HL Deb 14 July 1994 vol 556 cc2042-80

House again in Committee.

Lord Carmichael of Kelvingrove moved Amendment No. 105:

After Clause 61, insert the following new clause:

("Joint Boards for local government areas

.—(1) The Secretary of State shall, before 1st April 1996, establish Joint Boards for the local government areas comprised in each of the combined areas set out as follows for the provision in the combined area of the services required by the Water (Scotland) Act 1980 and the Sewerage (Scotland) Act 1968— Grampian Tayside Central Lothian Strathclyde Aberdeenshire, Moray, City of AberdeenAngus, City of Dundee and Perthshire and Kinross (except for water purposes the former County of Kinross) Clackmannan, Falkirk, Stirling (including for water purposes, the former county of Kinross) City of Edinburgh, West Lothian, East Lothian, Midlothian Argyll and Bute, Dumbarton and Clydebank, City of Glasgow, East Dunbartonshire, North Lanarkshire, South Lanarkshire, Renfrewshire, Inverclyde, East Renfrewshire, North Ayrshire, East Ayrshire, South Ayrshire.

(2) The provisions of sections 62A and 62C of the 1973 Act shall apply to a Joint Board established by an Order made under this Schedule as they apply to a Joint Board established by an order made under the said section 62A.

(3) The water and sewerage areas mentioned in subsection (1) above and in column 1 of Schedule (Water and Sewerage Areas) to this Act comprise the areas for the time being respectively described in column 2 of that Schedule.").

The noble Lord said: In moving the amendment, for the convenience of the Committee I speak also to Amendments Nos. 106, 106A and 107 to 114. The Minister will not be surprised that we consider this probably the most emotive part of the Bill. Therefore, without wasting time, I intend to go through the; argument fairly closely and exhaustively.

The Minister will be aware that in November 1992 the Secretary of State invited views on his consultation paper Water and Sewerage Services in Scotland— Investing for our Future. It concerned the future-arrangements for water and sewerage services in Scotland. The consultation document was rather disappointing. It was felt that it was superficial and much less than even-handed in its treatment of the background to those services, the perceived need for change and possible options identified by the Secretary of State.

Many respondents to the consultation paper looked in vain for logical and cogent argument as to why change was being contemplated, and the possible merits or demerits of the various options canvassed. The whole exercise had a look and feel of simply being cosmetic.

Members of the Committee will be aware that regional and islands councils in Scotland, and their predecessor water and sewerage authorities, during the past 150 years have reason to be proud of their achievements and the levels of service which have traditionally been provided to domestic, industrial and commercial customers. It is noteworthy that there was no suggestion from any quarter that the services are other than efficiently and effectively managed and delivered, or that customer satisfaction is other man extremely high. Indeed, surveys have indicated that levels of consumer satisfaction with water and sewerage services in Scotland are higher than for other public or private sector services in any part of the United Kingdom.

Recognition of that success has even been given in a letter from the Prime Minister to the President of CoSLA indicating that, local authorities in Scotland for many years provided highly effective water and sewerage services which the public rightly appreciate".

Given the undoubted success of water and sewerage services under the control of local authorities, I urge the Committee to support the amendments, retaining responsibility for water and sewerage by local authorities under the existing boundaries.

Amendment No. 105 outlines the water authorities as they currently exist and the water authorities that we would like. It is a new clause. The regional and islands councils in Scotland and their predecessors have been extremely efficient in providing water services. Recognition of this success has come from all quarters. Some years ago I was given the rather nice duty of being honorary president of an organisation that was set up to rehabilitate a fountain in Kelvingrove Park in my old constituency. The event was to celebrate the 150th anniversary of bringing water from Loch Katrine to Glasgow. The water was and is such that there is not a high sale of mineral water in the Glasgow area—a fact that may be taken two ways. The water from Loch Katrine comes straight through the taps and can be drunk without any filtering other than a gauze filter to take out solids. One of the problems is that it is so pure that you can put it straight into your car battery without the slightest worry. We believe that we have a system there about which the whole population of the west of Scotland is pleased.

When water and sewerage were privatised in England, immediately prior to the privatisation there were 10 regional water authorities responsible for sewerage and water in England and Wales. Those public sector quangos were similar to the ones being proposed by the Secretary of State. They were seen by many as a stepping-stone to full privatisation, as happened in England and Wales.

Through the Convention of Scottish Local Authorities, the people of Scotland commissioned consultants to report on the economic, social and public health implications of the privatisation of water and sewerage in England and Wales. The report was submitted to the Secretary of State and I am sure that the Minister either has a copy or has seen one.

The picture emerging should be a warning to all, but a few key points can still be highlighted. An important argument put forward for privatisation of water and sewerage services in England and Wales was that the new water companies would be freed from public expenditure constraints. However, the consultants' report does not suggest that that freedom was warmly welcomed or even used. Almost no new equity capital has been raised from the shareholders of privatised companies; rather, the majority of new investment has been financed from current revenue. That is, it was paid for by the consumer through increased charges. Inevitably, that has reflected itself in excessive increases in water and sewerage charges very much above the annual rate of inflation. There is no doubt that with the poverty levels increasing in Great Britain, the privatisation of water and sewerage services in England and Wales has led to a sharp rise in the number of disconnections of supply from domestic properties. That is something which we hope never happens in Scotland. It cannot happen now; it is illegal to cut off water and sewerage supplies to any dwelling in Scotland.

The Minister will know that the Strathclyde regional authority carried out a survey of public opinion, of which I have a copy. A number of comments were made as to the questions asked, but I am sure that the Minister has had a good look at them. They are professionally laid out, the collection was carried out by the Electoral Reform Ballot Services Limited and there was no question about the result. The simple question was asked: "Do you agree with the Government's proposal for the future of water and sewerage services? Please mark a cross in one box only". The referendum was conducted by the electoral reform body and the result was absolutely astounding. Of those voting, 97.2 per cent. or 1,194,000 voted no; 33,000 voted yes, with a turnout of 71.5 per cent. With his knowledge of local government, the Minister will surely agree that for any local government effort that is a very high turnout indeed.

Therefore, to say the least, I think that it would be highly unwise if the Government ever reached the point of going towards privatisation. But then, there are so many things with this Government, even with the good will of the Scottish Ministers. I have great respect for the noble and learned Lord who will answer tonight and also for Sir Hector Monro who dealt with the Bill during the Committee stage in the other place. He said that the new water authorities would have access to the National Loan Fund probably by broadly similar amounts as in England, although exact figures would depend on each year's public expenditure service settlement. That too would be public expenditure and would add to the PSBR. What Sir Hector was really saying was that it will not be allowed to be added to the PSBR so that the money will be spent. It will give the dividends that they are speaking about, and after the purchase of the water undertakings charges will be raised. Of course, the Government have said that they will not do it —there is no chance of them doing it. I wish I were as happy about that idea as the Government appear to be.

Before I move on to the other amendments, I should like to confirm that I am speaking to Amendments Nos. 105, 106, and 107. Amendment No. 105 outlines the water authorities as they exist now. The purpose is to retain responsibility for water and sewerage within local government and also to retain the existing boundaries of the water and sewerage authorities. Would it be convenient if I went through each amendment singly or should I deal with them en bloc?

Lord Fraser of Carmyllie

If I may interrupt the noble Lord, I understood that Amendments Nos. 105, 106, 106A and 107 to 114 were grouped together. I intended to respond to the noble Lord in a single reply.

Lord Carmichael of Kelvingrove

Yes, that is fine; it is probably the most economic way from the time point of view. Amendment No. 106 proposes the insertion after "be" of the words: persons who are elected councillors nominated by each of the local authorities which lie within the geographical area of the water and sewerage authority". The amendment will preserve the representation of elected councillors.

Amendment No. 107 proposes to increase the number of those on the board from 11 to 13, with additional responsibilities. Amendment No. 110 is to insert the words: Members of the authority shall appoint one of their members as chairman and one as deputy chairman". Those are technical amendments, as I am sure the Minister will appreciate. Amendment No. 110 is to provide that control of the new authorities, if established, will remain in the hands of elected and democratically accountable councillors appointed by the local authorities in the area of the water authorities.

Amendment No. 108 suggests that each member of a water and sewerage authority should be personally responsible for advising the Secretary of State of any potential or actual conflict of interest. A register of such interests should be available for public inspection.

Amendment No. 113 suggests that there is no requirement for the new water and sewerage authorities to meet in public or to allow access to committee reports etc. The amendment would apply the same legislation to meetings of the new authorities as at present apply to local authorities, thereby ensuring public access to meetings. I do not think that that happens in England because they are private boards. Reports and documents, etc. should be published subject to the usual commercial specified confidential provisions.

The purpose of Amendment No. 114 is that members of a water and sewerage authority should be subject to the same penalties for non-compliance with the rules of the organisation as are members of other local authorities. I beg to move.

8.30 p.m.

Lord Mackie of Benshie

Perhaps I should apologise to the noble and learned Lord the Minister because, inevitably, in a group of amendments—and we are speaking to a group—there will be an element of Second Reading speeches. But the principle is so important that I make no real apology.

All of us, including Scots Ministers, are very proud of the heritage that we have in water supplies. We have heard about Loch Katrine in the west and Lintrathen in the east, which has supplied Dundee and other parts with excellent water for a long time, in addition to supplying fishing facilities for those who wish to fish. There we have an example of excellent work in the past. The only criticism one could make, if one were a spoilsport, in relation to the old water authorities of the county councils was that the annual inspections of the water facilities were perhaps a trifle liquid in another direction. But that happened only once a year. No harm was done, and the public purse did not suffer nearly as much as it has in England from the depredations of the privatised water authorities, which are skinning people for all they are worth. It is interesting that the average bill in England and Wales is £199 per household and the average bill in Scotland is about £100. That factor must be taken into account. We have good water and we have people who manage the waiter schemes extremely well. There is no reason for us to change.

Here I must congratulate the Scottish Office team. It is a good team. They are nice men and they are traditional men. They have no connection with some of the appalling yuppies who people the English Conservative Party. They have done their best for Scotland in resisting all sorts of appalling legislation which they know is bad. In regard to the privatisation of the Forestry Commission, we owe a great debt to Sir Hector Monro for his sensible application of the rules that were pushed upon him. The Ministers for Scotland have to be congratulated on managing to produce a scheme which is still a fair way from privatisation. They were, I suppose, forced to produce a scheme that was managed by quangos. It appears to be a sine qua non of any policy of the Conservative Party nowadays that the further you remove democratically elected people from the management of any resource, the better it pleases those who are appointed. But it does not please anyone else.

Our aim in this series of amendments is perfectly simple. We are trying to offer a scheme to the Government which will employ the people who traditionally have managed Scottish industry well—the elected members—and arrange the industry into rather better groups. The following amendments ensure that a majority at least of the managing group would be elected members. There could be provision for private finance without handing the assets over to private industry, and the development could follow. In other words, this group of amendments is a sensible outlet for the Government. If they will look sympathetically at a number of the amendments it will improve the scheme no end. It will give it a democratic base and please the people of Scotland. The figures for the dislike of privatisation have already been produced by the noble Lord, Lord Carmichael, so I shall not reiterate them. These amendments may not be perfect but they do point a very sensible way forward.

Lord Sanderson of Bowden

I want to say a word about this group of amendments because I think that it goes to the heart of this part of the Bill. When I hear some of the stories north of the Border I am reminded of the old one about the message that is sent from the front: "Send reinforcements, we are going to advance", but it comes out at the other end as, "Send three-and-fourpence, we are going to a dance". In a week when the Government have been subjected to the most extraordinary rumour-mongering as to the future of Rosyth, I must say that the "read across" from the Scottish Office Minister's plans (the Government's plans) to deal with the water and sewerage industry in the way that they are doing, in equating that with privatisation or the route through which privatisation will come, does a great disservice to the honour and integrity of my right honourable friend the Secretary of State and his colleagues.

There are fundamental problems to be addressed in Scotland so far as water and sewage are concerned—or perhaps I should have put it the other way round and said sewage and water. I well remember, when in my previous post in government, having to deal with the very large problems that arose in Scotland. In particular, I had to deal with Inverness. I can assure those who do not know what I am referring to, that it was a messy business. The whole problem was trying to get enough finance to do something about the matter.

Yes, indeed there will be increased charges. I think that Members on all sides of the Chamber will realise that if we have to get our sewerage situation in Scotland put right a lot of money has to be spent. The pledge of the Government not to have disconnections north of the Border is an extremely important one, and I welcome it.

As to the set-up on how we should proceed, yes, I have heard all the stories about quangos and so on. I look to the Government in setting up the three boards that will represent the whole of Scotland to ensure that the balance in those boards will be clearly drawn. I believe that councillors have a part to play because of the knowledge that they have of the water and sewerage industry in Scotland. I would not decry that particular part. But there are also many people in the industry itself, and close to the industry, with a knowledge of the engineering and the water and sewage problems that exist who could be very useful members of the board. I do not look for the good and the great to be members of that board. I look for those who are good and great in the whole matter of water and sewerage to be members of it. While I well understand the nervousness of parties opposite as to the route down which the Government intend to go, I caution them that what is really important is that a very big problem has to be resolved in the water and sewerage industry in Scotland. No one should imagine that this Government, or this Secretary of State for Scotland, could possibly wish, having gone down the route that they have taken, then to move on to privatisation, which has its problems, as all of us know who live south of the Border.

The Earl of Balfour

I feel confident that the Government are taking the right steps in having the three authorities to cover the whole of Scotland. Strangely enough, before the Local Government (Scotland) Act 1973, in Scotland we had water boards. That Act made water and sewerage a regional function. Equally strangely enough, England established water boards at the same time as we got rid of them in Scotland. I feel that the members of the new water and sewerage authorities must have the knowledge and experience connected with water and sewerage in particular.

From a slightly political point of view, it is worth remembering—I am sure the Government remember—that it was the old progressive boroughs and cities that built water and sewerage systems and reservoirs. Perhaps some people in Scotland feel that, because of the old connection, there should continue to be some local authority representation within membership of the new constitution.

It is pleasing to think back to our city fathers, or perhaps I should say grandfathers, who paid for the water and sewerage systems to be developed. It is good that their children should continue to take an interest. I shall be pleased to be corrected by the Minister if I am wrong, but I do not see anything within Schedule 7 to prevent the Secretary of State choosing a local authority representative, provided that person had the necessary knowledge and experience.

Lord Macaulay of Bragar

This is a very sad debate about water in Scotland. We have plenty of it throughout the year. We know where to find it when we want it. It is uncomfortable to be discussing the possibility of three water authorities for Scotland. I ask: why? Scotland has a population of 5 million people and is a small part of the United Kingdom. Why do we need three water authorities to look after water for Scotland?

With great respect to the noble Lord, Lord Sanderson of Bowden, I am quite amazed by what has been "leaked", so to speak, about Rosyth. There was a debate this afternoon in the Chamber, which some Members of the Committee no doubt attended. If Mr. Rifkind, the Secretary of State for Defence, had been a battleship, he would have been sunk long ago. There have been so many leaks. At 8 o'clock this morning I learnt from LBC Radio what was intended to be announced in this Chamber and another place this afternoon. It may have been an incorrect leak. But there were leaks all over the place. For the Government to suggest that leaks were coming from this side of the Chamber is quite inappropriate.

Lord Renfrew of Kaimsthorn

I should like to say that the leaks in letters that seemed to be permeating the Palace of Westminster last week were very far from the truth. I referred to that.

Lord Macaulay of Bragar

I have always found the truth to be very elusive. No doubt one day we shall arrive at the truth about what is happening at Rosyth.

I am told on reasonable authority that in Scotland the private water people were unable to guarantee the health of the community and that is why water was taken into public control by the local authorities. In Glasgow in particular, in the Strathclyde area—we know what the Prime Minister said about Strathclyde and that he wants to get rid of the monstrosity called Strathclyde; perhaps that is what the Bill is all about—the far-seeing councillors in the early part of the century not only guaranteed the people of Glasgow and surrounding areas healthy water, as was said by my noble friend Lord Carmichael. They also guaranteed the health of the people of Strathclyde.

Now the Government move in to say, "You cannot do that any more." I ask why the local authority cannot do it any more. The noble Lord, Lord Sanderson, made a perfectly valid point. There has to be investment in public water and sewerage and we have to pay for our health. Let us not beat about the bush. If it is part of the local authority's responsibility to ensure the health of its population, it has to be paid for. The populace has to pay for it through various forms of rates.

What struck me coming down on the train yesterday was what has happened to charges in England and Wales since the privatisation of water. I do not have the figures in front of me. But they are quite horrendous. The cost to the individual consumer is horrendous; the percentage increase in water rate is horrendous. The payment made to the people in charge of the water boards is yet more horrendous. And the profits of the companies involved are horrendous. Why should this place say that people should make a profit out of health? That is what water is all about; it is about people's good living.

When the Minster replies, perhaps he will give a guarantee to the Committee. I give an illustration of what 1 mean. About a month ago, I took the trouble to take a sail on Loch Katrine. I do not know when the Minister was last down at Loch Katrine. I sailed in a little ship called "The Sir Walter Scott"—the last of the "Para Handys", so to speak. That loch is as clean as a whistle. No one is allowed to take on it any outboard motor. One can fish on it provided one just has a boat. Will the Government and the new authorities give a guarantee that no other vessels will be allowed to sail on Loch Katrine? There is the terrible problem on Loch Lomond of people being killed by motorboats mowing them down at midnight. Are we to have a repeat of that situation on Loch Katrine? Will the Government underwrite the assurance that within the appropriate context that will not happen? I should like to know.

The councillors in that area not only took over the loch; they took over the land surrounding the loch. I should like to have a guarantee from the Government, on behalf of the people of Strathclyde, that the land will not be sold off for private purposes and private profit as part of the privatisation of the water industry in Scotland. I shall say no more at this stage. I give a guarantee to the Government that we shall come back to the matter. It may be rather wide of the amendment at the moment, but we shall come back at Report stage. I shall listen with interest to what the Government have to say.

8.45 p.m.

Lord Thomson of Monifieth

The noble Lord, Lord Macaulay, is absolutely right to say that despite the somewhat placid state of the Chamber at the moment, this issue is one of the most fundamental issues in the Bill. It divides the Government's view from the Opposition's view most deeply in many ways.

So far as we can—avoiding Second Reading speeches, as my noble friend Lord Mackie of Benshie remarked—we try to offer the Government a way out of what is a very basic issue for the Scottish people.

It has been customary in long debates for those who speak to establish some kind of credibility. I can only say, in an effort to be as persuasive as possible, that I grew up catching minnows in Monikie and Crombie and was then lucky enough to catch an occasional trout and trade it in the former constituency of the noble and learned Lord, Lord Fraser, which is also my old home. I believe that the Government should bear in mind what has happened on a number of issues. Yesterday's discussion on the director of education concerned a similar matter. Feeling about local authority ownership of Scottish water for the people of Scotland runs very deep in the Scottish psyche and in Scottish traditions. The noble Lord, Lord Carmichael, who is deeply steeped in the lore of Glasgow, mentioned Loch Katrine, the history of which goes back to disputes between the Glasgow public authority and the Duke of Montrose. It is one of the great chapters of the history of public improvement in Scotland.

I say seriously to the Government that it is dangerous to trample too much on tradition. When I was a young politician the general concept was that we in the Opposition parties were supposed to be the apostles of change and the Conservatives were the protectors of continuity. That has somewhat turned round in these latter days. I am doing my best to set the scene for our way out.

The difficulty, it seems to me—coming to the matter from the outside and belatedly—is that the water issue in the Bill brought together originally the central economic and political dogmas of the Government. They were very keen both on privatisation, for economic reasons, and on "quangoisation"—if that is not a terrible word—for political reasons. They came together on the issue. Then, because of the reaction from the people of Scotland and because of the frail political base of the present Government in Scotland, there was a certain retreat and we have the propositions that are now in the Bill.

That brings about a real dilemma which should dismay any of us who are Scots on either side of the Chamber and in Scotland generally; that is, on the one side there seems to be a deep distrust on the part of the Government of elected local authorities and, on the other, an even deeper distrust on the part of the Scottish people of the present Government's intentions in this field, particularly in relation to the organisation of water. Figures given by the noble Lord, Lord Carmichael of Kelvingrove, were particularly striking.

Without hope of any success I ask the Government, between now and Report stage—which gives a healthy period of meditation over the long parliamentary vacation—to consider seriously the merits of the main thrust of the amendments tabled by the noble Lord, Lord Carmichael of Kelvingrove, regarding the changed structure of organising Scottish water, the retaining of responsibility for water and sewerage within local government, and the retaining of the existing boundaries of the water and sewerage authorities.

The arguments are sometimes put in financial terms and it is said that it is difficult to do that because of financial realities. That is a thin argument. I felt that there was force in the brief from CoSLA—no doubt received on all sides of the Chamber—which states: The Government's solution to this problem appears to be the Private Finance Initiative. This would involve the private sector building, owning and operating capital assets with the water authorities paying ongoing charges on the basis of the services provided. The great benefit from the Government's point of view is that, since the assets are owned by the private sector, the capital expenditure does not count as public expenditure and has no impact on the public sector borrowing requirement. The use of the Private Finance Initiative does not, however, depend on the creation of independent water authorities. The facility is equally available to local authorities and indeed the Scottish Office have already issued a circular to local authorities encouraging them to consider its use". I look at the issue inevitably from the point of view of the European Union dimension. From my experience of the European Community I was not struck that they did things differently on the mainland of Europe. It may be that we can learn a lesson from that. CoSLA gave an interesting example from our European partners. Regrettably it does not give the origin of the quotation but I should like to place it on the record just the same. It said: The main exclusion from public expenditure is the expenditure of those government owned enterprises or public corporations which primarily sell the goods and services they produce in the market. In UK terms, that means distinguishing between, on the one hand, the activities of public corporations plus government trading bodies and, on the other hand, the principal activities of government, which involve taxing to finance public services". If the Government were more willing and imaginative in these matters we could deal with the financing problems of the investment that is badly needed in the Scottish water and sewerage development without the problems relating to the PSBR. Without any hope of success, because of the importance of the Committee stage on this issue, I again ask the Government to consider seriously what was put to them by the noble Lord, Lord Carmichael of Kelvingrove, and to give a proper democratic local authority base for the future control and regulation of Scottish water.

The Earl of Minto

I do not find it easy to talk to a large group of amendments. I ask the Committee therefore to allow me to speak specifically to Amendments Nos. 106, 107 and 110 to begin with. As a representative of local government I believe that I should be allowed, within your Lordships' Committee, to express the view of those of us who live not necessarily in the massive conurbations but within the rural areas of Scotland as well.

We share with many other Members of the Committee who have spoken this evening a common feeling of unhappiness in relation to the intentions of Her Majesty's Government in the overall sense. I always felt that it was extremely unfortunate—I cannot help but think of what the noble and learned Lord the Lord Advocate was saying a little earlier this evening when he spoke of the awful local government finance system—that there is not some way that we can sometimes, with good sense, bring the private sector into the public sector and still retain control of it in that public sector.

Speaking for my own authority, our water happens to be extremely expensive. We have to pay for it and we accept that. However, it is massively expensive if we look at it in relation to the remainder of Scottish water. There is, therefore, something rather attractive in becoming part of one of the three boards. That would help us and slightly reduce our costs—and we know that —even if it were to be within the public sector. From that point of view there is a certain sympathy towards the creation of our own specific authority. I cannot speak for the other two—that would be wrong of me —but once there it is a question of control.

There is a massive feeling within Scotland that people do not want to be taken out of democratic control. Irrespective of where we live, we do not like that. The amendments to which I am speaking intend to provide that the control of the new authorities, if they are established, remains in the hands of elected and democratically accountable councillors appointed by the local authorities in the area of the water authorities. At no time when we are discussing the local government Bill should we allow ourselves to be divorced from the word "democracy". The democratic process is something of which we are immensely proud in Scotland, and within the United Kingdom. Therefore, when that principle is breached, it must be something which we treat with deep concern.

I believe it is important that the control of our water and indeed our sewerage authorities remains in the hands of those local people who are democratically accountable. To ensure that this occurs, I believe that the only feasible means of achieving such an end is to require that the membership of the authority is drawn from the councils within the area. It is not sufficient that the members of the authority should, as suggested in the schedule, have, knowledge or experience relevant to the discharge of the functions". The vital point is that decisions should be taken by people who are democratically accountable to the users of the service. That is especially important, given that the Government claim that water and sewerage services are remaining in the public sector. If they are remaining in the public sector, then that in the minds of Scotland means that they are controlled with a totally democratic hand. It should also be remembered that the supporters of the Government have expressed that as a majority opinion.

During the debate on similar amendments in the House of Commons, the Minister, Sir Hector Monro, argued that the new water and sewerage authorities would be democratically accountable. He stated (at col. 1538 of the Hansard report of the First Scottish Standing Committee on 29th March 1994): The authorities will be democratically accountable to Parliament. Men and women of a blend of expertise, with knowledge of the water industry and of business, will be members of the boards". But they will not be elected. That is what frightens me. Sir Hector Monro, for whom I have friendship and admiration, clarified his position and said (at col. 1541 of Hansard) that, the water authorities will be responsible to the Secretary of State, who is responsible to Parliament, and all hon. Members have access to the Secretary of State". While that is undoubtedly true, I would contend, and many of the local authorities, if not all of them, in Scotland would contend, that the line of accountability to the public presently employed in the control of Scotland's water and sewerage services should continue, as it is closer to the public and more accessible than the more distant form of accountability envisaged by the Minister. I believe that accountability for water services has historically been at a democratically local level in Scotland. I believe that it should remain so.

9 p.m.

Lord Fraser of Carmyllie

Rather as the noble Lord, Lord Mackie of Benshie, anticipated, given the significant block of amendments in this group and given the fact that this is the first block of amendments dealing with that part of the Bill which will bring about a change in the way water is provided in Scotland, a number of the contributions have undoubtedly been in the nature of Second Reading speeches. In the circumstances, there is no complaint to be made about that approach.

Perhaps I may try to draw together from these amendments the difference between what the Government propose and what would be the effect of the new clause contained in Amendment No. 105. The amendment would require the setting up of five joint boards of the new local councils to deliver the water and sewerage services in those areas where the existing regional councils are to be replaced by more than one new council. The new clause marches with other suggestions for retaining control of water and sewerage services with local authorities.

There has been extensive debate in another place on this matter but I am afraid that the noble Lord, Lord Thomson, is, broadly speaking, correct. We are not impressed with the merits of the argument that we should be establishing a joint board basis for the delivery of water and sewerage services. The structure of 12 water and sewerage authorities fits very well with the current local government structure of regional and islands councils. The Government, including the Prime Minister, have always made it clear that we acknowledge the good record of those councils in maintaining and improving these important services. But, as we have discussed now at some considerable length during the proceedings on the Bill, the structure of local government is to change. I shall not repeat the arguments but against that background we determined that a change has to be effected in relation to water and sewerage.

Some mention has been made of the referendum conducted in the Strathclyde region. I do not propose to analyse it in any detail but I shall repeat what I have said previously. First, I have no complaint to make about the fashion in which the referendum was conducted. I have no doubt that it was accurately recorded and that the figures properly reflect what were the views of those who responded. However, I am far from confident that those who responded appreciated the context of that we were suggesting—that there ought to be a change if local government was to change.

Secondly, I know, as I am sure the noble Lord, Lord Carmichael, knows, that there was in parallel to that properly conducted referendum a campaign conducted throughout Strathclyde with pamphleting which indicated that those who responded should say no to the privatisation of water. We have not suggested the privatisation of water and that is not our intention. We believe that what is proposed here represents a stable and satisfactory arrangement for providing water and sewerage services in Scotland.

Lord Thomson of Monifieth

When I was referring to public opinion I was not referring to the Strathclyde poll but to the figures which CoSLA gave in its public opinion survey. It said that 95 per cent. of Scots wanted to see the provision of water and sewerage left in the control of local authorities and 85 per cent. thought that the Government's plan to establish three public water authorities would eventually lead to the services being privatised. That seems to be a reflection of a degree of distrust which should worry the Government.

Lord Fraser of Carmyllie

If leaflets are put out saying that what is proposed is an inevitable route towards privatisation, the noble Lord will not be surprised to learn that we regard such an approach with some suspicion. Water and sewerage are now very substantial businesses, employing advanced technology and representing major capital investment. Over 6,000 people are employed and capital expenditure runs close to a quarter of a billion pounds each year and it is set to increase sharply in order to meet the requirements of the various European directives. Current expenditure and income—turnover in business language—is about £450 million a year. Perhaps I may pick up the words of the noble Lord, Lord Thomson of Monifieth. I entirely agree with him that investment in our water and sewerage services is badly needed. The history of water and sewerage provision in Scotland is one of increasingly large units of supply. That trend will continue in view of the investment needs and the desirability—about which there seems to be general agreement—of harnessing (the resources of the private sector to help finance them.

I accept that joint boards are a well-precedented arrangement for the delivery of services which, by their nature, cannot best be delivered by each individual local authority on its own. The traditional examples are of course the police and fire services. There is also a precedent with water itself, as the noble Earl, Lord Balfour, reminded us, in as much as joint boards were responsible for the service before the last local government reform in 1975. A return to a system of joint boards was obviously a possibility for water and sewerage in the circumstances of the current reorganisation. It was one of the options that was set out in the consultation paper Investing for our Future, which was published in November 1992. That paper itself, however, pointed out that joint boards did not appear to be the best way to organise the services to operate on commercial lines.

That is the nub of the argument. The new water and sewerage authorities will inevitably have to conduct their operations in line with the best business practice. It is our view that a structure of joint boards would not be conducive to that end. In the circumstances—

Lord Mackie of Benshie

Will the noble and learned Lord give way?

Lord Fraser of Carmyllie

I would like to make progress. This first group of amendments is taking a long—

Lord Mackie of Benshie

It is a little ludicrous to say that great things lie ahead when in fact greater things lie in the past and were done by the local authorities. The massive expenditure on Lintrathen and the bringing of water to Dundee was a major factor and as big as anything contemplated today.

9.15 p.m.

Lord Fraser of Carmyllie

The level of expenditure, as I indicated, is what is currently required and what we require over the next 10 to 15 years is massive. It seems to be agreed that we want to harness the use of private sector finance in this matter. We believe that the arrangement of the three authorities within the public sector—I stress that they remain within the public sector —offers the right solution. The authorities will be of the right size to achieve economies of scale. The noble Earl, Lord Minto, in his contribution at least in part appeared to acknowledge that economies of scale might he achieved in some parts of Scotland if that were to be done. The largest (the west) will serve about 2.3 million people; the east about 1.5 million people and the north about 1.1 million people. They will all be substantial enterprises in their own right. At the same time they will all have sufficient similarities to allow a measure of comparison.

I have no doubt that what we are proposing is the right way ahead for these services in Scotland. I acknowledge the record of local authorities and understand the sentiments of those who would wish to retain something of the former structure. However, I do not believe that that would be for the best. Over time, I believe that this will become increasingly apparent as the new authorities establish themselves and the benefits of restructuring come through.

I am one who belongs to the Brian Meek school of water and sewerage. As he recorded in the Glasgow Herald recently, while there were frequently intense battles in local government for the convenership for the various distinguished responsibilities within local government, he could not remember when there was a ferocious political battle for the convenership of the water and sewerage services committee. That is the reality, so to some extent I believe that the furore that has been created has a degree of artificiality about it.

There may be some sentimental attachment to the continuation of those committees and responsibilities, particularly at the time of the annual visit, be it to Loch Katrine or to Lintrathan—an annual visit of golden legend. That may be a time when those involved feel some affection for those committees.

I share the difficulty of the noble Earl, Lord Minto, in trying to draw this considerable group of amendments together. Indeed, I do not propose to do so. Important as they are, many of them seem essentially consequential on the idea of establishing joint boards and what should be the attendant responsibilities and liabilities if that is to be done.

However, I should like to say something about Amendments Nos. 106 and 106A. Amendment No. 106 would require the membership of the new authorities to comprise solely elected councillors representing districts within the geographical area of the authority in question. I want to make it clear that elected councillors certainly have a part to play and this will be recognised in the composition of the new authorities' membership.

Sir Hector Monro stated in another place that the ranks of people qualified to serve on the authorities would include a significant number of councillors. He confirmed the intention that councillors will be among the appointees. Allan Stewart confirmed on Report that the Government believe that there should be a significant number of councillors on the new authorities, but that it would be unreasonable to bind the Secretary of State on specific numbers. But the authorities must also have within their membership the professional, business and financial expertise that will be indispen-sable to the running of these substantial businesses.

I should like to adopt the approach of my noble friend Lord Sanderson of Bowden to the membership of such boards. It is not our intention that they should comprise those who are traditionally slighted as being "the great and the good"; we want those who have real expertise and understanding of how the services should best be delivered. I am happy to confirm that we believe that a significant number of councillors will be among them.

It is right therefore that the membership should be drawn from the widest possible field of those who have most to contribute and that they should be appointed by and be responsible to the Secretary of State. I appreciate what the noble Earl said about accountability. The fact is that even if those bodies are not directly accountable in local government terms, because of their accountability to the Secretary of State and his accountability to Parliament they will find themselves answerable to Parliament albeit indirectly—that is, to your Lordships' House and, what is possibly more important, to Members of another House.

Unless any noble Lord wants me to take up any points relating to the other amendments, perhaps I may skip over them. Therefore, with that explanation of how we feel that the new boards should be established, I hope that we can now consider, in the detail that your Lordships choose, the other amendments in this part of the Bill relating to the new water authorities.

Lord Mackie of Benshie

Before the noble Lord replies, perhaps I may take up the point raised by the Minister about big business and the necessity to spend money. As I understand it, the necessity is to spend money on sewerage. The water provisions are not nearly so expensive. As far as I know, there is no way of collecting the money for sewerage except through the local authorities. If money is borrowed, it will eventually have to be paid for by the consumer and the only way is through the local authorities. If payments are made through them, that seems to me to be a strong reason for the local authorities controlling the new boards—or whatever they may be. The one thing that cannot be done is to cut off the sewerage. That would not work. That is the point that should be considered.

Lord Fraser of Carmyllie

Again, I agree with my noble friend Lord Sanderson that possibly we would have focused proper attention on what are the problems of investment in these services in Scotland had we inverted the debate and conducted it not on the emotive basis of Scotland's water but on Scotland's sewerage. I wonder whether there would have been quite so many people immediately and spontaneously indicating their worry. It is a massive requirement for capital expenditure. Other provisions in the Bill spell out exactly how the charge is to be levied on people. I anticipate that when we come to later clauses we may discuss that aspect.

Lord Carmichael of Kelvingrove

One of the difficulties in a Bill such as this is that the Minister putting it forward is so believable. I do not doubt that at this moment he believes everything he is saying. However, as a result of the record of the Government he represents, I have a sneaking feeling that most people in the country will believe that five or 10 years from now —if the Conservatives come back into power after a couple of elections—they will be looking at the total privatisation of the water companies in Scotland, as they did in England. I believe that to be the reason why people voting in the referenda took the view that they did not want them.

As regards the referenda, it is not good enough that the Government dismiss almost 1.2 million Scots as though they did not know what they were voting for. Basically, that is an insult to their intelligence. When the announcement was originally made I said, perhaps slightly emotionally, that the people of Scotland felt strongly about the whole question of water. It has been suggested by others that if the Government had gone about it another way and given the figures for sewerage as well as for water there might have been a different answer. They did not do so, and I do not believe that that would have worked.

The investment in water in Scotland by our forefathers was immense, and people know that. They have visited the reservoirs and, like my noble friend Lord Macaulay and myself, have seen the colossal investment at Loch Katrine. Thirty-six inch pipes were laid for 30 miles in the days when they used horses and carts. Reinforced by certain events that have taken place during the past 15 years, people have a sneaking feeling that that enormous investment will be snatched up on the cheap by people looking for a quick turnover. Once they have it, they will start to explain how expensive it is to complete the sewerage works. We all agree that sewerage is expensive. I would not hide that for one moment. To some extent, the campaign was emotional. But that emotion was fed by 100 years of folk history and the belief that Scottish water is not something from which people should make large fortunes.

We discussed the question of those who will sit on the boards. Mr. Stewart and Sir Hector Monro, who are Members in another place, gave assurances that there would be representation of councillors. We have been told that there will be a significant number of representatives. Does that mean 33 per cent., 51 per cent. or 75 per cent.? Obviously, I am not asking the Minister to give the answer now, although it would be helpful if he did. However, it should be simple for him to do so because he must have been in discussions, official or semi-official, and he must know whether it is to be tokenism or genuine representation.

After 15 years, the Government have put forward this proposition. They have all the powers of propaganda by the use of pamphlets and leaflets but they cannot even get their own newspapers in Scotland to support it, I agree that in the past few months, the newspapers have been trying to increase their circulation. The Minister mentioned Brian Meek. I read that article. I believe that Brian Meek is one of the cleverest and lightest—I do not mean frivolous —reporters. He has a light touch which I think is extremely good. However, I do not know where his knowledge of water and sludge comes from, although I know that he was with the Edinburgh corporation for a long time.

I do not know whether the Committee knows that Glasgow has two extremely good boats which sail down the Clyde every day. Therefore, there are two sides to this matter. I have been on sludge boats in other parts of the world—the Mersey and Manchester. The conditions are so good on those boats that you would not know what they were carrying.

All joking aside, this is an incredibly important matter for the Scottish people. A very senior member of the party opposite—it would be wrong to give his name —asked me at a recent gathering why the Government keep doing these things. Why does the Conservative Party wish to meddle with water? This is the bridge too far.

Of course there are difficulties with regard to raising money but the Americans and French have managed to solve that problem. The Government may manage to make arrangements with regard to the Channel Tunnel which will not affect the PSBR. For many years members of Select Committees have argued that we need to get rid of Treasury rales and, if necessary, raise debentures as the Americans do for their big inner city or regional transport projects. That can be done. But the Government prefer to sell off their assets in order that they can justify obtaining a good market price.

Lord Fraser of Carmyllie

I am reluctant to draw out our discussions further but the noble Lord has committed the very error about which I complained. I had hoped that he would accept—as the noble Lord, Lord Mackie of Benshie, did—that we propose to leave the water boards within the public sector. Nothing will be sold off and this will remain in the public sector. There will be no sale and nothing accruing to the Treasury as a consequence of the change.

However, our proposals will secure the opportunity for the investment which we believe is required to bring Scotland's water and sewerage up to the high standards required of us, both domestically and in the European context.

Lord Carmichael of Kelvingrove

Earlier I tried to suggest that the Victorian investment in water and sewerage was so immense that it would be easy to attract private capital because that private investment will be riding on the huge investment that is already there. I said at the beginning that I do not believe that the noble and learned Lord has horns. He genuinely believes that that is what will happen. However, very few people in Scotland believe that 10 years from now —unless conditions politically change—there will not ultimately be a sell-off. If the Minister does not believe that, then some of the recent examples that we have heard about, when things seems to have been Treasury motivated, will prove that he is wrong—although I hope not. I really believe that. Indeed, it is even more tragic for the party opposite, but rather better for my party: the people of Scotland believe us and not the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 7 [Constitution and proceedings etc. of a new water and sewerage authority]:

[Amendments Nos. 106 to 114 not moved.]

Schedule 7 agreed to.

Schedule 8 agreed to.

Clauses 62 and 63 agreed to.

9.30 p.m.

Clause 64 [General duties of Secretary of State and of new authorities]:

Lord Carmichael of Kelvingrove moved Amendment No. 115:

Page 56, line 44, leave out ("to have regard to the desirability of preserving") and insert ("to preserve").

The noble Lord said: In moving the amendment I should like to speak also to Amendments Nos. 116,117 and 118. Again, it is perhaps the kind of clumsy arrangement about which the Minister and the noble Earl, Lord Minto, spoke where we have to deal with too many amendments at once. However, they are grouped together and there is no question about it. I would have liked to have dealt with them in the other way but, as I say, they have been grouped together.

The amendments are designed to help in our ultimate objective; namely, to ensure that the new authorities will be subject to a duty to preserve public access and protect and conserve buildings, sites and objects of archaeological or historic interest.

When one looks at some of our water works, we can see examples of quite staggering Victorian engineering, ingenuity and science. The water supply that I know best is Loch Katrine. It comes down from the granite rock and runs the 30-odd miles to Glasgow. As I said on another occasion, you can use the water in your car battery without the slightest worry because it is absolutely pure. The work was carried out by local firms. Some Members of the Committee will know the famous water manufacturing appliance companies in Kilmarnock, Renfrew and Kennedy which, way back long before the turn of the century, provided wonderful machines for controlling the water. They also supplied the pipes that were sent over the hills in a huge siphon down to the water works at Milngavie. All such works should be preserved.

The Milngavie water works have been open to the public for a hundred years now. One can stroll around the works on a Sunday or on any day of the week and it is a wonderful experience. We are most keen that it should be preserved. Anything that says, "Keep off the Grass" or "Keep Out" is there for a very good purpose. In general, I believe that people are aware of that fact. If the water companies ever come to the area, we want them to provide such safeguards. But such safeguards must allow people to exercise their rights of access.

Amendment No. 117 provides that in the exercise of their functions relating to water and sewerage the Secretary of State and the new water authorities are required to consult local authorities on matters which impinge upon the exercise of the functions of local authorities.

Amendment No. 119 states:

Not less than one-third of the members of the Customers Council"—

in this case I am not speaking about the boards themselves—

shall be members of local authorities appointed by such national associations of local authorities as exist and the remaining members shall be appointed by such other bodies which are representative of the interests of domestic and non-domestic consumers of water and sewerage services".

That may be, to some extent, a help to the noble Earl, Lord Minto, who unfortunately has now left the Chamber, because he expressed concern about maintaining contact with the local authority. If the customers council comprises a reasonable number of members from the local authority, the chances are that people will approach that body. The Minister, having been a Member of Parliament, will know that constituents attend their MPs' surgeries and they will speak to one when perhaps they would not normally do so because they feel they have a right—and they are correct in that —to lay their problems before their MP. We finish with—

Lord Mackie of Benshie

Are we not confining ourselves at the moment to Amendments Nos. 115 to 118?

Lord Carmichael of Kelvingrove

Yes, I have gone rather too far ahead. As I have said, the documents before us are rather confusing. I have a little help available to me, but I do not have the facilities that are available to the Minister. I would repeat myself if I discussed the matter further. I beg to move.

Lord Mackie of Benshie

I do not wish to add much more to those comments except to say that this is an important amendment and I think that the Government could go a lot further than they have done as regards providing access and facilities for the public. The authorities that we are discussing will control vast areas of Scotland and those areas are of great interest in many respects, including archaeological interest. Great interest is now shown in such subjects as can be seen from the television programmes that are now transmitted on archaeology, antiques and other such matters. We do not know how much study will be conducted in these subjects in the future. I believe it is reasonable to instruct the authorities to conserve and to preserve these valuable features of our heritage.

Lord Fraser of Carmyllie

I shall attempt to confine myself to Amendments Nos. 115, 116, 117 and 118. Of course the matter of access is important but this amendment would place an unqualified duty on the new authorities and the Secretary of State to ensure that the public have the right of access to certain areas used by the new water authorities in the exercise of their function. As the noble Lord, Lord Mackie, has just indicated, the Bill already lays a duty on the new authorities and the Secretary of State to have regard to the desirability of preserving access. I can readily understand the desire of Members of the Committee to make this duty stronger, but I have to say that I do not think it would be right to do so.

The noble Lord, Lord Macaulay of Bragar, in the contribution he made on the previous set of amendments, referred to Loch Katrine and the purity of the water there, and the desirability of keeping that water pure. I entirely share that desire. If there is a right of unrestricted access, there must be some risk that that purity will be put in peril. It is for that reason that there certainly should be a requirement—as provided in the Bill—to have regard to the desirability of preserving access. However, it would be wrong to impose a right of access that was without any qualification at all.

The new water authorities will, I am sure, take a responsible attitude to the question of access and will be guided by the code of practice issued by the Scottish Office, entitled Conservation, Access and Recreation. The noble Lord accused me on an earlier amendment of a degree of naivety. I may continue to exhibit it because I do not genuinely believe that there will be problems in this area. We have to recognise that the first duty of the water authorities is to secure the provision of water and sewerage services. It is conceivable that access, or access for certain types of activities, might well be inimical to those purposes. In that case it would be right for the water authorities to put the interests of their primary functions first.

Similarly, I can understand noble Lords' desire in respect of Amendment No. 116 to ensure that the new water authorities properly respect the built heritage. I have no doubt that they will. The purpose of the clause is to encourage their efforts in that direction.

However, again we have to recognise that the prime functions of the new authorities are the delivery of water and sewerage services. It would not be right to have an unqualified duty in respect of the built heritage which could conflict with that function.

Amendment No. 117 would require the Secretary of State and the new water authorities to consult with local authorities when anything that they did might affect the exercise of any local authority function. I am sure that the new local authorities and the new water authorities will need to be in touch with one another almost continuously on a whole variety of issues. There are obvious areas of contact—planning, industrial development and environmental health. There will also be less obvious areas or areas of particular local importance which will emerge from time to time.

In all those instances we can expect the two bodies, as part of normal good management, to consult one another as appropriate. I am sure that that is the right approach. We do not want to be excessively heavy-handed in this legislation and require of them an excess of consultation and paper chasing on what might be relatively minor matters.

Finally, Amendment No. 118 would place on the new water authorities a duty to ensure that they cause no loss or damage to any other person or the environment when exercising their power. Again, it is clearly desirable that the new authorities should not cause loss or damage or that if they do so they should pay prompt and proper compensation. However, that is largely the position mat already exists. The Water (Scotland) Act 1980 and the Sewerage (Scotland) Act 1968 contain a number of provisions which require water and sewerage authorities to compensate any person who has suffered loss as a consequence of the exercise by the authority of its powers.

We believe that what is already provided for in statute is more than sufficient and that the additional safeguard which the amendment proposes is excessive in the context of what is already required of the authorities and will continue to be required of them.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for the trouble that he has taken. I do not suggest that he is naive, but I think that sometimes he has a healthy suspicion of what he is asked to do.

The noble and learned Lord said that I had suggested unrestricted access. No one has ever thought that you could walk unrestricted round a waterworks. There are always parts where you cannot go. If you go to Milngavie on any Sunday there will be scores of people, and even children on bicycles. Of course motor cars are not allowed or any activities that might foul the water.

At Loch Katrine "Walter Scott" sails to Stronachlachar twice a day. There is unrestricted access.

People are worried about access. On many occasions in Scotland, not only in the northern Highlands but also in the central area, someone buys a property and suddenly, in an area which has been open for years, gates are put up. I can think of two or three places where that has happened. The old Glasgow merchants, many of whom were councillors in the days of the early Liberals, were responsible for Loch Katrine, but Glasgow people have had easy access to it. They would be most annoyed if someone became an important shareholder and started claiming rights. That is the exact point.

The noble Lord, Lord Taylor of Gryfe, has referred to this matter. A member of the Scottish aristocracy suddenly threw a gate across a duke's path just above Aberfoyle. It was not there long because there had been hiking in the hill for generations. Hordes of hikers just went through the gateway and it had to be taken away. People are genuinely worried that someone may become important enough in the set-up of the water authority to demand or deny privileges which have existed for generations.

I have said enough. Although we may return to some points later, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 116 to 118 not moved.]

9.45 p.m.

Lord Thomson of Monifieth moved Amendment No. 118A:

Page 57, line 5, at end insert: ("( ) Each of the new water and sewerage authorities shall consult the Customers Council established under section 66 below on such matters as appear to affect the interests of the customers or potential customers of that authority").

The noble Lord said: In moving the amendment, I speak briefly to the other amendments in the group.

Amendment No. 118A is a narrow but not unimportant amendment. It seeks to ensure that the new authorities will consult the customers council which is to be set up to look after the interests of consumers on any aspect which could have an effect on customers. The provision may seem plain common sense, but it is not automatic under the Bill. Customers councils are required to consult the new authorities; but the new authorities are not required to consult the customers councils. For example, a water authority may be considering how to encourage customers to accept meters. The customers council may be unaware of the issue until the matter reaches a developed stage. In England and Wales the water companies have a condition in their licence requiring them to consult with the local customers service committees at least once a year on general matters. The purpose of the amendment is to ensure that Scotland has similar provisions.

The next two amendments relate to the composition of the customers council; the proportion of members from local authorities and whether among the consumer representation, domestic, as distinct from non-domestic, consumers should be in the majority. Non-domestic consumers are often large commercial bodies. They have their own means of making their interests known to the water authorities. The amendment ensures that the domestic customer is in the majority in that element of the composition of the customers council.

Amendment No. 121A inserts a new clause. The provision ensures that there are arrangements for the resolution of any complaints on which the customers council has been unable to reach agreement with the water authority concerned. In England and Wales there is provision for a reference to the Director General of Water Services. The amendment specifies that the Secretary of State shall be responsible for reaching an enforceable decision. We recognise and accept that in practice the Secretary of State would not take that matter on himself. He would delegate the decision-making to an independent party or refer the matter to arbitration. But the thrust of the proposal is to ensure that there is some means of enforcing complaints and bringing them to a point of attempted settlement and reconciliation. I beg to move.

Lord Fraser of Carmyllie

This is an important group of amendments. I hope that I shall be able to respond succinctly to the contribution of the noble Lord, Lord Thomson.

Amendment No. 118A would place the new authorities under a duty to consult the customers council on all matters relevant to the interests of customers or potential customers. We want the new authorities and the customers council established under the Bill to have a good and productive relationship. I have no doubt that that will entail a continuing and searching dialogue on a wide range of issues. Equally, however, the dialogue will need to be selective if time and money are not to be used to little effect.

Practically the whole of the authorities' operations could be said to affect the consumer but only a limited number of key issues should be the focus of discussions between the authorities and the customers council. As the noble Lord identified for himself, the Bill provides for the customers council to select and concentrate on the issues of greatest importance to consumers. That is the approach that we have seen as being the most appropriate.

Beyond that, the council is already required under Clause 67 to undertake certain functions which include consultation with the authorities about matters which affect the interests of customers. Clause 68 gives the customers council a right to all the information it reasonably needs. This will ensure that it can raise all appropriate matters with the new authorities and implicit in those statutory provisions is the reciprocal duty on the authorities to engage in meaningful consultation with the council. I believe that that is sufficient. I hope that it meets an anxiety which the noble Lord advanced and which I concede to be perfectly legitimate.

Amendment No. 119 would alter the arrangements for appointing members of the customers council. It would require not less than one-third of members to be elected councillors appointed by associations of local authorities. The remaining members would be appointed by other bodies representative of the interests of domestic and non-domestic customers.

Members of the customers council should certainly be representative of customers, but appointments will be made because of the personal contribution the appointees can bring to the job. We believe that that is the best way to construct such a watchdog body.

The alternative proposed in the amendment is to make the appointees effectively delegates of the particular organisations which have nominated them. We believe that that reduces their flexibility of operation in a personal capacity in a way which would not be in the best interests of the council or consumers at large. I would stress, however, that in making appointments on a personal basis, the qualifications of those appointed and their ability to be representative of the different groups of customers will be paramount.

There are already some pointers in the Bill. The particular needs of rural customers, both in the domestic and non-domestic sectors, must have appropriate representation, as must other customers and potential customers. Sir Hector Monro said in another place that he wanted local councillors to be on water authorities, the customers council and area committees, and that nominations could come from community councils and local authorities. That is absolutely right. I hope that I can reassure the Committee that before making any appointments the Secretary of State will have regard to any suggestions from those sources and will particularly consider the matter of local authority appointees.

Amendment No. 119A would require the majority of members on the customers council to represent domestic customers. I am bound to say that I do not consider that that is an appropriate development. We are setting up a customers council to look after the interests of all customers, domestic and non-domestic alike.

Amendments Nos. 120 and 121 relate to the appointment of the chairman and deputy chairman and remove the need for the Secretary of State to approve the appointment of the chairmen of the three area committees. Again, unless I am asked to elaborate upon them, they appear to me to be essentially consequential on the changes introduced by the earlier amendments.

Amendment No. 121 A, however, deals with a rather different point, and it is quite an important one. It would establish an elaborate mechanism for resolution by the Secretary of State of a complaint which the customers council had been unable to resolve with a water authority. The parentage of this clause appears to lie in the Water Industry Act 1991, which gave these powers to the director-general of Ofwat in respect of England and Wales.

We do not think that parallel powers are required in Scotland. In England and Wales, in contrast to what we propose, there is a privatised industry, to which a system of regulation including this procedure for complaints is particularly appropriate.

We have already inserted in the Bill in the other place provisions for water authorities to draw up codes of practice in consultation with the customers council. It is also the duty of the customers council to investigate any complaints from consumers. The hope and expectation is that these procedures will allow complaints to be resolved fairly and amicably. Should that fail to be the case, it would be open to the customers council to lay the facts of the case before the Secretary of State. It would then be open to the Secretary of State—and this bears back on the issue of accountability to which reference was made earlier—if circumstances warrant-ed, to give a direction to the water authority.

I have taken a little time to explain these amendments. I consider them to be important, but I hope that, with the explanations that I have given, the noble Lord will withdraw them.

I regret to say that because this group is so lengthy I almost omitted reference to the amendment that requires the new water and sewerage authorities to prepare their draft charges schemes in a format specified by the Secretary of State. While we acknowledge that we would like to see a measure of comparative performance, we would not like to impose this degree of inflexibility on the three new water authorities.

Lord Thomson of Monifieth

I am grateful to the noble and learned Lord for the care that he has taken to deal with these particular amendments. For my part, I was satisfied with his reply on the first amendment. I think that common sense should prevail there. We need to read and think about what he said on the other matters. Clearly, in regard to the question of dealing with complaints, the enforceability of complaints, and so on, if there is a final direction by the Secretary of State, basically that is reassuring. But I say to the noble and learned Lord that much will depend, in the light of what he has said and what it appears to me that he said, on the care and wisdom with which the Secretary of State carries out his responsibility in terms of the balance of interests within the customers council. It is very important that it should carry credibility. We are all very suspicious these days about quangos and excessive governmental influence on their overall composition. Here it would be very important to ensure that the local authority representation is one that carries real credibility. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 64 agreed to.

Clauses 65 and 66 agreed to.

Schedule 9 [Constitution and proceedings etc. of the Scottish Water and Sewerage Customers Council]:

[Amendments Nos. 119 to 121 not moved.]

Schedule 9 agreed to.

Clause 67 agreed to.

[Amendment No. 121A not moved.]

Clauses 68 to 74 agreed to.

Clause 75 [Charges schemes]:

[Amendment No. 121B not moved.]

Clause 75 agreed to.

Clauses 76 and 77 agreed to.

10 p.m.

Clause 78 [Collection of charges by local authority]:

Lord Carmichael of Kelvingrove moved Amendment No. 122:

Page 64, line 17, at beginning insert ("Failing agreement between a new water and sewerage authority and a local authority that the local authority shall demand and recover such charges payable for services provided by a water and sewerage authority under a charges scheme as are specified in the agreement;").

The noble Lord said: In moving this amendment, it may be convenient for the Committee if I speak also to Amendments Nos. 123 and 124.

Amendment No. 122 seeks to insert:

Failing agreement between a new water and sewerage authority and a local authority that the local authority shall demand and recover such charges payable for services provided by a water and sewerage authority under a charges scheme as are specified in the agreement".

In the first instance, it should be open to local authorities and water and sewerage authorities to reach agreement regarding the collection of charges on such terms and conditions as are mutually acceptable rather than those imposed by the Secretary of State. It is suggested that the Minister wants the Secretary of State kept out of the matter as much as possible. I should have thought that he would therefore be willing to accept this amendment. We do not expect such a situation to arise often. If the conditions are right and everything is as well ordered as the Government have suggested throughout the Bill, it will be only a long-stop defence. I hope that the Minister will give us some reassurance on the matter.

Amendment No. 123 seeks to ensure that:

payments shall not be greater than the sums actually recovered by the collecting authority, less the cost of such collection".

This appears to be a fairly technical amendment but there may be very large sums involved. I do not think we should treat the matter lightly. Local authorities should not have to bear the bad debts of a new water and sewerage authority. They might be considerable if in the future there is a substantial increase in water and sewerage charges. Local authorities should be reimbursed for the collection of any charges that are incurred.

Amendment No. 124 seeks to leave out the words: may be prescribed by reference to such",

and insert the words: shall be prescribed by reference to the needs and resources of a person liable to pay an amount under a charges scheme and such other".

The purpose of the amendment is to prescribe more closely the factors which the Secretary of State is required to take into account when making regulations that provide for a person to pay a reduced charge. I cannot give any kind of list—certainly not a complete list—of the people for whom the Secretary of State may wish to offer the special provisions. There are already one or two similar cases. For instance, if water is for a hotel, one meter will usually be sufficient for the whole hotel. A comparison may be the charge relating to television—I must be careful at this point because the noble Lord, Lord Thomson of Monifieth, is listening carefully. If it is, say, for television in an old folk's home, a single licence is sufficient for the whole establishment—or at least, there is a special block licence which allows for that.

There are some cases on which the Secretary of State should have the flexibility to make decisions for the benefit of deserving people. It would be his job to decide which people are "deserving", advised no doubt by the correct authorities, whether charitable, medical or whatever. I beg to move.

The Earl of Balfour

I take this opportunity to ask one or two questions in relation to Clause 80. Clause 80 appears to allow the Secretary of State to make reduced charges in certain circumstances. The kinds of case that come to mind are the sort that may arise under Clause 11, which deals with metered water. Such a case may involve a large family with young children. What can also be a frightful problem for a family, and even worse than having young children, is having incontinent grandparents. One can go through gallons of water in that situation. Will the arrangement which allows the Secretary of State to reduce charges provide a quantity discount for those families who really need to be helped?

I may be raising this matter at the wrong point in the proceedings. However, I hope that some satisfaction can be given bearing in mind the plight of those families.

Lord Rodger of Earlsferry

Amendment No. 122 would make collection of water and sewerage charges under a Clause 78 order a procedure of last resort, to be used only where the council and the water authorities could not reach agreement. There is always thought to be virtue in proceeding by agreement. But in this situation the Government believe that the virtues of agreement must yield to certainty and, in particular, certainty at an early stage.

The Minister for the Environment, Sir Hector Monro, said in another place that it could make practical and administrative sense to have the new councils collect charges for the new water and sewerage authorities in the early years. The Committee may well understand that. These are new authorities and may not have in place an easy and efficient form of collection in the early years, whereas they may be able to use to good effect the collection systems already existing for councils.

I can tell the Committee that the Government intend that for 1996–97 at any rate—it will be seen that the orders refer to a specific year—the new councils should collect charges for the new water and sewerage authorities. The necessary order under Clause 78 will be brought forward after Royal Assent. The charges to be covered will be those for domestic sewerage and domestic unmetered water; that is, those charges which are currently collected along with or as part of the council tax. On the other hand, it will be the responsibility of the new water authorities to make appropriate arrangements for the collection of other charges; that is, charges for non-domestic water and sewerage and for all metered water.

Sir Hector Monro also indicated in another place that the local councils would not be out of pocket and their full costs would be reimbursed if collection under a Clause 78 order was introduced. As the Committee will appreciate, that does not necessarily imply a situation where local councils are reimbursed whatever they assess to be the costs of collection. They are required only to remit to the water authorities whatever amounts they happen to have been able to collect. Costs will be repayable but it will, on the other hand, be only reasonable for the water authorities to have, in turn, some assurances about the sums to be remitted to them. These are all matters which, among others, can feature in the detail of an order under Clause 78. The Government look forward to constructive discussions with all the parties concerned before the terms of those details are finalised.

I turn to Amendment No. 124. Your Lordships will see—and I draw the attention of my noble friend Lord Balfour to this matter—that the terms of Clause 80(1) are very general. It states: 'The Secretary of State may make regulations as regards any case where—

  1. (a) a person is…liable to pay an amount to a new water and sewerage authority or to a local authority; and
  2. (b) conditions prescribed in the regulations are fulfilled".
Without prejudice as to whether or not my right honourable friend the Secretary of State would make an order in the kind of situation which my noble friend has indicated, I would say to my noble friend that my right honourable friend has a very wide power under that provision. I would equally say to the noble Lord, Lord Carmichael, again without prejudice as to whether or not he would make any such order, that the terms of the power under Clause 80 are sufficiently wide to permit an order to be made in the kind of circumstances which he envisages. Nonetheless, we do not think that the most effective way—I can only presume that this is what lies behind the terms of Amendment No. 124—of providing help to customers is to require some kind of a means-tested scheme. After all, income support levels will already take account of water and sewerage charges. Requiring a further examination of means would be costly and inappropriate. Decisions on the form of any scheme to reduce charges are for my right honourable friend the Secretary of State and he will take those decisions in the light of all the circumstances prevailing.

I stress the generality of the terms of Clause 80 but I could perhaps indicate that one possible use of the clause is, for example, to enable forms of transitional reduction schemes to be introduced should that prove to be appropriate. It is right that the full cost of water and sewerage services should be recovered through charges. That is already the case with water and non-domestic sewerage.

However, domestic sewerage expenditure is current-ly met from the council tax. With the restructuring, that will change. Domestic sewerage will be included on the charges levied by the new authorities and paid by those connected to the sewerage service. The change will therefore produce an increase in direct water and sewerage service bills but there will be a parallel reduction in local authority expenditure and in the amount of income they require. Therefore, it may be appropriate to use the power in connection with this change.

Other factors will affect bills in 1996–97 and in subsequent years. The continuing investment programme will have to be paid for, a point which everyone can recognise. But increased economies of scale and the greater efficiency of the new water authorities will ensure the delivery of service at a lower cost than would otherwise have been the case. With the explanation of what lies behind the provisions in those clauses I ask the noble Lord to withdraw his amendment.

10.15 p.m.

Lord Macaulay of Bragar

Before the noble and learned Lord takes his seat again, I must say that I was intrigued to hear him talking about constructive discussions taking place. He said that he was hoping for such discussions in relation to Amendment No. 123. We are talking about pure water and here we have a pure Bill. We are now on the third day of the Committee stage and not one Government amendment has been tabled. What are we facing for the Report stage? We had another Bill as regards England and Wales for which 220 amendments were tabled by the Government. Are we to have a mass of Government amendments at Report stage? If the Government are a caring and listening government, as they say they are, why are there no Government amendments to this Bill? It is very strange. On this side of the House we look forward to seeing what the Government consider to be wrong with this Bill and what they are going to put right at Report stage. Perhaps the noble and learned Lord can tell us so that when we come back in October we shall be refreshed for the battle at Report stage, with Government amendments duly lodged in good time so that we can consider them all.

Lord Rodger of Earlsferry

It is passing strange to have stood here so often and been criticised for introducing Government amendments, having been told so often that the Bill had not been thought through properly and that it had been done on the hoof. Now, when we do not have amendments, we are being criticised for that. I say that in passing.

The noble Lord, Lord Macaulay, does not seem to have listened to the point I was making. It referred to the terms of the order that will be made under Clause 78. It was in respect of the terms of that order that I indicated the matters to be taken into account in the discussions before finalisation of the order.

Lord Carmichael of Kelvingrove

I appreciate what the noble and learned Lord has said. We are not trying to be difficult, but everyone is surprised. We have a Bill here of 270 pages and there has not been a single amendment by the Government. I doubt whether anyone in this building in the past 50 years has got a Bill back from another place without making amendments. The noble and learned Lord will recall the famous Consolidation Bill and the Roads (Scotland) Bill. I believe that one of the schedules came to us with 25 pages. When it returned to the other place it had 83 pages. That was excessive and that was only a schedule. There were also other amendments.

We are surprised that the Government have managed to produce a Bill of this size without a single amendment. We are most grateful to both noble and learned Lords for being willing to look at things before Report. They should not chastise this side of the Committee for believing that we are being difficult. We are looking at almost a miracle in terms of legislation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 123 not moved.]

Clause 78 agreed to.

Schedule 10 agreed to.

Clause 79 agreed to.

Clause 80 [Reduced charges]:

[Amendment No. 124 not moved.]

Clause 80 agreed to.

On Question, Whether Clause 81 shall stand part of the Bill?

Lord Carmichael of Kelvingrove

Clause 81 makes it an offence for a member of a local authority or of one of its committees or a joint committee to vote on any question arising in a meeting concerning the exercise of such functions as the local authority may have by virtue of Clause 78, acting as the collecting agency for charges levelled by the new water and sewerage authorities, where that member is at least two months in arrears with a charge payable by virtue of Clause 78.

Although we accept that it is proper to disqualify members where they have a statutory function and an interest, it is unconstitutional to disqualify members where they are acting only as a contractor for another body. The collection of a charge is simply a contracted job. No restrictions should be placed on a democratic-ally elected member in terms of collecting charges for a quango. There is no similarity here with the situation in which a councillor is placed if he chooses not to pay his council tax and is debarred from voting on budgetary matters. The situation is different for the non-payment of water charges under the proposed system. In the former case, the councillor can influence policy decisions while in the latter case, he has no such power.

I am opposing the question that Clause 81 stand part of the Bill in a genuine attempt to discover what the clause really means. I do not understand the whole tenor of the clause and I should be grateful if the Minister could explain it to me.

Lord Rodger of Earlsferry

Perhaps the difficulty of the noble Lord, Lord Carmichael, arises from his description of what is being done in the clause as a function which is "contracted". As we have just seen, that is not the case because although in his Amendment No. 122 the noble Lord wanted there to be agreement between the new authority and the local authority—and that would give rise to the situation of contract to which the noble Lord refers—he will appreciate that, in the absence of his amendment, Clause 78 provides for an order by the Secretary of State.

I do not put it any higher than saying that there might conceivably be some members of some local authorities (upon whom the collection duty had been laid on behalf of the new authorities) who might not be entirely in favour of the policy of the new authority. That is not wholly inconceivable. Those members might therefore have political or other opposition to that policy which might lead them not to pay the water charges in question. That would put them in a position similar to those who in the past did not pay their poll tax, but nonetheless went on to vote on matters relating to that and thus committed offences. There have been such cases. The clause exists to prevent parallel cases occurring. Although the point raised by the noble Lord might or might not have some weight if this were a matter of contract, I point out that it is not such a matter.

Lord Carmichael of Kelvingrove

I am most grateful to the Minister. I think that I understand him. As a layman, I am slightly confused about whether a councillor would need to have been convicted or simply to be known, within the organisation, to be in difficulty. As I said, I tabled the Motion in a genuine attempt to gain information and I think that I have got it —I may have got too much—but I thank the Minister for it. I beg leave to withdraw the Motion.

Clause 81 agreed to.

Clause 82 agreed to.

Clause 83 [Financing and borrowing]:

[Amendment No. 124A not moved.]

Lord Carmichael of Kelvingrove moved Amendment No. 125:

Page 68, line 4, at end insert: ("(4A) The Secretary of State may by order made by statutory instrument extinguish all or any of the liabilities of the existing water and sewerage authorities in respect of the principal of any loan made to the existing water and sewerage authorities. (4B) The assets of the National Loans Fund shall accordingly be reduced by amounts corresponding to any liabilities so extinguished").

The noble Lord said: The purpose of this amendment is to allow the extinguishing of existing water and sewerage authority loans by the Secretary of State. Prior to the water authorities in England and Wales being privatised in 1990, Section 86(1) of the Water Act 1989 gave the Secretary of State power by statutory instrument to, extinguish all or any of the liabilities of the nominated holding company … in respect of the principal of any loan".

The effect of that was to reduce the loan debt due by water authorities by £5,800 million. Apart from making the water undertakings a more attractive financial proposition to potential investors, the effect of that write-off was to eliminate from the customer charges all outstanding investment and loan payments. From a consumer's perspective, there is no equity in a situation in which customers in England and Wales have received that subsidy but consumers in Scotland have not. A similar arrangement should therefore be put in place for Scotland.

In response to a similar amendment tabled in the other place, the Minister, Sir Hector Monro, stated:

Hon. Members have raised the issue of the green dowry, as it is called, that went to England and Wales. They miss the important point that in England and Wales water was privatised, whereas in Scotland it is to remain in public control. It is therefore right that the debt should move from the local authority to the water authority. The case of England and Wales is not a good parallel, because the need there was to create new companies with a capital structure that made sense to the market. Debt finance to 100 per cent. does not make sense for a private sector company". —[Official Report, Commons, First Scottish Standing Committee, 14/4/94; col. 1820.]

However, that view does not give water consumers in Scotland equity with their counterparts in England and it will inevitably mean higher charges north of the Border in the long run.

That is a slightly confusing statement and perhaps it needs someone such as our deputy chairman, the noble Lord, Lord Lyell, who is an accountant, to be able to explain it. Perhaps the Minister can help me out and give me a little more insight into the Commons amendment. I believe that I understand it and I agree that the argument raises suspicions, but I should be happy if the Minister could help by giving me a clear understanding of the matter. I beg to move.

Lord Fraser of Carmyllie

I am not sure that I can assist the noble Lord because he has conveniently read for me the detailed answer that I wanted to give; that is, what was contained within the speech made by my honourable friend Sir Hector Monro. I am not sure that the argument is capable of any greater elaboration.

The exercise that is being carried out in Scotland will be different and this gives me a further opportunity to point up the difference between what has been carried out in England and Wales and what is proposed for Scotland. We are setting up public authorities and not private-sector companies. We do not therefore need to put in place the capital and financing structure that might be needed in market terms.

The noble Lord is right in saying that there will be no equity in the structure of the new authorities. They will have loan finance drawn primarily from the National Loans Fund. The capital structure and the debt which the new water authorities will acquire when they open for business will be settled and announced in due course.

I do not believe that I can say any more. I merely point out the distinction between the particular solutions which have been followed in England and Wales in respect of privatisation and the proposal that we are putting forward.

10.30 p.m.

Lord Thomson of Monifieth

Before the noble and learned Lord sits down, will he elaborate on the distinction? I hesitate to go down this line because of the position in which it may put me. But does it mean that, if the Government privatise, they are ready to subsidise those who are engaged in the privatisation and through them, the consumer; whereas if they engage in the transfer from one form of public authority to another, the Government's view is that the consumer in Scotland must pay a great deal more than the consumer in England because in Scotland we forced them to continue with some form of public authority ownership?

Lord Fraser of Carmyllie

I am intrigued to know why the noble Lord suddenly wishes to go down this road. We are saying that while the Bill proposes a change, arrangements for water remain in the public sector. The particular arrangements that were put in place in England and Wales, which were very different indeed, do not apply here.

The noble Lord's ultimate anxiety may be in regard to what will be the cost to him as a consumer in Scotland. I do not accept that it is inevitable that the charges with which he will be confronted will be greater than those which apply in England. We believe that the arrangements which we propose should be capable of providing water and sewerage services efficiently and effectively and, indeed, the charges which he and other Scots will have to pay will in no sense be exorbitant or exaggerated.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for his explanation. I am grateful also to the noble Lord, Lord Thomson of Monifieth, because he has made me feel that perhaps I am not alone in my lack of accountancy skills. I shall read carefully what the Minister said. I am sorry that I stole his thunder by quoting Sir Hector Monro. I quoted that passage because I did not understand what he was saying. I think I now have a clearer understanding of the matter and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 126 had been withdrawn from the Marshalled List.]

Clause 83 agreed to.

Clauses 84 to 89 agreed to.

Clause 90 [Transfer of property, rights and liabilities to the new authorities]:

[Amendment No. 126A not moved.]

Clause 90 agreed to.

Clause 91 [Transfer schemes: general]:

Lord Carmichael of Kelvingrove moved Amendment No. 127: Page 74, line 35, leave out from first ("the") to ("in") in line 37 and insert ("transferee").

The noble Lord said: The purpose of the amendment is to require that compensation for the loss of pre-emption rights is payable only by the new water and sewerage authorities.

Where property is transferred to a new water and sewerage authority, the Bill provides that in relation to that initial transfer, rights of pre-emption—previous owner's right to buy back—and similar rights shall not operate. Where such a right has been removed, compensation is to be payable by the local authorities or the new water and sewerage authorities. As the benefits of such a transfer will be enjoyed solely by the new water and sewerage authorities, it is considered that they alone should be responsible for those compensation payments.

Therefore the amendment provides that, where compensation fails to be paid, responsibility for making the payment rests with the new water and sewerage authorities. Again, we are in the realms of accountancy. I take it in faith that the amendment serves the purpose that I think it should serve. Perhaps the Minister will make the matter even clearer for me. I beg to move.

Lord Rodger of Earlsferry

I am most grateful to the noble Lord for drawing our attention to the matter. It is somewhat complicated and, indeed, the explanation also seems to me to be quite complicated. However, I can first assure the noble Lord, Lord Carmichael, that subsection (4) of the clause is modelled on a similar provision which is to be found in the Railways Act 1993 and which is designed to try to cover various contingencies, not all of which may be immediately obvious.

The noble Lord, Lord Carmichael, referred to the most obvious situation; namely, where the right of pre-emption is lost and where one would think that the most obvious person to pay is the transferee new authority. However, the ingenuity of lawyers is such that they can actually figure other situations which could be covered. Perhaps I may just indicate the other situations referred to in the clause.

It is thought that it would be inappropriate for the liability to rest solely on the new water authority if there are, for example, circumstances where the right of pre-emption might be lost by virtue of a transfer of the land from a new water authority back, in effect, to a new council. The fact that that is not entirely fanciful can be seen if one looks to the depths of paragraph 3 of Schedule 11 to the Bill where that particular contingency is envisaged. It deals with the question of the successor of the council.

On the other hand, there could also be cases where the land over which such rights exist may not be transferred in its entirety to the new water authority but may remain in part with a present authority or a new council. In that situation, again, it would not be necessarily appropriate for the whole of any payment to come from the transferee as envisaged. Therefore, although they are rather obscure contingencies, nonetheless they appear to be at least theoretical contingencies for which provision must be made. With that explanation, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Carmichael of Kelvingrove

I shall certainly withdraw the amendment. That will enable me to study the Minister's response with great care. The noble and learned Lord said that lawyers were able to think of things that might not occur to the rest of us. However, I think that they can sometimes give us answers that take a great deal of thought to understand. I am grateful to the noble and learned Lord for trying to educate me in the matter. I shall do my homework and see whether I understand it by the time we reach the Report stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 91 agreed to.

Clauses 92 to 94 agreed to.

Schedule 11 agreed to.

Clauses 95 to 98 agreed to.

Clause 99 [Disposal of land]:

Lord Mackie of Benshie moved Amendment No. 128: Leave out Clause 99 and insert the following new clause:

("Disposal of land

. Where a new water and sewerage authority wishes to dispose of land it shall first offer that land to the unitary authorities within the former regional boundaries, free of charge, and in the event that the land is subsequently sold shall distribute the proceeds of sale to those authorities on a population basis.").

The noble Lord said: I move this amendment which has been tabled as a result of the suspicion with which we and the inhabitants of Scotland regard the intention not of the present holders of such offices but that of possible future holders if they happen to come, for example, from the vicinity of Stirling. It would appear to us very necessary to protect the assets built up by a community over a long period of time. This amendment simply states that if a new water authority and sewerage authority wants to sell land and sees an opportunity to do so, it must first offer it back to the unitary authority. Those authorities are the heirs, as it were, of the work done to such good effect by people in the past. Substantial amounts of cash have been paid for assets owned by former public companies and the suspicion, of course, is that if the bodies we are discussing were to be privatised in the future, assets would simply pass to a private company and people would be deprived of the fruits of their ancestors' hard work and foresight. I shall be most interested to hear what the Minister has to say. I beg to move.

Lord Rodger of Earlsferry

I listened to what the noble Lord, Lord Mackie, said about the suspicion which lay behind this amendment. That suspicion is entirely unjustified. The theory behind the provisions in the Bill is that we are concerned with matters relating to water and of course we are concerned with the infrastructure, the land and the various other assets connected with water. We have heard on a number of occasions in eloquent terms from the noble Lord, Lord Carmichael, of the events of last century in and around Loch Katrine, and how that all came about. That is certainly very interesting, but it highlights the extent to which it is difficult to tie any particular assets—historic, or other assets—to any particular council or to any current authority which may happen to be vested with the responsibility for water. Nonetheless these assets will transfer to the new water authorities and therefore they will be primarily assets which are to be used for the benefit of people who will consume the water.

It seems to the Government that, if, and in so far as, there may be assets which are surplus to requirements for the provision of water, the correct course, if the land or some other assets are sold off, is that the return from that should benefit the people for whom the authority is working; namely, the people who will be supplied with water. We think that is the coherent way of looking at the matter because these are all assets which are concerned with water. It is for that reason that we think the policy as enshrined in the Bill is correct and that the policy suggested by the noble Lords' amendment would be contrary to the spirit which I think should underlie this whole matter.

Lord Macaulay of Bragar

Before the noble and learned Lord sits down, is it not clear from the wording of the Bill as it presently stands that Clause 99 gives the new water authorities a completely free hand to dispose of national assets? In my earlier contribution I referred to the land surrounding Loch Katrine, which local authorities acquired many many years ago on behalf of the county of Dumbarton, as it probably then was. Clause 99 now reads: Subject to subsection (2) below, a new water and sewerage authority may dispose of land held by them in any manner, to whomsoever and for whatever purpose they wish". That is a case of their "gladhanding" to all their mates. Who will get the land? Who will control the disposal of assets belonging to the people of Scotland?

The purpose of the amendment is to keep the land which belongs to the people of Scotland within the domain of the unitary authority, whichever authority that might be. If the Government now say that Clause 99 means a free-for-all in the disposal of land which has been acquired on behalf of the community and which is part of our national and natural heritage in Scotland, it is a sad day for Scotland.

10.45 p.m.

Lord Carmichael of Kelvingrove

Perhaps I may ask the Minister another question. He said that lawyers think in special ways. Clause 99(1) reads: Subject to subsection (2) below, a new water and sewerage authority may dispose of land held by them in any manner, to whomsoever and for whatever purpose they wish". I should like the strict legal interpretation.

According to that subsection there is not even any necessity to make it a requirement, even at a reservoir, that land use should not create a nuisance. I may be going over the top, but I should have thought that in strict legal terms it would be difficult to stop someone unless there were other rules. Someone could start a business which was a potential nuisance to the water supply, yet the land could be sold for whatever purpose the authority wishes. I should be grateful if the Minister would clear up that little point.

The Earl of Minto

Before the noble and learned Lord replies, I must say that I find the clause a little worrying. I hope that the noble and learned Lord the Lord Advocate will give us some assurance in relation to the Scottish heritage. It is an important factor. It appears that a great deal of freedom is being given to people who have no right to have it in the first place.

Lord Rodger of Earlsferry

The right of these people to the land will derive from an Act of Parliament. That is the ultimate authority for everything in our country. One cannot have a higher authority.

Members of the Committee forget that the new authorities cannot do whatever they like. They have duties, and those duties derive from an Act of Parliament and are set out in Clause 64 and elsewhere. Whatever they do, those duties are binding upon them. Those duties are, for example, to secure and promote the provision of adequate water supplies. Therefore, whatever the authorities do in relation to the disposal of land and so on must be seen within the overall context of their duties.

Having said that, the terms of the power to sell are wide. They state that the authorities may dispose of land: in any manner, to whomsoever and for whatever purpose they wish". Nonetheless, the Committee will notice that there is a proviso that the consent of the Secretary of State is required if the authorities are to dispose of land for a consideration less than the open market value of the land. In that way the return is secured, except that there may be circumstances—and noble Lords opposite may consider it entirely appropriate—where the land might be given, for example, for charitable purposes which were thought to be appropriate and where the Secretary of State gave his consent. Unless that is the case, the disposal must be at market value. It must always be seen within the context of the overall duties laid upon the authorities by Parliament.

Therefore, I do not believe that there is any real problem in relation to that power. It seems to me that the authorities must have a power to dispose of land, otherwise they will be entirely static and might find themselves with land locked up for which they had no economic use. I cannot imagine that Members of the Committee would think that sterilisation of land in that way would necessarily always be best. There might be other ways of dealing with that land which noble Lords consider more desirable. The position is quite without prejudice to the duties which lie upon those authorities.

Lord Mackie of Benshie

The noble and learned Lord has done his best; but it appears that the only time the Secretary of State can interfere is if those bodies wish to sell the land at below value for some purpose. That is not the danger. The danger is that they will sell the land for great value and will not use the money either immediately or in the future for capital expenditure which would promote benefit to the consumers of the water.

Nevertheless, we shall have a good look at the issue between now and Report stage. It is important. There are plenty of precedents. Over everything hangs the very real spectre, to us, of privatisation. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 99 agreed to.

Clauses 100 to 117 agreed to.

Clause 118 [Records held by new authorities]:

The Earl of Balfour moved Amendment No. 129: Page 89, line 1, after ("authority") insert ("and the Keeper").

The noble Earl said: The clause is almost a mirror to Clause 52 in which we also discussed the keeper of the records. I beg to move.

Lord Fraser of Carmyllie

I am grateful to my noble friend for moving the amendment so briefly. He is absolutely right. A similar amendment was tabled in respect of Clause 52(2). The requirement under paragraph (b) for the new authorities to consult the keeper on the management of their records will include the establishment of general principles for disposal including destruction where appropriate.

I hope that the authorities will operate their records management system autonomously within these general guidelines. I would not wish the authorities subsequently to be obliged to consult the keeper whenever they wished to dispose of purely routine material which would be of no interest to anyone in the future. In any event, as I explained on the earlier occasion, the keeper does not have the resources to undertake such a task. I hope that my noble friend will be reassured that the keeper himself supports the provision as it stands.

The Earl of Balfour

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 118 agreed to.

Clauses 119 to 121 agreed to.

Clause 122 [Power to require local authorities and assessors to supply information to the new authorities]:

Lord Carmichael of Kelvingrove moved Amendment No. 130:

Page 90, line 10, at end insert: ("( ) Regulations made under subsection (1) above may only require the furnishing of reasonable information and shall also give the local authority or Assessor the right to levy charges, as determined by the local authority or Assessor").

The noble Lord said: We have had a long day, but this is not an unimportant amendment. The purpose is to add a duty of reasonableness to the requirement that authorities and assessors provide information to water and sewerage authorities and to allow the right to charge for any work done in supplying the information.

It is extremely unusual that a democratically elected local authority is required by statute to provide information to non-elected quangos. If such a requirement is to be made, however, it would seem only fair that an element of reasonableness is included in order that authorities are not engaged in time-consuming tasks to provide the water and sewerage authority with information which, while interesting, may be of little real purpose.

In addition, given the financial constraints under which all local authorities operate, the authority which is providing the information should be allowed to charge for the efforts undertaken to supply the information. It would seem strange that, at a time when the Government are requiring local authorities to be ever more efficient and put out their services to compulsory competitive tendering, they should also require authorities to provide information to another corporate body free of charge.

At this time of night I shall spare the Minister a quotation from his honourable friend in another place, Sir Hector Monro, because possibly he has the answer which Sir Hector gave in the other place. I have read it and I do not find it all that convincing. I beg to move.

The Earl of Balfour

I wish to take the opportunity to speak to Amendment No. 131 which is grouped with Amendment No. 130. Purely on a point of information, I wish to ask whether council tax payers who are on public water will be charged a water charge and council tax payers who are on public sewerage will be charged a separate charge.

My problem is that we have almost finished dealing with Part II of the Bill and I cannot find the confirmation that water and sewerage services for council tax payers will be charged for separately. I ask this because my own home is on a private water supply. Some people may have private sewerage and under the provisions of Schedule 8 the areas of the two southern parts of Scotland are not quite the same for water and sewerage. There is also the provision under Clause 62 that the water and sewerage areas can be altered.

I take into consideration Clause 101 which brings in a new Section 10 on the emptying of septic tanks. It would be fine if we were separately charged, but sometimes a vehicle cannot get near the septic tanks. They have to be privately entered. Those are my questions.

Lord Fraser of Carmyllie

If the noble Lord, Lord Carmichael, has read what my ministerial colleague, Mr Allan Stewart, said, I think I can deal with the amendment fairly shortly.

The new water authorities will be in the position that they will want to have access to the information used by their predecessors in the provision of water and sewerage. That is what Clause 122 provides. That information is needed to provide the services which are being transferred to the new water authorities. It should not be seen as the preserve of the local authorities and the assessors, to be made available at their discretion or for payment. We believe that it is something to which the new water authorities should have automatic access, as they require. That is what the Bill provides and I am sure that it is right. Otherwise, we shall be talking about transferring a charge around from the same group of people, whether they pay it indirectly through the council tax or through the water charges. It seems to me that automatic access would be the correct approach.

Perhaps I may turn very quickly to Amendment No. 131. Sewerage is indeed as much in point as water in the operations of the new authorities. However, the reference would not be appropriately inserted at this point in the Bill. The reason is that there is no domestic sewerage charge at present. The costs of domestic sewerage are included within the basket of services covered by the council tax. We already have a reference to council tax in the clause. Councils will, of course, have information about the costs of domestic sewerage. That, indeed, is the information contained in a pamphlet recently prepared and distributed by the Scottish Office. It is information held in connection with the setting of the council tax and so under the clause as drafted will be available. Non-domestic sewerage, as will be appreciated, is a different matter and is separately mentioned in the clause.

My noble friend also raised a number of other matters to do with the emptying of septic tanks and made reference to another clause. I hope that he will forgive me if I do not attempt to answer him at this stage. I will undertake to read what he has to say and will write to him about the details of the points that he has raised.

11 p.m.

The Earl of Minto

I wonder whether the noble and learned Lord would be kind enough to explain just one point to me. I think I understand what he was saying to the Committee—that the new water authority should get information from the local authority free of charge. It would not be sensible to have the to-ing and fro-ing of charges. Because of the financial acumen of local authorities now, we have interdepartmental charges for any information that is taken from one to another and goes back and forth. The services—even if they are IT services—are taken from, let us say, the roads and transportation department into the education department as a cross-entry. Is this a level playing field? I ask the noble and learned Lord to think about that from the point of view of internal accounting.

Lord Fraser of Carmyllie

I am grateful to the noble Earl for that very brief but lucid account of the arrangements which, I am aware, are frequently followed not only in local authorities in Scotland but in a large number of organisations within the public sector.

In this particular context the reason—and perhaps I tried to curtail my reply too much—is that we are of the view that automatic access without payment is desirable. But I accept from the noble Earl that that is not always the case, and indeed within a particular organisation there may be such invoicing and billing for services rendered. I will certainly reflect on what he has to say, but at the present time our view is that the principle of automatic access should be maintained.

Lord Carmichael of Kelvingrove

I thank the Minister for his help. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 131 not moved.]

Clause 122 agreed to.

Clauses 123 to 125 agreed to.

Viscount Goschen

I beg to move that the House do now resume.

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

House resumed.

House adjourned at four minutes past eleven o'clock.