With permission, I would like to make a statement about the restructuring of the water and sewerage industry in Scotland.
The forthcoming reform of local government in Scotland makes it necessary to review the way in which water and sewerage services are to be provided. A consultation paper on other aspects of local government reform has already been published, but I considered that water and sewerage should be addressed separately.
I told the House on 8 July that the Government had not yet decided on the future structure of those services, and that I intended first to commission a consultants' study into the technical aspects of alternative forms of organisation to assist me in drawing up a range of options, including ways in which the private sector might contribute enterprise and investment. I said that thereafter I intended to consult on the options. I am issuing today a consultation paper that fulfils that undertaking. Copies are available in the Vote Office.
The paper sets out the background to the water and sewerage services in Scotland and lists a number of different structures for the industry on which I am inviting comment.
There are eight options set out in the paper, ranging from the re-establishment of a structure similar to the present arrangements to full privatisation. Other options include the grouping of publicly owned authorities and various types of franchise operation. Given the very high level of investment that the services will require in the next 10 to 15 years and the need to manage resources in line with best commercial practice, all those options merit close consideration. The paper sets out in an even-handed way and raises a number of issues on which answers are sought. The Government will take a final decision in the light of the response to the consultation paper.
Water and sewerage are important, indeed vital, services. They take up an appreciable amount of our resources and will require substantial investment in the years ahead to ensure that the high standards that we have set are fully maintained. The challenge for everyone who responds to the consultation paper is to identify the best means of securing that investment. The public will have to continue to pay for those services whether they are in the public sector or the private sector; and it is clear that in either case costs are likely to continue to rise. It is all the more important, therefore, that a structure is put in place that will deliver high standards with maximum value for money and at the lowest attainable cost to the consumer, and which will ensure that the wider environmental interests are also protected. Identifying that structure is what this consultation paper seeks to do.
It is not—[Interruption.] Order. As a matter of fact, it is not out of order for a statement of this nature to be made when the documents are not available. The Secretary of State has given the House an undertaking that the document is available in the Vote Office, but I understand that hon. Members have been to the Vote Office and found that it is not available. It is, of course, up to the Government to make documents available in the Vote Office.
Further to that point of order, Madam Speaker. I have asked my parliamentary private secretary to check and recheck, and on both occasions he has assured me that the Vote Office has the documents and is willing to release them the moment I sit down. I understand that that is the usual procedure.
Does the Secretary of State agree that his statement—and the document, when hon. Members can read it—flies in the face of the majority of Scots, who are utterly opposed to privatisation in any form? Where is the evidence that the services for water and sewerage are seriously failing, that local authorities are not delivering, or that the public are unhappy with existing structures? Why were not these options put to the Scottish people at the general election, as recently as April? Why was there nothing about this in the Scottish Tory manifesto?
If the options are for real and the right hon. Gentleman's consultation is meaningful, will he give us an unqualified assurance here and now that, if a majority of those who respond are in favour of local government retaining control, he will accept their view?
Is not this charade really about the Government finding ways of taking water and sewerage out of the public expenditure arena and dodging their responsibilities on matters as important as health and the environment, affecting every household in Scotland?
Why is the Secretary of State so concerned about controlling the level of investment when investment in the public sector and the private sector is increasingly paid for by the consumer and decreasingly paid for by the Treasury? Does the right hon. Gentleman agree that, in England and Wales, we have seen the future and it does not work?
The prospect of introducing to Scotland the highest ever bills as a reward to shareholders, record disconnections, even greater poverty among the nation's families and children, and lower standards of hygiene and environmental awareness is wholly repugnant to the Scottish people.
Finally, is it not time the Secretary of State met interested parties in Scotland genuinely to discuss with them investment in our water and sewerage industries instead of wasting the time of the House on a document that goes nowhere towards meeting Scotland's needs? Plainly, the Government have not yet put the practical needs of investment above the political concerns of ownership. That is why our campaign against water privatisation will go on.
The hon. Gentleman asked about evidence of the services failing. It is not a matter of evidence of the services failing: on the contrary, because of this Government's investment in the water and sewerage industries in Scotland, standards are rising. It is our purpose and intention that they shall continue to rise. The important issue is where the resources are to come from to fund that investment in future.
The hon. Gentleman asks why the options were not put to the public, and suggests that the matter should have been included in our manifesto. The matter arises from the reform of local government which was mentioned in our manifesto. In the light of the proposal to reform local government, it is inescapable and unavoidable that a new structure for the water and sewerage industries has to be achieved because the organisations responsible for them will no longer exist in their present form.
However, I refer the hon. Gentleman to the first consultation paper on the reform of the structure of local government published in June 1991, paragraph 23 of which says:
In addition, the provision of water and sewerage services might best be handled by organisations separate from the new unitary authorities.
That is clearly marked out in the consultation paper, which he has had the opportunity to study.
The hon. Gentleman asks about the Government's response to the majority who respond. Her Majesty's Opposition should treat such issues with more seriousness than to pretend that they can be decided on the basis of some kind of trivial opinion poll. These are important issues. We have a practical problem, to which we must find a practical solution.
I invite people to consider the issues, to weigh up the advantages and disadvantages of the range of eight options, six of them in the public sector, which I have set out in the consultation paper, and to let me have their reasoned responses so that we can secure the best future for the water and sewerage industries in Scotland.
The hon. Gentleman asks about the publication of the Quayle Munro report. That report was commissioned on a confidential basis because of the commercial sensitivity of the issues involved, but, in view of the presentation of the options in the consultation paper, I can assure the hon. Gentleman that the Quayle Munro report's findings were concerned with assessing the feasibility of a number of options and made a number of assumptions about their potential viability.
With regard to taking expenditure on the water and sewerage industries out of the public sector arena and, as the hon. Gentleman says, dodging the issues of health, he fails to understand the central point. It is because we need about £5 billion of investment in the industry during the next 10 to 15 years that we have to find the best solution so that that sum is not denied to schools, houses, hospitals, roads and the environment. That is the issue that Opposition Members must address. I hope that they will take a more serious and responsible attitude during the consultation period than is suggested by the hon. Gentleman's questions.
My right hon. Friend is to be congratulated on presenting a discussion paper which is so wide-ranging and which gives everyone the opportunity to make their views known. Can he confirm that, because of the substantial sums required to bring the industry into line with European requirements, he and the Government recognise that, with a public sector borrowing requirement approaching £40,000 million, it is nonsense for anyone on the Opposition Benches or elsewhere to suggest that we should not be looking at other ways of funding? At the end of the day, only the consumer can pay. There is no one else who can pay, because the consumer is also the taxpayer, and taxpayers are the people who pay. We need to find the money in a manner that will not overheat the public sector borrowing requirement when it is required for health and other resources.
My hon. Friend is right. He addresses the central issue, which is where the money for future investment is to come from. The Opposition think that we can rely safely on the public sector to find that investment, yet when they were in power, between 1976 and 1979, they cut capital investment in the water industry in Scotland by one third and in the sewerage industry by a half. That is the kind of disadvantage that the industry is placed at when it relies on public sector funding. We must find a way in which the funds can be made secure and available and without prejudice to other services, and that is what I invite the Opposition to address.
Will the Secretary of State confirm that he and his officials have placed restrictions on local authorities over recent years which have given inadequate consents for investment in water and sewerage services? Can he give any good economic reason why it should be easier to raise equity for private finance than to raise loan funding for Scottish water authorities which remain in the public sector with public accountability?
Finally, will the Secretary of State confirm that, if people cannot pay their water bills, the sanction of disconnection will not be one of the options with which he has presented the House and the public today?
The hon. Gentleman suggested that the industry had somehow been starved of capital investment. He may wish to know that capital investment has just about doubled in Scotland over the past four or five years. He also asked about the continuing reliability of public expenditure. Let me point out to him that, in the 20 years between 1969 and 1989—when expenditure was entirely in the public sector—investment throughout the United Kingdom was under £6 billion. Between 1989 and 1999, investment in likely to be closer to £30 billion—as a result of the privatisation of the water and sewerage industry in England, and taking account of Scottish needs as well. That is five times as much investment in half the time, and it shows that investment is available if we are prepared to view the circumstances imaginatively. The consultation paper presents a range of options that will enable that to be done.
Disconnections are not legal in Scotland; they have been legal in England before and after privatisation. We shall address Scottish circumstances in accordance with Scottish needs.
I welcome the report, which looks in detail at the intricacies of the water system. Opposition Members may not experience problems in their constituencies, but believe me, there are problems with sewage in the Clyde, and it is about time that they were addressed.
The report offers a wide range of options. It is a consultation document—[Interruption.]
Order. I am well aware that it is a consultation document; what I need from the hon. Gentleman is a question—very briefly—that the Secretary of State can answer.
I am happy to give my hon. Friend that assurance. He is absolutely right. He is also right to recognise the heavy investment needs that lie ahead. Under the EC urban waste water treatment directive, we are required to reduce and abolish sludge dumping at sea by 1998; currently, we dump 75 per cent. of the total. That requirement is bound to create enormous demands for new investment in the sewerage industry.
Will the Secretary of State pay heed to the way in which English water authorities have suffered? Ofwat has received 10,000 complaints about water. In the first year—1991–92–21,000 people had their water cut off, and there was a 20 per cent. increase overall in the 10 English water authorities.
Let me deliver a message to the Secretary of State—a message not from the Labour heartlands, but from the Tory heartland represented by the hon. Member for Eastwood (Mr. Stewart). In Clarkston, Newton Warns, Busby and Gifnock, 15,000 people signed a petition saying that they wanted nothing to do with the privatisation of the water industry. Is that not a clear message from the Secretary of State's own party?
Let me draw the hon. Gentleman's attention to the Muirdykes water treatment works, which serves the Paisley area. New capital works amounting to £15 million were completed there in the last financial year. Where does the hon. Gentleman think that such investment will come from in the future if public expenditure constraints are imposed on the industry? I hope that he will look at the options presented in the consultation paper, and will let me have an answer to my question.
Does my right hon. Friend agree that the near-hysterical rantings that we are hearing from the Opposition in no way enhance the debate and the consultation exercise on which we are now embarking? Does he, like me, hope—probably in vain—that, over the next few weeks, the argument will become more rational, more constructive and much more responsible?
I fear that my hon. Friend is right, not least because the Opposition made up their minds before we had even published the consultation paper. I hope that they will read it, and will observe that we have laid out a range of options in an even-handed way. We invite responses, and we also invite those who read the paper to answer 12 questions, giving reasons for their answers, so that we can consider this important issue sensibly. Water and sewerage are vital services in Scotland, and we have a responsibility to our constituents to achieve the best.
Why is the Secretary of State covering up, in a kind of Scottish Watergate, the Quayle Munro report, on which the taxpayer has spent £50,000? Is it because, if we were to see that report from Quayles, which has extremely dubious connections with the water privatisation industry, we would see that it is about how, not whether, Scotland's water, given by God in abundance to the Scottish people, should be sold off to the speculators and second-hand car salesmen who will queue to buy it?
Did not the hon. Member for Tayside, North (Mr. Walker) put his finger on the nub of the question: that, because his Government have a £40,000 million deficit in the public sector borrowing requirement, they need to sell off the last of the family silver, irrespective of the effect on the health and well-being of the Scottish people, to whom the Conservative party lied, by omission, in the election when they failed to say what they intended to do with this precious natural resource?
On 12 December—
Is the Secretary of State aware that, on 12 December, tens of thousands of Scottish people will make their objections known in the demonstration at the Euro-summit in Edinburgh, and that that will be only the beginning of the labour movement's campaign to stop this theft in its tracks?
I hope that the hon. Gentleman will read the consultation paper, because he will then see that it is an even-handed paper that lays out the options. I am surprised that he should complain about our publishing a consultation paper and making today's announcement, because on 16 July—this was reported in the Daily Record the next day under the heading "House of Chaos"—the hon. Gentleman behaved in an extraordinary and unparliamentary way in the Chamber, complaining because we had not made a statement on the future of the water industry. He really should make up his mind.
I join my hon. Friends in complimenting the Secretary of State on the consultation paper. Will he emphasise to Labour Members that, if they wish best to serve Scotland's needs, they should embark on a proper debate on how best to fund water in the next 10 or 15 years and how best to manage it? It is likely that Labour will carry on in its normal way and reach a judgment before it considers the matter.
My hon. Friend is absolutely right. The cost of water has risen by about 60 per cent. in the past four years, and sewerage by slightly less. It will continue to rise in the future, regardless of the structure that we set up, because we need a dramatic increase in investment in the next 10 or 15 years. It is all the more important, therefore, that we secure the structure that minimises the cost to the public and the consumer, who pays on average more than £100 per household, and maximises the quality of water.
The Secretary of State refused to accept the result of the greatest consultation—the general election in Scotland, where his party polled only 25 per cent. of the votes cast—and took charge of Scotland's business. Why should we believe that he will accept the results of the consultation on water? What will be the extent of that consultation? How will he reach the vast majority of people in Scotland, and why should we believe that he will accept the findings of a genuine consultation?
Of course I will accept the findings of a general consultation, but I shall assess the strengths and merits of the arguments that are advanced. [Hon. Members: "Ah."] Does the Labour party think that we should ignore the argument and have a simple poll? On an issue of this importance to their constituents, who need, deserve and, under this Government, will have high-quality water at the minimum cost, Labour Members really should behave more responsibly and in a more serious-minded way.
Can the Secretary of State explain to the House why, in the course of a £20,000 promotional video on the restructuring of local government, water and sewerage are not mentioned as local government services, despite all the other services being listed? Is that not an indication that this consultation exercise is the same sham, bogus exercise as the Secretary of State carried out on hospital opt-outs? Can he tell the House why, if it is possible to write off £6,000 million of capital debt for English private water, it is not possible to write off hundreds of millions of pounds of capital debt for Scottish public water to allow the required investment to be made? Finally, if he regards Scottish public opinion as "trivial", can he estimate what percentage of the Scottish population support any Tory attempt to steal Scotland's water?
On the question of writing off debt, the hon. Gentleman knows that that is an issue that would arise only if it were decided to privatize—[HON. MEMBERS: "Why?"] Because the debt would be converted into equity on the restructuring of the companies for privatisation. I have not reached that stage of consideration, because I am laying out a consultation paper with a range of options on it. The hon. Gentleman suggests that the consultation is some kind of charade. That is precisely what it would be reduced to if I were to listen to Labour party advice. I want people to address the issue seriously and to give their considered responses so that we can make sure that we have the best kind of delivery of water and sewerage services in the future.
Instead of offering a primary 1 lesson on "how we get rain", would not the Secretary of State advance the argument, consultation and discussion better if he were to publish the report of the consultation which he commissioned? What has he got to hide? Why can we not have those facts in order that there may be a real discussion, so that we can see what the facts are? It would advance the case for looking at the issue in a properly objective way if we could do that. There can be nothing commercially sensitive about the finances of what is currently a publicly owned water industry.
There are commercially sensitive matters in the report. It was commissioned on the basis of commercial confidentiality, and I am not prepared to breach that undertaking.
I brook correction by the Secretary of State, but as far as I can see, on brief acquaintance with the document, the word "disconnections" is not used anywhere in it. Will he confirm that there is no legal right to disconnect in Scotland at the present time? Will he confirm, further, that no private ownership of water could operate without the sanction of disconnection, as in England?
Will the right hon. Gentleman therefore take into account the fact that it is totally morally repugnant to everyone in Scotland, with very few exceptions, that, in the last decade of the 20th century, in a society that has previously managed very well without the sanction of disconnecting domestic water supplies, such an option should even be considered? Will he thus accept that, if the logic is that it is not to be considered, the whole scheme falls? Will he say now that beyond doubt there will be no domestic water disconnections in Scotland, because, if he will not say it, millions of people in Scotland will say it for him?
I understand that the number of disconnections, which rose in the early days of the privatised arrangements in England, has now fallen by 40 per cent., and that three quarters of disconnections are reconnected within two days. Perhaps the hon. Gentleman was not present in the Chamber when I answered this question earlier. There is no legal consent available to disconnect water in Scotland. I have no plans to make any change in that. I shall be considering the range of options in the light of the submissions in the consultation paper, but at present that does not arise.
Will the Secretary of State explain to the people on the lowest incomes, who are struggling to pay their bills without any rebate help whatsoever, how it will benefit them, how it will help them to pay their bills, if they have to pay not only for the cost of the water and the investment but also for the profits of rapacious speculators?
I can understand the hon. Gentleman's concern about the cost of water and sewerage, because Western Isles has an average cost of £167 per household, which is double that in the lowest authority in Scotland and well above the Scottish average. It is precisely because the continuing needs for new investment in the industry in Scotland mean that the figures will continue to rise that we must ensure that the rise is minimised, and that we have the best and most efficient delivery mechanism for the service in the future. I hope that the hon. Gentleman will submit a constructive and positive input into the consultation process.
What is the considered, professional advice of Professor Kendell and the other medical advisers in response to the horrendous, but true, stories from England of lavatory pans being left to fill up, understandably for financial reasons, in water-metered households?
I have no information on those stories. lithe hon. Gentleman thinks that his point is relevant to the future structure of the water and sewerage industry in Scotland, he will, I am sure, make a submission in response to the consultation paper.
The Secretary of State has offered eight options in his paper. Does he consider all eight options to be valid? Does he accept that those whom he consults should make the decision rather than a Government who are motivated by prejudice in favour of privatisation? Will he give an undertaking that, should the people of Scotland, through their local authorities, community councils and public bodies, clearly show that they favour the local authority option advanced by my hon. Friend the Member for Monklands, West (Mr. Clarke), that option will be the one that the Government select?
I assure the hon. Gentleman that all options in the consultation paper are valid. It was to establish their validity that we commissioned work from Quayle Munro. I can give an undertaking to the hon. Gentleman that all eight are open to consideration. If the hon. Member for Monklands, West puts forward a reasoned and argued case for one option, it will be considered. I hope that the hon. Gentleman will put forward such a case as well.
Does the Secretary of State accept that, in the Borders region, the Tweed basin is a natural water area with one of the cleanest discharges into the North sea in the United Kingdom? Will he also accept that, if anything goes wrong with water or with sewerage, the people have recourse to the officials or councillors who are responsible to them? That would not be the case with the board of directors of a Scottish company, of an English company or, worse still, of a French company, to which my constituents' compatriots south of the Tweed have to go at greater expense. Will the Secretary of State leave well alone?
The right hon. Gentleman has advanced no suggestion about what should happen to the structure of the water industry and of the sewerage industry when local government is reformed. One option that we have laid out or something close to one of them will have to be adopted. I hope that the right hon. Gentleman will make a submission. We cannot "leave well alone" when the authority under which the water industry operates at present will no longer exist.
I hope and believe that water in the Borders region is in good condition. It may be that the Innerleithen water supply improvements costing £1·4 million being undertaken at the moment will continue with that work. We need constantly to upgrade the quality of the drainage and water delivery systems throughout the country to ensure that we comply not only with EC directives, but with the high standards we set ourselves.
Is the Secretary of State prepared for the derision that he is likely to get when his document is passed around in Scotland? It does not compare favourably with material put forward by the Convention of Scottish Local Authorities, which has a far more factual base in the running of water authorities than even the right hon. Gentleman's private consultants have.
Will the Secretary of State add to the information that he is giving about the cost of water to people in the privatised regions of England? The cost for a one-apartment flat in which I live is £109, which is twice what I pay for a four-apartment house in Central region in Scotland.
If the Secretary of State allows the people of Scotland to choose and their choice is for the industry to be financed through local authority investment—and they are willing to pay for it through local taxation—will he accept their wishes?
I am surprised that the hon. Gentleman has managed to read the consultation paper so quickly as to enable him to pass such an authoritative verdict on it. I hope that the Convention of Scottish Local Authorities will address the questions laid out in the consultation paper and will let me have its answers. Its views will also be important so that we can secure the best system for the future.
The Secretary of State has repeatedly referred to the fact that it is against the law in Scotland to disconnect domestic consumers from the water supply, except for technical reasons. Will he now guarantee that, whatever happens, and even if full privatisation goes ahead, that law will remain unchanged and that Scotland will never have to experience the barbarism of people being cut off from the water supply because they cannot afford to pay for it?
I have already said that I have no plans for disconnection but, clearly, the future structure of the water industry must be decided and, in due course, when one of the eight options—or one of the variants of those options—laid down in the consultation paper has been decided upon, the other factors relevant to that option will also have to be decided. That is a matter for later.
Will the Secretary of State give us a categorical assurance that, if the vast majority of people say no, he will respect that response—something that he did not do in connection with the consultation on the South Ayrshire general hospital trust and no doubt will not do in connection with the North Ayrshire trust?
As with the hospital trust consultation period, I will assess the arguments advanced and reach a decision with my colleagues on the basis of those arguments. It will be a bad day for parliamentary democracy if we ever abandon that process.
Is the Secretary of State aware that what appeared to be a well-rehearsed leak on Scottish radio this morning suggested that his own preferred option was water franchising? If that is true, it is because he is now so frightened of the political consequences of a direct sell-off of water that he is going for a botched-up compromise instead. Would it not be better to drop both local government reform and any proposals for water privatisation and let us keep the status quo?
I am happy to assure the hon. Gentleman that that allegation is untrue. I have expressed no preference and am awaiting the outcome of the consultation process.
Does the Secretary of State seriously expect private investors to invest in water supply services if they are to have no sanctions against those who cannot or will not for any reason pay for such supplies? As the answer to that question must be obvious, does the Secretary of State accept that the only way in which the privatisation of water services in Scotland can possibly work is if powers to disconnect domestic premises are introduced?
That is not an issue that I have yet addressed. The time at which to address it will be the time at which we decide on a particular option that might make it necessary. I would point out to the hon. Gentleman that, in England, the number of disconnections has fallen sharply in the past few months.
Does the Secretary of State accept that his response has been entirely unconvincing? That will be the reaction in Scotland as well as in the House.
In particular, does the Secretary of State accept that the House is not persuaded by his assertion that, because he decided that the Quayle Munro report was confidential, that necessarily follows? We shall pursue that point.
Does the Secretary of State accept that people will be gravely concerned that, despite four or five opportunities, he gave no guarantee that there would not be disconnections in Scotland, and that that is entirely unacceptable? Does the right hon. Gentleman further accept that, in response to my hon. Friend the Member for Cumbernauld and Kilsyth (Mr. Hogg), he refused to give an assurance that he would accept the views of the majority of the people whom he says he will consult? What sort of consultation will it be, given that the right hon. Gentleman has clearly decided what to do in advance of the consultation period?
In response to my hon. Friend the Member for Glasgow, Provan (Mr. Wray), the right hon. Gentleman gave examples of investment that is taking place under the existing local government structure. Why does not the right hon. Gentleman meet local authority representatives to discuss investment and come up with the answers? Why does not he forget the whole charade of privatisation, which remains repugnant to the majority of Scottish people?
I find it depressing that the hon. Gentleman still has not grasped the fact that we are publishing a consultation paper which will lay out a series of eight options, one of which—or a variant thereof—will need to be adopted for the future of the water and sewerage industry in Scotland.
This is a serious matter, and I had hoped that the Opposition would rise to the level of events. Instead, they have paraded naked blind prejudice and unthinking atavistic resistance to any kind of progress that might improve the quality and delivery of services to their constituents. They have given no answers at all. I hope that they will reflect and soon produce an answer to the question of how the £5 billion that we shall need in Scotland over the next ten or 15 years can be found without jeopardising investment in schools, roads, hospitals, housing and a whole range of other developments, which both they and I regard as important.
The Opposition have until the end of January to reflect and consider how to fulfil and discharge their responsibility in a sensible way for the benefit of the people of Scotland. I hope that they will be more serious and responsible than they have been so far.