in the roadway will be covered up very quickly. It is much better to have it on the pavement, particularly if it is paved like most of the London streets. Pavements can be there for a very long time. This is an important point.
Another point that I wish to raise at this stage concerns any person who takes advantage of the Government grant that is available to replace lead pipes with other material, which may be pvc or something else. The person who lays the pipes usually lays them just through the wall of the house. The grant is paid for the replacement from the main to the first tap in the house. At the moment the work done outside is exempted from VAT and it is zero rated. Any work done inside the house should be done by a qualified plumber. That work is done using a different material and is subject to VAT. That is part of my reason for this amendment.
If there is a burst pipe inside the house and the stopcock is inside, in order to be able to turn off the water the undertaker has to gain entry to the house and he will need a warrant in order to do so. It will also probably mean smashing in a door. I can assure the Committee that even a half-inch pipe bursting inside a house can dramatically affect the pressure of water to a great many of the surrounding houses. There may be technical reasons for the wording. I ask my noble friend to ensure that stopcocks are placed outside and not inside the house. Equally, I wish to see hand valves inside the house which the housewife can turn off. I beg to move.
The Earl of Arran: If my noble friend's amendment is passed it will negate the desired effect, and I shall take a short time explaining why. An undertaker's stopcock will normally be located in the street. This provision addresses the particular case where a water undertaker is required by the owner or occupier to connect premises which abut on a street with a main running through the street. The service pipe enters the building other than through an outer wall of a building abutting on the street and the stopcock on the service pipe is to be located in the garden. The Committee will be aware that the provision has now been amended to clarify that the term "premises" as used here is to be taken to include a building and the land occupied with a building, normally the garden. The undertaker is to be empowered to lay as much of the service pipe as is necessary in the garden between the boundary of the street and the stopcock in the garden. If accepted, this amendment would effectively remove this power. Where the stopcock is situated in the street outside the premises the undertaker is already empowered to carry out works by virtue of Clause 42(3)(a).
My noble friend is, I understand, concerned that a water undertaker should not be able to fit a stopcock inside a building. I hope he will accept my assurance that this is not the effect of this provision as now clarified in its amended form. I am grateful to him for raising the point which I hope he will now accept need be moved no further.
The Earl of Balfour: Once again I am very grateful to my noble friend. For my own peace of mind I am glad that I raised this point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Arran The Earl of Arran moved Amendments Nos. 304A and 305:
Page 46, line 47, at end insert ("or in any land occupied with those premises").
Page 46, line 51, at end insert ("; or—

(b) to connect a service pipe to any premises with a service pipe to other premises.").

Clause 42, as amended, agreed to.
Clause 43 [Conditions of connection to water main]:
Lord Hesketh Lord Hesketh moved Amendments Nos. 306 and 306A:
Page 47, line 22, leave out from ("disconnection") to end of line 26 and insert ("made by reason of any person's failure to pay any charges, that the person serving the notice has paid any amount owed by him to the undertaker in respect of a supply of water to those premises or in respect of expenses incurred in the making of the disconnection;").
Page 47, line 46, after ("fittings") insert ("used or to be used in connection with the supply of water to those premises, or with the use of water").
The noble Lord said: Clause 43 sets out the conditions that a water undertaker may impose before complying with the duty to make a connection to a water main. Amendments Nos. 306 and 306A
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are technical amendments to clarify the effect of the provisions. I beg to move.
[Amendments Nos. 307 to 309 hadbeen withdrawn from the Marshalled List.]
The Earl of Balfour The Earl of Balfour moved Amendment No. 310:
Page 48, line 43, leave out subsection (8) and insert—
("(8) In this section "meter" means any apparatus for measuring or showing the volume of water supplied to, or of effluent discharged from, any premises.").
The noble Earl said: This amendment should be taken with Amendment No. 350. Perhaps I may briefly explain why. Clause 77(4) gives the definition of "meter" as it is set out in my amendment. At present we are on Chapter II of the Bill, which deals with water only. Chapter III, which starts with Clause 67, deals with sewerage only. Chapter IV, which starts with Clause 74, deals with water and sewerage. In the Bill as drafted there is a full definition in Clause 43(8). The last but one line of the subsection refers to,
"the volume of effluent discharged from those premises".
I believe that this long definition should be in Clause 77 and that the short definition in Clause 77 should become subsection (8) of this clause. It would make the Bill a little easier to understand and would be an improvement. There should not be such an elaborate definition in regard to charges dealing with effluent going out from a house when we are dealing with water only. The amendment seeks to make the Bill clearer for those who have to read it. I beg to move.
Lord Hesketh: The effect of this amendment would be to remove the definition of fixing of charges in relation to any premises by reference to volume in subsection (8) of Clause 43. We believe that it is a probing amendment.
Clause 43 sets out the conditions of connecting new water supplies to the main. Subsections (1)(c) and (1)(d) enable water undertakers to require, as a condition of connecting a new supply of water for domestic purposes, a meter to be installed or the plumbing to be such that it would be reasonably practical to install one at a later date. Subsection (4) enables these conditions to be applied even if the undertaker has no immediate intention to charge on a measured basis. This is to enable a smooth transition to metering for those water undertakers who decide to move to widespread metering at a later date. It would also reduce the cost and inconvenience of such a move.
Subsections (1)(c) and (4) both refer to the fixing of charges in relation to volume. This is defined in subsection (8) as being the volume of water supplied to or the volume of effluent discharged from premises, or a combination of both these factors or one of them taken in conjunction with another factor such as a standing charge. It would cover the situation where, for instance, the water supply was not charged by volume but the sewerage services were. Given this explanation, I invite my noble friend to withdraw his amendment.
The Earl of Balfour: I am grateful to my noble friend for drawing that to my attention. I should like to add two more comments. It would be a good thing if water could be metered for two reasons. The first is that the householder—I am thinking mainly of houses—would then pay only for what he used. Secondly, if water is metered it is one of the few ways in which the water undertaker can find out if it is being wasted, because there is suddenly a fantastic reading. Unfortunately—and this is one of the facts of life—if people are paying a fixed charge for water they tend to waste it appallingly badly; indeed, they very often do not bother to repair ball-cocks or other such appliances. That is one of the reasons I think metering is definitely an advantage.
How one can successfully meter sewage, which one wants to flow as freely from a house as possible, is very much another matter. After all, under the metering systems which we have at present water comes in under pressure, as does gas. Moreover, electricity comes in under pressure in a way with a voltage. However, I feel that to attempt to meter sewage would be rather complicated and I think that one could end up with more trouble than the exercise was worth. Accordingly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 43, as amended, agreed to.
Clause 44 agreed to.
Clause 45 [Duty to supply water for domestic purposes]:
Lord Hesketh Lord Hesketh moved Amendments Nos. 311 and 311A:
Page 51, leave out lines 37 to 41 and insert ("supply having been cut off by reason of any person's failure to pay any charges, that the person serving the notice has paid any amount owed by him to the undertaker in respect of a supply of water to those premises or in respect of expenses incurred in cutting off any such supply;").
Page 51, line 47, after ("fittings") insert ("used or to be used in connection with the supply of water to those premises, or with the use of water").
The noble Lord said: Clause 45 defines the circumstances in which a water undertaker owes a domestic supply duty to a customer. Amendments Nos.311 and 311A are technical amendments to clarify the effects of the provisions. With the leave of the Committee I should like to move the amendments en bloc.
Clause 45, as amended, agreed to.
Clause 46 [Supply of water for non-domestic purposes]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 312:
Page 52, line 31, after ("new") insert ("or increased").
The noble Earl said: We are now dealing with the supply of water for non-domestic purposes. I feel it is important to ensure that the interests of other people living in the surrounding area are taken into consideration under the provisions of this clause. If you double the diameter of the pipe, you will get four times the volume of water through it. That is
1024
why I feel that the wording of this subsection should read:
"A water undertaker shall not be required by virtue of this section to provide a new or increased supply".
It is as simple as that. I propose the addition of those words because the provision, as it stands, could be detrimental to the person's neighbours. I beg to move.
Baroness Blatch: I should like to support the amendment. I shall give three brief examples as to why I wish to do so. For example, a warehouse alongside a brewery could at present be used as garages and have very low water consumption. The brewery owners could subsequently decide to use that warehouse for bottle washing. As garages, the daily consumption of water in the warehouse could have been, say, 100 gallons per day, but, as a bottle-washing plant, the consumption of water could rise to perhaps 10,000 gallons a day.
A second example is that of a chemist's shop which has no photo-processing unit. It could decide to open such a unit and, again, there would be an increase in water consumption. The third example is this. There could be a cattle trough in a field with very low water consumption. However, the farmer could decide to develop a broiler house for intensive turkey farming and, again, there would be a vast increase in water consumption.
In all those examples if the Bill were to be enacted in its present format the water undertaker would be required to supply this increased, not new, water supply, even if giving that increased non-domestic supply would prejudice its existing obligations or require it to incur unreasonable expenditure in constructing new water works. Could not the wider proviso contained in Section 27 of the 1945 Water Act be repeated in Clause 46? The same criteria should apply to the provision of an increased supply for non-domestic purposes as apply to a new supply.
10.15 p.m.
The Earl of Arran: The purpose of my noble friend's amendment is to extend the circumstances in which a water undertaker would not be required to provide a supply of water for non-domestic purposes. Water is supplied for non-domestic purposes on terms agreed between the person requiring the supply and the undertaker or, where agreement cannot be reached, on terms determined by the director.
The clause currently sets out the case where an undertaker is not required to provide a new supply of water for non-domestic purposes. Those are where it would incur unreasonable expenditure in constructing works or otherwise put at risk its ability to meet its existing obligations to supply water for domestic or other purposes and its probable future obligations to supply water for domestic purposes.
In addition, an undertaker is not required to provide such a supply to property where the water fittings do not meet the required standard. The amendment would extend the circumstances when an undertaker is not required to provide a supply for non-domestic purposes to cover instances where a person already receiving a supply wishes to obtain an increased supply.

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The amendment is unnecessary. If the undertaker is concerned that non-domestic supplies could put at risk its ability to meet its obligations, it is open to the undertaker to include in the terms of supply a limit on the amount of water that is to be provided. Indeed, that would seem to be sound management practice. In that way a request for an increased supply would require the terms of the supply to be renegotiated. That would be tantamount to a new supply.
I am grateful to my noble friend Lord Balfour for raising the point. I can assure him that the amendment he seeks is unnecessary as its purpose is already fulfilled in the clause as drafted. I therefore hope that he will agree to withdraw the amendment.
The Earl of Cranbrook: Before my noble friend considers whether to withdraw the amendment, will my noble friend the Minister say how many existing non-domestic supplies have such terms already written into them?
The Earl of Arran: I cannot answer that question at the moment. I hope that, with the leave of the Committee, my noble friend will allow me to write to him on that technical point.
The Earl of Cranbrook: It is more than a technical point. The argument put forward by my noble friend depends upon the fact that such terms would exist. I understood him to say that unless such terms exist the provisions that my noble friend Lord Balfour is trying to arrange cannot be met.
The Earl of Arran: I have already said to my noble friend that I shall write to him. In the circumstances I ask him to allow that to happen.
The Earl of Balfour: I am grateful to my noble friends who have supported the amendment. I am equally grateful to my noble friend the Minister for his reply. I am sure that we should all like carefully to read what he said. I am reasonably satisfied and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Arran The Earl of Arran moved Amendment No.312A:
Page 52, line 44, after ("fittings") insert ("used or to be used in connection with the supply of water to those premises, or with the use of water").
The noble Earl said: Clause 46 defines the duty of a water undertaker to provide a supply of water for non-domestic purposes. The amendment is technical and clarifies the effect of the provisions. I beg to move.
Baroness Blatch Baroness Blatch moved Amendment No.312B:
Page 52, line 47, at end insert ("or

(c) the supply would be a supply provided by means of a direct connection with any trunk main of the undertaker.").

The noble Baroness said: The amendment provides the third condition under which a water undertaker shall not be required to provide a new water supply to any non-domestic premises. Clause 45 contains a provision relating to the supply of
1026
water for domestic purposes. Clause 45 (5) (a) provides that nothing in that clause shall impose a duty on a water undertaker to provide a water supply for domestic purposes directly from a trunk main. In the Bill as drafted there is no provision to the effect that a water undertaker shall not be under any duty to give a supply of water for non-domestic purposes from a trunk main.
Therefore the amendment is intended to bring domestic and non-domestic provision into line. One difference between Clause 45 and Clause 46 is that the latter provides under subsections (2) and (4) that a supply for non-domestic purposes shall be in accordance with the terms and conditions agreed between the water undertaker and the person to be supplied. If the water undertaker and the person to be supplied fail to agree, then the dispute goes to the director for determination.
My noble friend the Minister may argue that the amendment is not needed as the water undertaker could make it a condition of supply that the connection should not be made to a trunk main. If the person to be supplied did not agree with the condition, the dispute could then be referred to the director.
Is it unreasonble that disgreementas to whether a supply should be given from a trunk main should be referred to the director? The undertaker itself should decide whether it is reasonable for a supply to be given from a trunk main for non-domestic purposes, in the same way as the water undertaker makes the decision whether to supply from a trunk main in respect of domestic provision. What is being asked here is that the water undertaker should not be under a duty to supply water from a trunk main. The water undertaker should be free to supply from a trunk main if it feels it is appropriate to do so. Therefore the purpose of the amendment is to amend the Bill to make it clear that a water undertaker is under no duty to supply water for non-domestic purposes directly from a trunk main. The purpose of a trunk main is to move large quantities of water from one place to another; for example, from one service reservoir to another service reservoir or from one borehole to a service reservoir.
I can illustrate the problem which would be caused to one water undertaker if the amendment were not accepted by reference to a situation in Anglian Water's region. Water circulates between three largereservoirs—Pitsford, Rutland Water and Grafham—via a trunk main network. The volume of water in these trunk mains fluctuates depending on the time of year and the availability of water. At certain times of the year the water in these trunk mains may be at a low pressure and thus incapable of giving a water supply to a non-domestic user.
Another example is that there could be a cluster of boreholes from which trunk mains run to reservoirs. The flow of water from any of these boreholes to the reservoirs may not be constant and could be taken out of action by the water undertakers. Again, these trunk mains are not suitable for supplying water for non-domestic or any other purposes.
The important point is that the water undertaker alone has detailed knowledge as to whether it is

1027
appropriate for a direct connection to be made to any of its trunk mains. It seems to be inappropriate for a person proposed to be supplied and the director to have a say in the decision as to whether it is appropriate to make a direct connection to a trunk main. In any event, it is not best practice to make direct connections to trunk mains because the flow of water in trunk mains may not be continuous and may from time to time be at a low pressure. Therefore, water undertakers should not be under a duty to supply water for any purpose from trunk mains.
If this amendment were not to be accepted, is there not a risk that disputes between water undertakers and people asking for a water supply for non-domestic purposes would be referred to the director unnecessarily under Clause 46(4)? I beg to move.
Lord Hesketh: Amendment No.312B would enable a water undertaker to refuse to provide a supply of water for non-domestic purposes where the supply would be provided by means of a direct connection with any bulk supply mains.
Clause 46 sets out the cases where an undertaker is not required to provide a supply of water for non-domestic purposes. These are where it would incur unreasonable expenditure in constructing works, or otherwise put at risk its ability to meet its existing obligations to supply water for domestic or other purposes and its probable future obligations to supply water for domestic purposes. In addition, an undertaker is not required to provide such a supply to a property where the water fittings do not meet the required standard.
These are the important considerations an undertaker needs to bear in mind in considering the provision of a non-domestic supply. The question of the source of supply is secondary. There is no overriding reason why a non-domestic supply should not be provided directly from a bulk supply main. If the water in the bulk supply main is not at the right pressure or of the right quality to meet the requirement of the non-domestic customer, or the provision of such a supply from that main would cause particular problems, it is open to the undertaker to seek to impose conditions in the terms of the supply or to suggest that the supply should be provided from other mains. If none is available, the undertaker may be able to refuse to supply under subsection (3). Any disputes over suitability of particular pipes for providing the supply are best resolved by reference to the director who can consider each case on its merits. If any particular technical questions are raised, the director may refer the matter to a suitably qualified arbitrator. Therefore, the amendment proposed is, we believe, not necessary. I hope that my noble friend Lady Blatch will not pursue it.
The Earl of Cranbrook: Before my noble friend makes that decision, I wish to ask the Minister a question. I believe there has been a misunderstanding between the terms "trunk main" as used by the noble Baroness, and the term "bulk
1028
supply mains", which I believe was the phrase used by my noble friend.
A "trunk main", which the noble Baroness referred to, is used not only for transporting water under pressure; it also serves as a connection between major supplies. The water in it is not permanently under a predictable pressure; the pressure fluctuates., That makes it highly unsuitable to be drawn upon for immediate supplies. I suspect that this matter needs to be taken away to be looked at because I think there is a misunderstanding between the Front Bench and the mover of the amendment.
Lord Hesketh: I am not entirely sure that that is correct. There may be a misunderstanding, but I do not think that the principle changes.
Baroness Blatch: Before my noble friend the Minister gives some thought to this amendment between now and the next stage of the Bill, I think my noble friend Lord Cranbrook has reinforced the point that there is a misunderstanding about the two types of mains. I do not intend to press this amendment tonight, but I am concerned that by not accepting this amendment we are allowing unnecessary and cumbersome references to the director which could be avoided by not placing a duty on the water undertakers. I ask my noble friend the Minister just once more whether he will give some thought to this amendment before the next stage.
Lord Hesketh: I can go no further than to say that I shall read carefully what my noble friend Lady Blatch has said.
Baroness Blatch: I am grateful for that reply from my noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.313 to 317 had been withdrawn from the Marshalled List.]
Clause 46, as amended, agreed to.
Clause 47 [Duty to provide a supply of water etc. for firefighting]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No.317A:
Page 54, line 20, after ("order") insert ("to a standard and in a manner to be approved by the fire authority").
The noble Lord said: In moving Amendment No. 317A I wish to speak also to Amendment No.317B. Clause 47 deals with the duty to provide a supply of water for fire-fighting. It will come as no surprise to the Committee to learn that the Association of Chief Fire Officers and the fire authorities themselves have expressed some concern at some aspects of the Bill. They are not concerned with the basic provision which is that water required for fighting fires shall be provided free of charge. I believe that is accepted as being a reasonable and proper provision. However, those bodies are concerned at some of the

1029
secondary provisions, if I may refer to them in that way.
Amendment No.317A concerns Clause 47(4). That subsection refers to the duty of water undertakers to keep fire hydrants fixed to the water mains or other pipes in good working order and to replace them when necessary. The present position does not sound very satisfactory to me. I am told that water authorities tend, when something goes wrong with a fire hydrant, to replace the whole thing rather than to replace the part which is affected. Those of us who have had dealings with motor garages are familiar with that tendency. It is utterly deplorable and shows a lack of British craftsmanship and all of that, and costs us a great deal more money, but we can see that garages sometimes follow that tendency.
However, we are now talking about private water undertakers and public fire authorities. The amendment seeks to provide that instead of an undertaking having the ability to replace hydrants when it feels like it, or when something is wrong—I should have stressed at the beginning that this is done at the expense of the fire authority, and not at the expense of the water undertaking—the fire authority whose money is being spent should have the right to specify that the repair is carried out to a standard and manner approved by the fire authority. In other words, it should be repaired and not replaced.
That seems to us to be a proper amendment, designed to conserve the money of public fire authorities. Since the fire authorities will pay, it will not cost the water undertakings any more and should not cause any difficulty to them. I hope that the Government will feel that this concession to the fire authorities will not cost anything, either in terms of the purpose of the Bill or the ability of the water undertakers to fulfil their primary objective, which is to satisfy their shareholders' demand for profit.
Amendment No.317B amends subsection (6) of Clause 47 and refers to the case in which fire hydrants are required for fire-fighting purposes other than on a trunkmain. The most common example is a new housing or commercial development. In such a case the law at present requires that the fire authority should provide fire hydrants for emergency purposes at the expense of the fire authority rather than at the expense of the developer.
I am told that this is an anomaly which goes back to an Act of1945, Schedule 3, Part VIII, paragraph 32 of which deals with the provision of fire hydrants. What Parliament was doing in 1945 passing fire Acts I cannot imagine. I should have thought that it had better things to do fighting and winning a war and dealing with the aftermath of that war. I suppose that large-scale fires were of more recent memory than perhaps they are now.
The result is that although private developers in, say, a new housing development, have to pay the cost of all other services, including electricity and gas services, to the properties on the development, for some anomalous reason the fire authority has to pay the cost of the fire hydrants. The amendment would provide that the person requisitioning
1030
it—namely the developer or the undertaker (if the undertaker is responsible for the development)—should pay the cost of providing the emergency fire hydrant. That would rectify an error in legislation which goes back more than 40 years. I hope that it will meet with the approval of the Committee. I beg to move.
10.30 p.m.
The Earl of Balfour: Before my noble friend replies to the amendment, I should like to say that I believe there is a need within this legislation for a requirement at least for consultation between the chief fire officer of the area concerned and the water undertaker of the area concerned, for example, fittings, connections, and valves change over a period of time. They are both responsible people, but it would do no harm if the need for consultation were written into the legislation so that they meet and nobody bulldozes somebody else. I am grateful that the amendment has been brought to our attention.
Lord Hesketh: Clause 47 sets out a water undertaker's obligations with regard to water for fire-fighting. An undertaker is required to allow water to be taken for extinguishing fires from any of its pipes to which a fire hydrant is fixed. An undertaker is required to fix fire hydrants on its pipes at places most convenient for firefighting at the request of the fire authority, to maintain the hydrants in good working order and to supply the fire authority with all such keys as it may require.
The effect of Amendment No.317A would be to require a water undertaker to maintain every fire hydrant fixed to its mains to a standard and in a manner to be approved by the fire authority. The Bill currently re-enacts provisions in the Water Act 1945, requiring a water undertaker to keep the fire hydrants in good working order and to replace them when necessary. The obligation is enforceable by the Secretary of State under Clause 20 and additionally breaches of the duty are subject to a criminal sanction.
I am grateful to the noble Lord for raising this issue, and I appreciate, and share, his concern with the essential public safety aspects involved here. I wonder, however, whether the amendment is entirely necessary. The obligation to keep fire hydrants in good working order implies they must be acceptable to the fire authorities, as the noble Lord, Lord McIntosh of Haringey, and my noble friend Lord Balfour pointed out. After all, it will be the fire brigades that ultimately will test that the hydrants operate satisfactorily. Fire hydrants are now designed to a formal British Standard specification—BS750—which I understand is adopted by all water authorities and acceptable to the fire authorities. Moreover, there are provisions in the Fire Services Act 1947 enabling my right honourable friend the Home Secretary, who is responsible for firefighting matters, to make regulations—after consulting the fire authorities—providing for uniformity in fire hydrants provided by the water authorities.

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We believe that it has never been necessary to make such regulations and we are not aware of any significant problems being experienced by the fire authorities in relation to the maintenance of fire hydrants by the water authorities. I am not persuaded that there is a need for this amendment. However, if the noble Lord has evidence to the contrary, I shall of course be happy to take up this matter with the Home Office.
I should now like to turn to Amendment No. 317B. The Bill provides for the expenses incurred in providing water for extinguishing fires to be met by the undertaker by virtue of Clause 79. The costs of fixing and maintaining the hydrants and supplying keys fall to the fire authorities to bear, except in the case of fire hydrants which can be provided at the request of owners or occupiers of factories or places of business who then pay maintenance costs.
The effect of Amendment No.317B would be to completely change the basis for the allocation of costs between an undertaker and the fire authority. The maintenance and the other associated costs of all new hydrants would fall to be met by a water undertaker's customers or by requisitioners rather than centrally through the block grant system under which the fire authorities operate.
We believe that such a change to a well established system is not justified. The costs incurred by a water undertaker are directly related to the fire authorities' functions and incurred solely at the instigation of those authorities. These are not charges that we believe it is appropriate to recover from water undertakers' customers or from owners and occupiers of premises who may have a requisition to a water main on which the fire authority has chosen to have a fire hydrant located. A fire hydrant serves a public purpose and not one limited to the needs of a particular water undertaker's customers or the requisitioner. Firefighting is a public service which it is right should be supported centrally from public funds, not least in accountability terms. We believe that it is clearly better for fire authorities to continue to be responsible for the costs incurred at their request.
For those reasons that I have outlined, we believe that the amendments are not necessary. I therefore ask the noble Lord, Lord McIntosh of Haringey, whether he will consider withdrawing them.
Lord McIntosh of Haringey: There are two separate issues here. The first is the question of the payment for keeping the fire hydrants in good working order and replacing them when necessary, and the second is the question of development. The first is perhaps the simplest one with which I can deal more quickly.
I am advised by the Association of County Councils that there has been a growing tendency on the part of water authorities which undertake minor repairs to replace a hydrant completely and charge authorities accordingly, rather than undertake the minor work involved. I am grateful for the indication from the Minister that he would listen to any evidence that is brought forward before the next
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stage to see whether there is any abuse of that kind. I believe that he will agree that it would be an abuse if that happened when, after all, the fire authority pays for the repair.
I shall ensure that the Association of County Councils writes to the Minister in good time before the next stage and that any evidence that it may have is put before him. I hope that the result will be that he will feel able to agree to this or a similar amendment at a later stage.
The issue on Amendment No. 317B is more complicated because I do not think that the Minister has adequately addressed the concerns that we have about this matter. As between water authorities and fire authorities, it is perhaps a matter which could be thought of as not particularly important between two public authorities. However, in natural justice it seems that those who are making money out of new developments, whether they are residential or non-residential developments, should pay for all the costs of providing the services, which include not only the electricity and gas which they are providing anyway but also the cost of emergency services, such as the fire hydrants and the mains to the fire hydrants which are necessary.
Otherwise it simply becomes the case that the ratepayers who support the fire authority, or as it will be from 1990 the community charge payers who support the fire authority, will be paying for this commercial development and contributing to the profits of those developers. Those are the people who would be requisitioning the main and requisitioning the hydrants. That does not seem to be a very satisfactory state of affairs, even as between two public authorities.
But of course the position after privatisation will be that much different because we shall be talking about a conflict of interest as between a public authority, the fire authority, financed by the community charge payers, and a private body, the water undertakers, or the customers of the water undertakers. I very much regret that the Minister in his reply should have felt it possible to neglect an opportunity to correct an anomaly which has existed for a very long time and not been important but which, without this amendment, would continue to exist and would be important.
I wonder whether, before I finally make up my mind, there is any further indication that he can give which would help me? No, it does not seem so. Therefore, with regret but with slightly less regret in respect of Amendment No.317A, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.317B not moved.]
Clause 47 agreed to.
Clause 48 [Duty to supply water for other public purposes]:
[Amendment No.318 had been withdrawn from the Marshalled List.]
Clause 48 agreed to.
The Earl of Arran: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at sixteen minutes before eleven o'clock.