Privatised Utilities (The Wrekin) (Hansard, 9 May 2000)

§ Mr. Peter Bradley (The Wrekin)

I am grateful for the opportunity to draw attention to the experiences of two communities in my constituency at the hands of privatised utilities. I am confident that in raising these matters I am speaking for thousands of communities, both rural and urban, up and down the country. Their needs have been neglected, their interests have been ignored or undermined and their environment and quality of life have too often been damaged and degraded. The two local examples are important for that reason. Through them I am raising issues of national importance.

I hope that the debate will lead to an acceleration of redress for the community of Hadley in the urban part of my constituency and of Preston upon the Weald Moors in the rural part. I also hope my hon. Friend the Minister will promise to close the loopholes in the permitted development system that enable utilities to ride roughshod over local communities. Perhaps he will go further and impose an obligation on utilities to provide the public services and fulfils the social responsibilities that they have jettisoned—as the high street banks have—in the single-minded pursuit of profit. That is long overdue and would be extremely popular. The privatised utilities would have no one but themselves to blame if tougher regulation were imposed on them.

I have raised the epic saga of the Hadley pylon before in the House. I am grateful to successive Ministers for the support they have given to the residents of Hadley Park road and Wheatley crescent and the indefatigable members of the Hadley pylon action group.

In November 1997, the Midland Electricity Board, acting for the private developer Cofton Land and Property, undertook to underground—which is a verb I have learned in the course of these events—cables beneath a proposed housing development. Cofton Land and Property's intention was to enhance the amenity of the residents of that new estate and to increase the number and value of properties that could be built on the site and thus the profitability of the scheme. The work necessitated the erection of a new pylon in roughly the same position as an existing one. The local residents may not have come to love the old pylon, but they had become used to it. The new pylon presented a different aspect. Looking out of the back windows of properties on Hadley Park road and Wheatley crescent was like being confronted by one of the monsters from H. G. Wells's "War of the Worlds". The morning after the new pylon was erected, someone waking up and opening the curtains would have thought that the Martians had landed.

The works were not undertaken for any environmental benefit, but purely for commercial reasons—to facilitate the development of 300 homes for sale—and at the expense of the existing community. The method of under grounding was a reserved matter in the original planning consent for the development. Despite an obligation to do so, the MEB made no application under section 37 of the Electricity Act 1989 to take down one pylon and erect another. It did not consult the local community or initiate any negotiations with the local planning authority, Telford and Wrekin council. The MEB has claimed that it was not obliged to make an application or to consult, because the new pylon occupied 195WH the same space as the old one and, under the regulations, was therefore technically exempt from the process. That was simply one of many fabrications and untruths promulgated by MEB throughout this long and sorry story. It was disproved in May 1998, when the ever-resourceful and energetic members of the Hadley pylon action group secured—by what means I cannot say—a JCB digger and managed to excavate the foundations of the original pylon.

Faced with such incontrovertible evidence, MEB was finally obliged in July 1998 to concede that the pylon had moved. For Telford and Wrekin council—and, more to the point, the Department of Trade and Industry—that meant that MEB had been wrong not to apply for consent to move the pylon. In August 1998, 18 months after the works were undertaken, the DTI wrote to MEB expressing its "dim view" of the company's conduct and pressing for prompt retrospective action. As I mentioned, fabrication has regrettably played a greater part in the story than I should have liked. Delay has been another feature of the MEB's conduct. It has held the community, the local authority and, latterly, the Department of Trade and Industry, in utter contempt.

On 27 October, despite the plea from the DTI for prompt retrospective action, MEB refused to make the application that the DTI was urging it to make. In November, the DTI expressed "deep disappointment" at that decision. In February 1999, two years after the unlawful action, the DTI was obliged to threaten prosecution. It was pointed out to me that this would be only the second prosecution of its kind in 10 years. On 22 February last year, MEB promised that it would submit an application, but by July it had still not submitted to the council the background information and the detailed drawings and specifications that would make the application valid.

In October 1999, after showing extraordinary forbearance and patience, the council took the matter to an emergency committee meeting and rejected the application in favour of a public inquiry. Seven months later, MEB, now known as GPU Power Distribution, has threatened to move the pylon back to its original position. I use the word "threatened" because, far from seeking to appease residents, the company has made it clear that such a move would mean the compulsory purchase of part of their gardens. I mentioned the contempt in which MEB has held the local community and those who represent it in the past two years; that is the icing on the cake.

That cynicism is not atypical of the behaviour of MEB in my constituency and elsewhere—or of many other privatised utilities. The public inquiry that the DTI has now confirmed will take place will be of national significance. That is why MEB has resisted for so long. It knows that much will hang on the decision made at the inquiry. The current state of permitted development rights will be called into question. Those rights were referred to early in 1998 in a consultation document from the Department of the Environment, Transport and the Regions, called "The Use of Permitted Development Rights by Statutory Undertakers". That document stated: PDRs are supposed to simplify procedure and hence remove administrative and procedural burdens from statutory undertakers in delivering their services. 196WH The phrase "in delivering their services" is the critical one. I do not dispute the value of exemptions from the unwieldy and often lengthy planning process and related processes; nor do I dispute that statutory undertakers should have recourse to those exemptions, if they use them to provide essential services—such as gas, electricity, water or sewerage—to communities. However, those rights were not intended to facilitate commercial transactions between private companies pursuing profit at the public's expense, as has happened in this case. They were not intended to allow utilities to circumvent local authority controls in order to avoid their responsibilities and to make maximum profit at minimum cost. That is what happened in Hadley; MEB used its exemptions not to provide power, but to pursue a purely commercial transaction to facilitate a private development. I believe that that is an improper use of permitted development rights.

I hope that the Government will now act to ensure that new guidelines are issued to utilities and to local authorities. Those guidelines should make it clear that permitted development rights are to be used in future only in order to secure public services and public benefit, and that even then they should be exercised only under proper scrutiny and control by the local authorities. I hope that Ministers will also take the opportunity to review the compulsory purchase powers of the utilities. I believe that MEB has behaved disgracefully. The fact that the issue has come not just to local but to national notice is a credit to the Hadley pylon action group and its extraordinary efforts over the past two and more years. That applies especially to Ann West and Sandra Hodnett, who regularly attend my surgery and whom I confidently expect to see this Friday. They will not give up and neither will I. We are encouraged by the support that we have received from the Department of Trade and Industry and we hope to receive more, not just for the benefit of people in Hadley, but for the benefit of communities throughout the country that have suffered similar outrages. We confidently await the public inquiry, as we know that we have strong case.

The second issue that I want to raise concerns my constituents in Preston upon the Weald Moors—a small village just five miles or so from the major new town of Telford. Like thousands of settlements throughout rural Britain, the village does not have mains sewerage. Many such villages do not have access to electricity or gas—indeed, Preston does not have the benefit of a speed limit either. In this day and age, it is extraordinary that villages so close to major conurbations do not have the benefit of the essential services that so many of us take for granted.

In October 1998, following a visit that I had paid to Preston in the previous year, during which residents told me of their concerns about the lack of mains sewerage, and after protracted correspondence with Severn Trent Water, I received a letter from Mr. Robin Alexander. The letter was concise and to the point. It stated that approval has been given to a sewerage scheme which will improve the drainage of both Kynnersley— a neighbouring village— and Preston on the Weald Moors. It gave no qualification. It made it clear that the works would be undertaken. In subsequent correspondence, I was told that work would be under way early in 2000 and that it would be completed at the end of this summer.

197WH A year later, in October 1999, I received a letter from no less a person than the managing director of Severn Trent Water, Mr. Brian Duckworth. He, too, put in writing the same assurance. The letter stated: I can also confirm that the Preston and Kynnersley project remains in our programme. A few months later, in March this year, I was informed that the Preston scheme had been dropped altogether and that the Kynnersley scheme, which remained in the programme, was now unscheduled.

Those decisions were not made on the basis of the needs of the people in Preston upon the Weald Moors. Of the 37 households that responded to a questionnaire, 30 said that they were in favour of connection to mains sewerage and that they would be prepared to pay their connection charges. It is not that there is no physical need for a sewerage system in Preston; some of the septic tanks that are used by many of the householders are now leaking and could constitute a health hazard. A primary school in the village has similar problems. If the managing director of Severn Trent is to be believed, the reason for the scheme being dropped from the programme, despite the pledges that were made, is that Severn Trent Water is a company that is going down the plughole. Last year, Ofwat required a 14.1 per cent. reduction in the charges that it imposes on consumers. In a letter to me, Brian Duckworth said that Ofwat's long overdue initiative had imposed very severe reductions in our income and consequently in our ability to fund capital projects. That comment is from a company that, since privatisation, has imposed on householders a 90 per cent. increase in charges, has paid its shareholders more than £2 billion in dividends and has handed massive bonuses to its directors. In the past few months, it has announced 1,100 redundancies to add to the 2,500 redundancies suffered since privatisation by the men and women who worked for Severn Trent Water and secured its profits. The company never has to suffer, nor must it ever foot the bill—that is always for the consumer and the employee.

The situation provides the clearest evidence that, when privatisation is accompanied by inadequate regulation, there is cash on tap for the directors and shareholders of the privatised utilities—here, Severn Trent Water—and the service goes down the drain for the consumer. The previous Government were responsible for the disaster; I hope that the present one will take steps to make amends. As I said, it is disgraceful that rural communities should be expected to live without mains services in the 21st century. That is why, when the rural group of Labour MPs, which I chair, published its "Manifesto for Rural Britain" last month, it called for an obligation to be placed on the utilities to develop scheduled programmes of connection, with costs approved by the regulator, which would be affordable to consumers. That would enable isolated communities in the countryside to join the 21st century.

The people in the Preston upon the Weald Moors and Kynnersley case ought not to have to await action from the Government or from the regulator. Severn Trent Water made a cast-iron pledge to them in writing to their local Member of Parliament. I expect the company to honour its obligation and to recognise that it has a social responsibility to fulfil.

198WH Severn Trent Water might think that it is up against a small community that does not have the resources or the resolve to challenge it. That view would be wrong—the residents of Preston upon the Weald Moors and Kynnersley are no less likely than the residents of Hadley to take this matter lying down. The villages may be small, but the residents will make a big fuss. I will do what I can to help them. I am grateful to the regional division of Ofwat and to its chairman, Clive Wilkinson, who has written to the company, making clear the regulator's position. He said: As a company of integrity that expressly sets out its desire to be customer orientated and provides high quality service we therefore expect schemes to be completed as promised during the current financial year. Unfortunately, Ofwat's powers are limited in the matter. That is why I and the people of Preston upon the Weald Moors and of so many other communities in similar positions look to the Government to ensure that the utilities recognise, or are made to recognise, their responsibilities and that they live up to them. I have no problem with private profit or with utilities making their margin. However, I want that private profit to work in the public interest.

As I have said before, these issues will resonate in communities throughout the country. I hope that the Minister will recognise not only the importance of the problems to which I have referred, but the urgency of providing solutions to them.

§ The Minister for Competition and Consumer Affairs (Dr. Kim Howells)

I congratulate my hon. Friend the Member for The Wrekin (Mr. Bradley) on securing the debate. My Department is aware of the keen interest that he has shown in representing his constituency on the matters raised and in attempting to resolve the matter of the Hadley pylon. Before I proceed, I should tell my hon. Friend that responsibility for the behaviour of Severn Trent Water with regard to sewerage lies with the Department of the Environment, Transport and the Regions. If he wishes me to pass on to the relevant Ministers the evidence that he has quoted today, I will gladly do so. However, I cannot speak for that Department on the subject of connection to mains sewerage, important though the matter is.

I shall deal with the Hadley pylon. As my hon. Friend informed us, the story started about 26 months ago. In March 1998, the Department was alerted to a change sought by Midlands Electricity to a steel pylon off Hadley Park road in Telford—a change that caused great concern to local residents. It emerged that the work that the company wished to undertake breached the statutory planning regime. Although the regime makes provision for minor works to be carried out without planning permission or further Electricity Act consent being needed, that applies only within certain specifications as set out in regulations. In the present case, the Department concluded that the company had breached the requirements, and it wrote to Midlands Electricity in August 1998 to express its view and to ask the company to take prompt action to remedy the situation.

It is only right that companies should have the opportunity to reflect on the legal aspects of the Department's view and to make further representations. 199WH Breaches of statutory regimes are a serious matter and can lead to criminal prosecution. For that reason, although the Department will rigorously pursue alleged breaches in order to protect the credibility and integrity of the regime, it is far better for matters to be resolved constructively than for them to degenerate, with companies taking an entrenched and antagonistic position. As my hon. Friend told us, such breaches are rare. The Department has seldom had to take the extreme measure of prosecuting an electricity company. Indeed, as my hon. Friend said, only once during the past 10 years has the Department had to take an electricity company to court over a breach of the statutory consent regime. As my Department deals with up to 1,000 cases a year, that is a rare occurrence.

The Hadley pylon is exceptional, although I take to heart the general lessons that my hon. Friend draws from it. I realise that it may be no comfort to the local residents, who are frustrated at the apparent lack of action, but the Department has quietly and persistently moved matters forward. In March 1999, the company submitted a section 37 application, which was the Department's preferred course of action. The Department actively ensured that adequate information was made available by the applicant company, so that, after consulting the company and interested local parties, the local planning authority could come to a view.

It is a requirement of the section 37 process that a local planning authority, which represents the local perspective and has a detailed knowledge of the locality, should be able to give the Secretary of State a considered view. That the local planning authority has now done, following further discussions with Midlands Electricity—or GPU Power Distribution, as it is now known. The authority confirmed its earlier objection. The local authority wrote as recently as April asking for a public inquiry to be held. The ball is now in the Department's court. Unless material developments occur to resolve the matter, a public inquiry will be held. That statutory regime is specific: if the local planning authority objects and if, after discussion with the applicant, it does not withdraw its objection, the Secretary of State must hold a public inquiry. I believe that the objection has not been withdrawn.

I can understand that my hon. Friend and his constituents might feel frustrated by the protracted procedure, but it is obviously preferable to try to reach an agreed solution, rather than to have one imposed without time to reflect on the consequences. Public inquiries can be lengthy and costly, and without any guaranteed outcome. In our experience, this is an exceptional situation, which must be considered in the context of the Department's responsibilities for up to 1,000 overhead line applications a year, the majority of which are determined without a public inquiry.

In the few remaining minutes, I want to deal with my hon. Friend's comments about the overhead line regime in general. I am aware that experience may lead to calls for the regulations—whereby electricity companies can carry out works without requiring specific planning permission—to be revoked. Those regulations were put in place for reasons that remain perfectly sound. Like any installation, an overhead line will, in order to 200WH continue reliably and safely in service, need repair, refurbishment, modification or reconstruction. The extent of that work will inevitably vary.

Although the regulations provide for operational changes such as the installation of a temporary line while the permanent line is refurbished and the replacement of any existing line subject to specified limitations, there is inherent power in any existing consent to effect necessary repairs and improvements, provided that the appearance of the line is not materially altered. The relaxations specified in the regulations do not apply in specially designated areas and, for some changes, the company would need to obtain clearance from the local planning authority, which could require full planning permission to be sought.

When the regulations were introduced in 1990, wide consultation took place with electricity companies and local planning authorities, the outcome of which was reflected in the regulations. The regulations have been in force for some 10 years now without any evidence of fundamental problems. As I have said before, this case is exceptional, and despite my hon. Friend's most eloquent plea, the Department doubts whether it is appropriate to launch a major rethink without evidence that the regulations are not operating effectively. That is not to diminish the impact of the situation that my hon. Friend described, which is serious, but we do not believe that it necessitates a major rethink.

I am well aware that the view is often expressed that overhead lines should be put underground. However, there is no getting away from the fact that underground lines are significantly more expensive—at high voltage, in the order of 10 to 20 times more expensive. Ignoring for the moment the fact that underground cables are not without operational problems—they can take longer to repair, are less reliable and might not be suitable for all locations—the issue remains of who will pay for them. The wires businesses of companies are regulated businesses, which operate under price controls. My hon. Friend mentioned the fact that Severn Trent Water is in great difficulty as a result of price caps imposed by the water regulator, Ian Byatt. Price caps have also been imposed on the regulated parts of electricity companies' businesses, and, in many cases, they are stringent.

Companies cannot underground at will, and they would inevitably try to pass on the cost to consumers, both domestic and commercial. Those costs could be substantial. For example, it was estimated in the early 1990s that it would cost £100 billion to underground the whole system, which demonstrates the sheer magnitude of the situation. Developments in technology are unlikely to provide any immediate help in offsetting the cost differential. All that suggests that a sensible case-by-case approach must be adopted.

We have discussed a very difficult case, of which I assure my hon. Friend the Department is well aware. Unless the local authority produces new evidence, a proper public inquiry will be held. I know that my hon. Friend has pressed for that. He has represented his constituency well in that respect and his constituents must be proud of him.