§ Mr. Gwilym JonesTo ask the Secretary of State for the Environment if he will make a statement about the capital structures proposed for the water plcs.
§ Mr. HowardThe Government have announced their intention to restructure the finances of the 10 water plcs, by writing off all their debt to the Exchequer and providing a substantial injection of cash. The restructuring will enable them, among other things, to fund major new capital investment in England and Wales.
In order to achieve this, I and my right hon. Friend the Secretary of State for Wales intend to take the following steps. We propose by orders under section 86(1) of the Water Act 1989 to extinguish all the liabilities to the Exhequer of the 10 water plcs. Debts amounting to £5 billion will be written off on 15 November, as follows:
Water plc £ million Anglian Water plc 859 Northumbrian Water Group plc 450 North West Water Group plc 1,055 Severn Trent plc 831 Southern Water plc 276 South West Water plc 129 Thames Water plc 121 Wessex Water plc 315 Yorkshire Water plc 559 Total English plcs 4,595 Welsh Water plc 433 Total 5,028 Two of the companies, Anglian Water plc and Thames Water plc will be required to pay to the Government the sums of £61 million and £11.9 million respectively. In order to achieve this I propose to make directions under section 83(2) of the Water Act to Anglian Water plc and to Thames Water plc to issue debentures to the Treasury, also on 15 November, for these amounts. These debentures are expected to mature on 29 December.
We also propose to enter into agreements on 20 November, under section 87(1) of the Water Act, to subscribe for shares in each of the other eight water plcs, paying a total of £1.57 billion as follows.
556W
Water Plc £ million Northumbrian Water Group Plc 122.6 North West Water Group Plc 329.7 Severn Trent Plc 361.0 Southern Water Plc 46.3 South West Water Plc 265.9 Wessex Water Plc 81.3 Yorkshire Water Plc 89.4 Total English Plcs 1,296.2 Welsh Water Plc 276.0 Total 1,572.2 These sums are expected to be paid on 29 December. The shares so subscribed will be included in the offers for sale of shares in the water plcs in November.
Subject to parliamentary approval of the necessary Supplementary Estimate, the cash limit for class X, vote 9 will be increased by £1,296,200,000 from £1,000 to £1,296,201,000. The increase will be charged to the reserve and will not therefore add to the planned total of public expenditure. A separate cash limit increase in respect of class XVII, vote 13 will be announced by my right hon. Friend, the Secretary of State for Wales.
The capital restructuring described above—the write-off of debt, issues of debentures and subscriptions of shares—is designed to give effect to the proposals announced by the Government on 2 August. The figures in those announcements related to estimates at that time of the cash in balance sheets at 31 March 1990 resulting from the restructuring of the 10 water plcs. These estimates have now been modified to reflect updated information. The price ceilings are as announced on 2 August.