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The hon. Gentleman makes an interesting point. The answer is a matter of judgment. The market has made a judgment about the regulation of the water industry, especially Severn Trent. The market price of Severn Trent is below its asset value. That suggests that the regulatory decision is wrong. The hon. Gentleman should consider that carefully when he makes a judgment about whether the regulator is right. I believe that the regulator is wrong, and that he has made Severn Trent vulnerable to foreign acquisition and takeover.
That is an interesting dilemma for the company. It is not eligible for domestic takeover, but a French company could snaffle it. I do not object to foreign inward investment in the United Kingdom, but the regulator's decision has made that prospect more likely. That is surprising, and I am surprised that the hon. Gentleman wants to endorse that, given his perspective on such matters.
The regulator is quoted in The Daily Telegraph of 27 January. He was speaking at a conference entitled "Life after the 1999 periodic review". The article states:
Mr. Byatt said the Bill 'shows how difficult the government can find it to translate good intentions into sensible legislation' … Mr. Byatt said the Bill introduced a 'double jeopardy' for fines, empowering both the secretary of state for trade and industry and the water regulator to mete out penalties for the same offence … Mr. Byatt also criticised the Bill for failing to allow for an appeals procedure for penalised companies to go to the High Court or the Competition Commission.
The regulator is right to draw attention to the absence of a right to appeal.
Water UK, the trade association for the water companies, states:
Clauses 118 and 119 give powers to regulators to impose monetary penalties on companies for past and ongoing breaches of licence conditions",
among other matters. It continues:
There is deep concern in the industry over the power in the Bill to set unlimited fines, as well as over the proposal that the regulator can define the penalty regime without formal agreement with Government or Parliament.
On both counts, the House should be deeply worried about clauses 118 and 119. The right to set unlimited fines is almost unprecedented, and the House should not grant such a power to any regulator, however talented. I hope that the Government will reconsider that urgently in Committee.