I am most grateful for the opportunity of raising the question of a proposed regrouping of water undertakings in East Devon, a matter which is causing a number of water undertakers, and many thousands of ratepayers in my constituency, a great deal of anxiety.
The first approaches in this matter were made by my right hon. Friend over two years ago, and there has been a long series of negotiations with the water undertakers concerned and much correspondence since then. But at the end of those two years there is as much uncertainty and apprehension on the part of the ratepayers in this area as there was at the beginning. It appears that nothing has been decided, but certain facts have emerged which, in my view, are not calculated to allay the fears of the ratepayers, who expect a very steep rise in the cost of water.
My hon. Friend the Parliamentary Secretary will recall that we had a debate in the House on the matter of water supplies, especially in rural areas, in May, 1957. In the course of our discussions on that occasion I pleaded that if it were decided that the regrouping was necessary in this very rural part of Devon a big stick should not be used by the Ministry and threats of compulsion should not be introduced, at any rate during the early stages of negotiation. I must now say that the widespread disquiet which then existed has been amply justified by events.
Does not my hon. Friend think that some of the soundings, contacts and negotiations which have taken place have rather unnecessarily alienated some of the water undertakers who, in the early stages, although not liking the idea of regrouping, were in a reasonable frame of mind, and quite prepared to consider and even acquiesce in proposals provided that they were both practical and certain? The negotiations have been dogged by uncertainty which, unfortunately, has resulted in a great deal of suspicion which may or may not have been justified. There have been times when I felt that the Minister, in trying to carry out his duty under the Act, has had the misfortune to lose even those friends which he possessed at the start.
The independent undertakings owned by the Exmouth, Budleigh Salterton and Sidmouth Urban District Councils have had an axe hanging over them for about two years and I understand that determination to resist regrouping by all possible legal means is stronger today than ever. I need not remind my hon. Friend of the various petitions, demonstrations, and so on, which have been successfully organised to give expression to local feeling on this matter. But the major factor in all this has been the grave uncertainty about what is to happen.
Nothing has happened since June, 1958, when the Devon County Council decided to review the financial arrangements for the water supplies in the county. I do not know when the County Council will come to a final decision on the Report it has now received. I understand there is some hope of a definite decision about finances and the shape of the possible regrouping after a meeting which I believe has been arranged to take place next September. I should be grateful if my hon. Friend would throw some light on that matter, so as to relieve the minds of members of the public and the water undertakers.
My hon. Friend will know that the Exmouth Urban District Council, in particular, thinks that, should a regrouping be forced on it, the County Borough of Exeter should be included. The Minister's own Commission, which produced the Vale Report, recommended that Exeter should be included. To a layman, without knowledge of the technicalities of such matters, the inclusion of a large undertaking such as Exeter, or Plymouth, in any new arrangement would seem both practically and financially desirable. I understand, however, that the East Devon Water Board which would form the nucleus, or, at any rate, an important part of any regrouping, is not wholly favourable to the suggestion. Even though he may not be able to give a precise view tonight, perhaps my hon. Friend would indicate that this proposition will be seriously entertained by the Minister.
In the debate to which I have referred I asked my hon. Friend a number of questions, but he was unable at that time to reply to most of them. I wish again to draw his attention to the case of the Exmouth undertaking. Here is a thoroughly efficient undertaking which supplies abundant water much more cheaply than would be the case in any regrouping. Up to 1939, the total capital outlay by the Exmouth Council on its water undertaking was equal, at today's valuation, to £500,000. A further £250,000 has been spent since that date. The whole of that capital has been financed without any grant from outside bodies. The same applies to the annual working of that undertaking.
The view taken by the Exmouth Council is that the ratepayers would receive no compensation for £750,000 worth of assets, and they would, of course, have to pay very much higher water charges. From this point of view, the reorganisation merely involves subsidising, perhaps, more rural or backward neighbours—using the term "backward", of course, in the context of water supplies. The case for the implementation of the 1945 Water Act has never been put clearly by the Ministry as regards Exmouth. I have figures to show that, in the case of Budleigh Salterton and Sidmouth, there is no doubt that the charge on the ratepayers will be substantially increased if they are brought into any regrouping.
If the Minister's argument especially as regards Exmouth is that it is too small an undertaking to exist independently, will he tell the House what size an undertaking must have if it is to cease to be small? In Exmouth, there is an efficient undertaking, pumping over 1½ million gallons a day, and I understand that it could pump up to 2 million gallons a day. In what respect is it, in its present condition, either inefficient or not economic?
To sum up, I wish to draw my hon. Friend's attention to the widespread apprehension and uncertainty about this matter in the whole area. I should be grateful if he could say when the present suspension of negotiation is likely to end, and what are now the intentions as regards the type and shape of regrouping in the area. Will the Minister consider including Exeter so as to put the proposed new water board on a favourable financial footing? Lastly, I ask my hon. Friend to explain to those councils in my constituency which are running efficient and economic water undertakings why their assets have to be taken from them, and in what way it is in their interests and the interests of the ratepayers in those urban districts that they should be supplied by a new, larger but more expensive water undertaking.
My hon. Friend the Member for Honiton (Mr. Mathew) has asked several questions, which I shall try to answer in the ten minutes or so which remain to me.
The difficulties of regrouping water undertakings in areas which are partly rural and partly urban are formidable in all parts of the country, and I readily acknowledge that, in East Devon, these difficulties have developed in a rather acute form during the last two or three years. Almost invariably of course, there is a conflict between the urban and the rural authorities about the sharing of expenditure on water supply schemes and, also, the heavy financial cost which is involved in the provision of supplies to meet modern needs. That is a problem, however the cost happens to be shared between different authorities. In the particular case of East Devon, there is, as my hon. Friend knows, the reluctance, also, of at least one important authority to participate in regrouping unless the City of Exeter joins in.
I say at once that it is the view of my right hon. Friend—it has been his view for quite a long time—that we ought to work for a single unit in East Devon. My right hon. Friend has no intention whatever of going back on that view. He has, therefore, sought to persuade the various water undertakers to settle their differences, which undoubtedly exist, and to agree, in principle at any rate, to the formation of a new water board for the East Devon area, in the hope that, once that has been brought about, the authorities themselves will work out the financial and other details and proceed to write them into an agreed draft order. It has always been our hope that this regrouping would take place as a single operation.
Towards the middle of last year, it seemed that a fairly large measure of agreement—I do not put it any higher than that—had been reached. I think that there was also hope that the terms of the draft Order might be settled quite soon. As my hon. Friend knows, however, regrouping, not only in East Devon but throughout the whole of the County of Devon, is marking time due to the decision of the county council to examine the financial arrangements for water supply in the county as a whole.
From what my right hon. Friend and I have seen, the attitude of the Devon County Council towards problems involving water in Devon has always been a liberal one. Although it is not my business tonight to go into the highly complicated business of the financial relationships between the county and the various water undertakings—a temptation which is easy to resist because it is so complicated—I think that my hon. Friend the Member for Honiton knows that no regrouping Order which provides for the representation of the county can go ahead unless the county agrees to the financial arrangements.
So far, it is true that the County Council has come to no decision. Naturally, we regret this delay, but we recognise that these questions of the distribution of the financial burden as between the County Council, the water undertakers and the consumers must be examined before a formula can be worked out which would be regarded as fair by all the parties concerned. Once the City Council has finished its study and made known its views, we certainly hope that regrouping will go ahead. Meanwhile, my right hon. Friend has certainly not modified his view that there should be one single unit of water administration for East Devon.
My hon. Friend asked about what lies in the months ahead. My information is that the County Council was to have considered the situation in the middle of July and to decide its future course of action on finance and regrouping generally. I believe, however, that the County Council has postponed its decision until a special meeting which has been called for some time in September, by which time it will have also certain supplementary financial information. I should have thought, therefore, that there was a sporting chance that we shall be making at least some progress by September.
With regard to the vexed question-as, indeed, it is—of the inclusion or otherwise of Exeter, my right hon. Friend has made it known that he does not look upon Exeter's inclusion as essential for the effective organisation of water supplies in East Devon, although I concede to my hon. Friend that the inclusion of Exeter was recommended in the 1954 water survey. It is true that if Exeter were to come in, it would be financially advantageous to the other authorities and I have no doubt that the County Council is not excluding this consideration from the review which is at present under way.
We recognise that some of the undertakers in East Devon look upon themselves as self-sufficient and they are not convinced that they should link up with neighbouring undertakers, particularly where amalgamation would, as they think—possibly, rightly—involve them and their ratepayers in additional financial burdens. I understand that view and I have some sympathy with it, without going to the length of accepting it, but I think that it ignores the long-term benefits which are likely to accrue over the whole of the area, and not merely part of the area, if the various supplies are integrated and managed as one with expert technical staff.
Having said that, however, it would be disingenuous on my part if I were to pretend that the grouping of rural and urban areas and the consequent spread of cost means no cost increase at all in the urban areas. Very often it does. This can be and often is cushioned during the first few years by differential financial provisions. That is not something peculiar to East Devon. It arises in many parts of the country. Indeed, it is inherent in many of the amalgamations. Taking the country as a whole, it has been fairly willingly accepted.
I know that my hon. Friend is interested, perfectly rightly so, in the position of Exmouth. I would say that never at any time have either my right hon. Friend or myself or, so far as I know, any of our advisers criticised the record of the Ex-mouth undertaking. It is a good undertaking, although it is a small undertaking. But I do say that we have to look ahead, and have to consider what is desirable in the interests of public water supply for the wider area over a long period of time.
My hon. Friend also referred to the possibility—indeed, to rather more than the possibility—of the use of compulsion in this area. To be quite fair, I do not think that he would go so far as to say that compulsion has been employed. It certainly has not in the technical sense of the term, and we hope that, once the City Council has come to its conclusions, discussion for voluntary regrouping will be resumed by the various authorities right away. That is what we hope will happen. If we can avoid it, we do not want to interfere or to give the impression of using the big stick.
My right hon. Friend who, as my hon. Friend knows, has recently been in Devon, is quite convinced that, given good will and a little give and take, it should be possible to work out a scheme which will be acceptable all round, and will succeed in providing all parts of East Devon with adequate water supplies, both now and in the future.