HL Deb 25 July 1994 vol 557 cc523-4

2.58 p.m.

Lord Jay asked Her Majesty's Government:

What further action they propose to protect the consumer from possible exploitation by privatised water companies.

The Minister of State, Department of the Environment (Viscount Ullswater)

My Lords, the Government consider that the existing system of regulation already provides effective protection for the consumer. The Director General of Water Services has a statutory duty to protect the interests of water and sewerage customers in respect of both charges and quality of service.

Lord Jay

My Lords, when the Government handed over the water boards to the French companies, did they expect private monopolies to behave other than as private monopolies always do? Since privatisation bills to the domestic consumer have risen by over 60 per cent.; salaries of top executives in these companies have risen by 300 or 400 per cent.; share prices have risen by 99 per cent.; and on top of all that dividends have risen by 63 per cent. Can the Minister explain how that huge increase in dividends can help us towards de-pollution and cleaner water?

Viscount Ullswater

My Lords, as the noble Lord is aware, it is a complex problem. In what is considered to be practically a monopoly we put in a director to overlook the situation. Mr. Byatt has been reviewing the values of "K" for the next 10 years after a period of five years since privatisation. It is important to realise that tremendous investment was needed which had been neglected by numerous governments for decades.

Lord Williams of Elvel

My Lords, I welcome the noble Viscount to his new job and congratulate him on his appointment. In doing so, may I ask whether he is aware that since privatisation there has been a 48 per cent. increase in domestic disconnections, a 67 per cent. increase in consumers' bills, a 125 per cent. increase in water companies' profits and a 133 per cent. increase in the pay of chairmen of water companies? Does he approve of those figures?

Viscount Ullswater

My Lords, the noble Lord is kind to welcome me to the Dispatch Box, but then he seeks to destroy my case. I can answer only by saying that enormous investment was needed because many people are interested in the environmental improvements required. Although people do not like the drinking water and bathing water directives, they like drinking water and bathing water to be clean. Those things have to be paid for. The companies must be profitable if they are to raise the funds, which they did originally on a prospectus to undertake investment in the improvements which the customers demand from them.

Baroness Oppenheim-Barnes

My Lords, does my noble friend accept that, whereas consumers of all the other privatised utilities have actually benefited from better service and better value since privatisation, that is not the case with the water companies and that the under-regulation, or the apparent under-regulation, is bordering almost on the outrageous? Will my noble friend assure me that there is no complacency about that?

Viscount Ullswater

My Lords, my noble friend should be aware that the director general, Mr. Byatt, has undertaken a periodic review after five years, rather than the review which was set in place on privatisation which would only have taken place after 10 years, because he is committed to making certain that the customer has; a fair deal. He is there to promote efficiency and economy. It is with that in mind that he is going to announce in a very short time his new annual price limits and I think that people may be pleased by the results.

Baroness Nicol

My Lords, does the Minister agree—

The Lord Privy Seal (Viscount Cranborne)

My Lords, I think that perhaps we have reached our time.