Transferred Ministerial functions

Wales Bill – in the House of Commons at 3:30 pm on 24th January 2017.

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Photo of Eleanor Laing Eleanor Laing Deputy Speaker (First Deputy Chairman of Ways and Means), First Deputy Chairman of Ways and Means

With this it will be convenient to discuss Lords amendments 28 to 32, 46 and 137.

Photo of Guto Bebb Guto Bebb Government Whip, The Parliamentary Under-Secretary of State for Wales

The amendments deliver a comprehensive and lasting devolution settlement for Wales on water and sewerage. As right hon. and hon. Members know, water is of great symbolic importance as well as practical significance in Wales. Throughout the Bill’s passage, few issues have evoked more passion and debate. There is no question but that there cannot be a clear and lasting devolution settlement for Wales without resolving the issue of water devolution. The Government have therefore been determined to grasp the nettle and resolve the matter once and for all.

I was therefore delighted last autumn, when we were able to announce that we would replace the Secretary of State’s powers to intervene on water with a statutory agreement between the UK Government and the Welsh Government—in other words, a water protocol between the two Governments. Replacing the intervention powers with a formal protocol represents a clear break with the past, and is another landmark in the history of Welsh devolution.

The existing intervention powers were put in place in the Government of Wales Act 2006, when the Labour party was in government. Since then, they have taken on almost totemic status, despite having never been used. Their removal is another important change—alongside many others in the Bill—that marks the coming of age of devolved government in Wales. Amendments 30 to 32 give effect to this historic change.

Amendment 30 sets out the statutory requirements for the protocol that will be agreed between the two Governments, and we are absolutely clear that the protocol will have teeth. Both Governments will be subject to a duty to act in accordance with the new agreement, and once it is in place, both will need to agree any changes to it. The agreement will also need to include a process that both Governments sign up to for resolving any disagreements. The new arrangements will need to be negotiated, and that may take some time, but the Bill, as amended in the House of Lords, ensures that the Secretary of State’s water intervention powers can be repealed once an agreement is formally entered into.

Amendment 31 is also a crucial part of this package, as it imposes a duty on UK and Welsh Ministers to have regard to consumers on either side of the border when exercising functions relating to water resources, water supply or water quality.

The removal of these intervention powers ensured we were able to conclude our consideration of the wider devolution issues relating to water and sewerage, including the questions of whether powers over water and sewerage should be aligned with the England and Wales border and whether the sewerage intervention powers that were in clause 46 of the Bill when it left this House could be removed.

Amendment 30 removed the sewerage intervention powers from the Bill, and a great deal of work has gone into the question of whether the devolution boundary should be aligned with the geographical boundary of Wales.

Photo of Nick Thomas-Symonds Nick Thomas-Symonds Shadow Solicitor General

I welcome the giving up of the intervention power, but does the Minister remain concerned, as I do, that there will be no direct line of accountability between Ofwat and Welsh Ministers?

Photo of Guto Bebb Guto Bebb Government Whip, The Parliamentary Under-Secretary of State for Wales

I dispute the view that there will be no direct line of accountability between Welsh Ministers and Ofwat. There will be an opportunity to consult and work through the Secretary of State. The protocol that is being put in place will also address that issue in more detail in due course. However, hon. Members should welcome the fact that we are moving in that direction on the mature basis of a protocol between the two Governments.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

Will the Minister clarify the position on the Competition and Markets Authority? Its regulatory role is very relevant to water. Will it be accountable to the Welsh Government and the Assembly?

Photo of Guto Bebb Guto Bebb Government Whip, The Parliamentary Under-Secretary of State for Wales

It is important to highlight that the Bill is not devolving competition power; it is being reserved. Therefore, the Welsh Government—and this place, obviously—will have the ability to ensure that the views of electors in Wales on this important issue are taken into account.

Of course, the Silk report recognised that water and sewerage devolution is complex and that further work was needed to consider the practical implications of implementing the commission’s recommendations. Immediately after the St David’s day agreement, the Government set up the joint Governments’ programme board with the Welsh Government to look at these issues and to report on the likely effects implementing the recommendations would have on the efficient delivery of water and sewerage services, on consumers and on the water undertakers themselves.

After considering the conclusions of that work, the Government brought forward amendment 28, which provides for new schedule 7A to the 2006 Act, which is inserted by schedule 1 to this Bill, to be amended to devolve water and sewerage policy as it relates to Wales. While, on paper, this simplifies the devolution arrangements, it will involve the unpicking of a considerable number of provisions in primary and secondary legislation to align respective ministerial powers and duties with the England and Wales border.

Amendment 29 provides an order-making power limited to making changes to previously transferred functions and to functions directly conferred by primary legislation relating to water and sewerage, so that we will be able to make the various associated changes through secondary legislation once the Bill has been enacted.

The amendments in this group provide a significant package of water devolution to Wales. They deliver a stable, mature and effective devolution settlement by aligning powers over water and sewerage with the national border and replacing the Secretary of State’s intervention powers relating to water with an intergovernmental protocol. These new arrangements are in the best interests of water consumers on both sides of the border. I urge the House to accept these Lords amendments.

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales)

The devolution of water and sewerage matters to the Welsh Government is welcome—and, if we are honest, somewhat overdue. The tragedy of Tryweryn will never be forgotten, but the amendments in this group should, I hope, be another step forward in ensuring that something like it will never happen again. More broadly, while some cross-border aspects of water regulation will remain, we are pleased that the Secretary of State has given up his ability to intervene on this issue. Like my hon. Friend Jo Stevens, I find myself in the somewhat strange place of thanking the Government for their movement on this issue, albeit after some prodding both here and in the other place.

However, also like my hon. Friend, I still believe that these amendments do not go far enough. While they correct some problems, there remain discrepancies. As my hon. Friend Nick Thomas-Symonds said, there is the issue of Ofwat’s accountability to the Welsh Government. When Ofwat is discharging its functions in Wales, surely it ought to be accountable in some way to the National Assembly for Wales and Welsh Ministers. As it stands, Welsh Ministers regulate water and sewerage operators in Wales, but with the Secretary of State being able to exercise his function of giving a general direction to Ofwat without any legally mandated consultation with the Welsh Ministers. To be clear, we would argue that only Welsh Ministers should be able to provide directions in connection with matters relating to water and sewerage operators in Wales, or where licensed activities are carried out using the supply system of water or sewerage operators in Wales. Does that not seem a very reasonable and straightforward request? Surely it is not a step beyond imagining for the Minister that the regulator for a sector should be mandated to consult and speak to the politicians dealing with the implementation of that sector.

As my hon. Friend Ian C. Lucas may well detail, it is not sufficient to believe that regulation from London will always work in the interests of communities in Wales. I will let him expand on that point and the ramifications of these amendments for the campaign he is fighting in his community. I pay tribute to him for his work in raising the issue, and assure the House that we support him on it.

Echoing my hon. Friend the Member for Cardiff Central, despite the gaps in these amendments and the problems we have with them, we will not vote against them. However, I would like the Minister to provide a substantive response to the points I have raised, to give us an assurance that the issue of Ofwat and the Welsh Government could be looked at, perhaps through some mechanism outside the Bill, and to keep the House informed of his progress on that.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

I, too, welcome this Bill. As a firm believer in the adage that there are no coincidences in politics, I would go so far as to say that its existence is having an impact before it hits the statute book, because just as these amendments were being proposed in the Lords, the news came to my constituency and that of my hon. Friend—my very good friend—Susan Elan Jones that our local water company, Dee Valley Water, was the subject of a takeover bid from Severn Trent Water. I suspect that the takeover bid is not unconnected to the existence of the clauses that will give more powers and a greater role to Wales, the Assembly for Wales and the Welsh Government. I suspect that, with the transfer of regulation and accountability from the UK Government to the Welsh Government, it will be much more difficult to advance the present policy course as the Severn Trent bid is being made.

I cannot say too much about that bid, because it will be in court tomorrow; it is, of course, the most important court case that is taking place this week. What I will say is that I am a great believer in local accountability and local services. We have in Wrexham a great water company, Dee Valley Water, which employs more than 300 people. The workforce, to my knowledge, are united in their wish for the Severn Trent bid to be rejected. Because water is a monopoly, the role of regulators—there are and will continue to be two regulators involved in the process, namely Ofwat and the Competition and Markets Authority—is crucial. The regulators have let me down, as a Member of Parliament and a local customer, and they have let down the workforce and the community. The Government have also let the community down by standing aside while a very good, efficient local business is taken over by a much larger business in what I regard as a predatory way. The workforce are very worried about their future.

I do not want to be part of a customer base that pays into a pot to pay the chief executive of Severn Trent Water a salary of £2.4 million per annum. I think that is completely out of touch with the people I represent, and I do not think it is an appropriate course. I do not agree either with our having one less water company as a result of the proposed takeover. That means that we will have less competition and fewer benchmarks against which to measure water companies on price and quality. I am disappointed that the Competition and Markets Authority and Ofwat have not got involved and that they have not referred the matter to a stage 2 inquiry so that it can be looked into in more detail.

The Government have let down local people in Wrexham and Chester, where Dee Valley Water supplies water, and the regulators have let the people down. The proposals in the Bill are very welcome indeed, but I wish that they had been introduced a year ago. If they had been, the people of the community that I represent would have been listened to by a Government who had influence and authority and who would have exerted influence to prevent the predatory takeover of our local business, which is serving our community well and being let down badly by the proposal.

Photo of Liz Saville-Roberts Liz Saville-Roberts Shadow PC Spokesperson (Home Affairs), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (Women and Equalities) , Shadow PC Spokesperson (Energy & Natural Resources), Shadow PC Spokesperson (Local Government), Shadow PC Spokesperson (Justice) 3:45 pm, 24th January 2017

I rise to speak to the second group of amendments, led by amendment 10. My noble Friend Lord Wigley originally welcomed the Government’s announcement that they would devolve power over water, and in Committee he eloquently outlined how an historic wrong could be righted. He set out in great depth how the drowning of Welsh valleys has motivated his politics and the emotions of so many people in Wales, and how 50 years ago in Capel Celyn the compulsory eviction of families from their homes and land meant the destruction of whole communities. Llyn Celyn and Afon Tryweryn are in my constituency.

The high-handed way in which Westminster treated the people of Tryweryn still has repercussions in this place, as well as in communities across Wales. Amendment 30, in which the so-called water protocol is outlined, embodies the entrenched Tory resistance to addressing this injustice in any meaningful terms. What format the so-called protocol may take has never been fleshed out. In this Bill, we do not have a protocol or a draft protocol, and for that matter we do not have an outline of a draft protocol or a protocol by which to arrive at a protocol. However, despite that lack of clarity, the Government are willing to include clauses watering down this already thin provision.

Lords amendment 31 explicitly charges Welsh Ministers with the interest of English consumers when it comes to any changes to our water supply. It is important to note that the amendment specifically references English consumers. We are not concerned with communities or individuals even, but consumers matter and Wales’s natural resources are still not ours to dispose of to our best advantage. That is because the Government are prioritising the primacy of competition over the interests of Wales. The amendment refers us to the Water Industry Act 1991 to define consumers, but that Act was based on promoting competition. Does this mean that the protocol will be based on the Thatcherite dogma that the wellbeing of the consumer—in this case, the water consumer—is tied up with the tenets of free market competition?

Photo of Guto Bebb Guto Bebb Government Whip, The Parliamentary Under-Secretary of State for Wales

The contents of the protocol and whether it includes a Thatcherite dogma is surely a matter for the Welsh Government to agree with Westminster, so there will be no Thatcherite dogma unless the Welsh Government agree to it.

Photo of Liz Saville-Roberts Liz Saville-Roberts Shadow PC Spokesperson (Home Affairs), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (Women and Equalities) , Shadow PC Spokesperson (Energy & Natural Resources), Shadow PC Spokesperson (Local Government), Shadow PC Spokesperson (Justice)

The Minister explained earlier that competition is a reserved matter. In this case, that prompts the question, what does such a dogma have to do with the reserved powers model for Wales, in relation to this most emotive of all subjects? My party and many people in Wales feel cheated. When the Minister played the card of water devolution, we were led to believe that this would be a real game changer, but I am afraid it is no more than smoke and mirrors.

We considered pushing Lords amendment 30 to a vote, but we will spare the Chamber such an exercise, given that we might only manage to tweak the wording of something we have already opposed. I want the record to reflect, however, that my hon. Friends and I will not be taken in by empty words dressed up as substance from the Government. This remains a cynical political sleight of hand—endeavouring to gain capital from an historical event of deep emotional significance in Wales.

Photo of Susan Elan Jones Susan Elan Jones Labour, Clwyd South

As much as two words can ever encapsulate a feeling or a sense, the two words “Cofiwch Dryweryn”—“Remember Tryweryn”—probably do so. I hope that we will not look back at this year and think of another four words, “Cofiwch Dwr Dyffryn Dyfrdwy” —“Remember Dee Valley Water”—as encapsulating the spirit of our age.

My hon. Friend Ian C. Lucas spoke very powerfully about a difficulty in our part of north-east Wales that threatens the livelihoods of many people working for the local water company. In a sense, it is a David and Goliath battle, but there is real fear that David may not win on this occasion. David is in the courts tomorrow, so we cannot speak about many of intricacies of the situation. We can say, however, that one of the UK’s smallest water companies—indeed, it may be the smallest, but I need to check that—which has the fourth lowest bills of any water company in the United Kingdom, is in court against its Goliath on issues involving the votes of shareholders.

In north-east Wales, we have seen what used to be called the unacceptable face of capitalism, with a nasty, large predator coming in and trying to take over a local company quite against the will of the local workforce and the local consumers. That, I fear, is a cause of great regret. I will not repeat what my hon. Friend said about the issues concerning us—the role of the Competition and Markets Authority, and its lack of linkage in terms of devolution to the Welsh Assembly, and that of Ofwat—but he made some very serious and important points about the future of water in our area. I know that great symbolism attaches to Tryweryn, and rightly so. The chair of the action committee of Tryweryn, T. W. Jones, was also a resident of my constituency. T. W., as he was known, fought valiantly for that campaign.

I urge this House and Ministers, as we approach the welcome devolution of water, to think carefully about what is happening with Dee Valley Water and to look carefully at aspects of company law. Surely this cannot be right, given the views of local people, shareholders and the employees of the company. If local ownership matters to us, surely a predatory takeover is in nobody’s interests, other than the large predator itself. I urge the Minister to give thought to the points that my hon. Friend and I have made. I welcome the proposals that devolve water to the Welsh Government. I agree that it is totemic and symbolic, but most of all, I want something that works, especially for people in north-east Wales.

Photo of Mark Williams Mark Williams Liberal Democrat Spokesperson (Wales)

I will say a few words about clause 46 and Lords amendment 30 on the water protocol.

Every time I travel south in my constituency, I go past a famous piece of graffiti that says “Cofiwch Dryweryn” on the outskirts of the village of Llanrhystud. Intermittently, that acceptable bit of graffiti has been vandalised by others. No sooner has it been vandalised than it is restored to glory, as it should be. As Liz Saville Roberts and the Government have acknowledged, such issues need to be dealt with sensitively and history does not always dim those sensitivities.

In that spirit, I reflect on the long gestation of the water protocol. It was recommended by Sir Paul Silk in February 2015. I remember being my party’s representative, alongside the predecessor of the hon. Member for Dwyfor Meirionnydd, Elfyn Llwyd, in the Wales Office when we went through the Silk recommendations and came across the devolution of water and sewerage responsibilities. It was altogether easier to dispense with sewerage than water. The officials were charged with looking at this issue because it was complex, not least because the responsibilities of water companies had to be assigned across national boundaries.

I am pleased that the Government—my party in association with the Conservative party—acknowledged in the St David’s day agreement that there should be a water protocol. On paper at least, the protocol makes eminent sense, although it would be a lot easier for us to pass judgment on it if we had a draft or, indeed, any assessment of the criteria under which it will work. Their lordships made the point that more detail would have been helpful, and so too would a timescale. We are dependent on the Bill being passed, and then the protocol will swing into action. I look to the Minister to give us some indication of the timescale.

Concerns were raised in the other place, right up to the end of proceedings. I will summarise them, and again I look to the Minister to assure me that these matters will be dealt with. Their lordships were looking for a clear statement that the National Assembly has total legislative control over the creation of reservoirs in Wales and for the Assembly to have legislative control over all matters relating to water in all of Wales, coterminous with Wales’s border. Is the Minister satisfied that those questions will be adequately addressed by the protocol once it is enacted?

On a pedantic point, the first line of new clause 46, as introduced by Lords amendment 30, states that Welsh Ministers and the Secretary of State “may” make a protocol. Should that not read “shall” make a protocol? If the protocol does not emerge, or if there are difficulties or delays in agreeing one, it would not serve the people of Wales well. I welcome the attempts made so far, but there remain unanswered questions, and I look forward to hearing from the Minister.

Lords amendment 10 agreed to.

Lords amendments 28 to 32, 46 and 137 agreed to.

Clause 1