Discretionary Share Option Schemes in the Privatised Utilities

Part of New clause 1 – in the House of Commons at 5:30 pm on 3rd April 1995.

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Photo of Mr Tim Smith Mr Tim Smith , Beaconsfield 5:30 pm, 3rd April 1995

I know that it is difficult to introduce competition into the water industry, because I made an inquiry after we passed the Competition and Service (Utilities) Act 1992, which introduces an element of competition into the water industry. I am a customer of the Three Valleys water company, and Thames Water is half a mile down the road, so I wrote to Thames Water to see whether I could change suppliers. It told me that, if I paid £10,000 to have the main extended to my house, I would be welcome to buy its water.

The hon. Gentleman is right to say that competition in the supply of water is more difficult to organise, but it can be done on the same basis as it is being done for gas. The pipes could be kept in public ownership, and different suppliers could supply the water. It is possible, but it is much more difficult.

As far as possible, we need more competition to put the utilities on the same basis as other businesses. These are the right pressures to place on those companies, rather than trying to tackle the problem through the tax system. It is tempting to try to use the tax system to achieve different, social objectives but I do not believe that we should do so in this instance.