HL Deb 15 May 1989 vol 507 cc940-90

4.6 p.m.

House again in Committee.

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

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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 moved Amendment No. 204A: Page 23, line 17, at end insert—

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 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 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". 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 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): 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 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 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 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 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 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 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: 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 moved Amendment No. 204C: After Clause 20, insert the following new clause—

.—(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 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 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 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—

  1. (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 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 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 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 had given notice of his intention to move Amendment No. 222. After Clause 23, insert the following new clause:

.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 moved Amendment No. 222A: After Clause 23, insert the following new clause:

.—(1) It shall be the duty—
  1. (a) of a special administrator exercising the powers contained in order under section 23 above; and
  2. (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—
  1. (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
  2. (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—

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 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 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 moved Amendment No. 228: Page 199, line 46, after ("provisions") insert ("and without further assurance").

On Question, amendment agreed to.

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—

  1. (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
  2. (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—
  1. ("(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;
  2. (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 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, 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 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 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 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, 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 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 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 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 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 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.

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 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 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 Morpethmoved 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 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 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 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 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 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 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 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 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 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 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.