Wales Bill - Report (1st Day)

Part of the debate – in the House of Lords at 5:45 pm on 14th December 2016.

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Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales 5:45 pm, 14th December 2016

My Lords, these new clauses and amendments in my name mainly take forward the recommendations of the Silk commission in relation to water and sewerage.

The Silk report recognised that water and sewerage devolution is a complex issue and that further work to consider the practical implications was needed. Following the St David’s Day agreement, the Government set up the joint Governments’ programme board with the Welsh Government to look at practical issues around Silk’s recommendations and the effect they would have on the efficient delivery of water and sewerage services across England and Wales. It is widely acknowledged that the devolution arrangements around water and sewerage are incredibly complex, and they are not necessarily made any simpler by devolving legislative competence and executive functions along the border. This was recognised, not least by my noble friend Lord Crickhowell, in Committee.

The Silk recommendation on the devolution of sewerage was, of course, included in this Bill when it was introduced in another place. However, these provisions would devolve sewerage policy on a “wholly or mainly” basis, and Clause 46 includes a power for the Secretary of State for the Environment, Food and Rural Affairs to intervene where an Act of the Assembly or any action or inaction of the Welsh Ministers or a public body could have a serious adverse impact on sewerage services in England. This was to mirror the equivalent existing devolution arrangements for water.

Amendment 39 will amend Schedule 7A to the Government of Wales Act 2006, which is inserted by Schedule 1 to this Bill, to devolve both 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 both primary and secondary legislation to align respective ministerial powers and duties with the England-Wales border. Clause 21 currently provides the necessary powers to deliver this aspect of Silk’s recommendations through secondary legislation by changing the extent of previously transferred provisions. Given this is quite a broad power, Amendment 40 will replace Clause 21 with an order-making power limited to making changes to previously transferred functions relating to water and sewerage. These amendments address a recommendation by the Delegated Powers and Regulatory Reform Committee in its report on the Wales Bill, and I am very grateful to the committee for its scrutiny of the Bill.

Amendment 41, tabled by my noble friend Lord Crickhowell, seeks to extend this list of “water-related” functions to include those relating to “fisheries” and “recreation”. These matters are not devolved on a wholly or mainly basis and there are no plans to change any ministerial functions on these matters using this power.

Amendment 39 also places a requirement on Ofwat to make its annual reports to the Welsh Ministers rather than just sending them a copy, as is currently the case. The Welsh Ministers will be required to lay the annual report before the Assembly and publish it. This reflects the current duty on the Secretary of State to lay Ofwat’s report before Parliament and is similar to one part of Amendment 43, tabled by the noble Baroness, Lady Morgan of Ely. The noble Baroness’s Amendment 43 also seeks to amend other provisions in the Water Industry Act 1991 as it applies to Ofwat. I appreciate that the noble Baroness will address this later. Part of the amendment would require the Secretary of State for the Environment to seek the consent of the Welsh Ministers before making directions to Ofwat outlining her priorities for keeping the activities of water companies under review. This consent would include directions relevant to reserved matters, such as those relating to competition law, insolvency, mergers and so on. This would therefore give the Welsh Ministers considerable influence over policy areas for which they do not have legislative competence or executive functions.

The amendment requires appointments to Ofwat’s boards to be made jointly by the Secretary of State and the Welsh Ministers and seeks to grant Welsh Ministers joint powers over board members’ terms and conditions with the Secretary of State. There is already a duty on the Secretary of State to consult the Welsh Ministers before making any Ofwat appointment. However, joint appointments would be unprecedented and could prove problematic where the Ministers could not agree.

Amendment 42, tabled by the noble Lord, Lord Wigley, would devolve legislative competence for all water policy, including the licensing of water supply and sewerage licensees. The Government believe that legislative competence for licensing should remain with the United Kingdom Parliament. There would be no obvious benefits for licensees or customers should the Assembly seek to introduce its own separate licensing regime for Wales.

I said in Committee that I would bring forward amendments to replace the controversial Secretary of State intervention powers relating to water. Amendments 45 and 53, tabled in my name, will repeal the water intervention powers and replace them with a power for the Secretary of State for the Environment and Welsh Ministers to agree and lay before Parliament and the Assembly a water protocol. This will enable both parties to challenge any action or inaction by Ministers or relevant public bodies that could have a serious adverse impact on water on either side of the border. We have gone further than Silk recommends by giving the water protocol statutory backing and making it reciprocal so that the interests of water consumers in Wales, as well as those in England, are protected. However, Amendments 46 to 48, tabled by my noble friend Lord Crickhowell, seek to extend the scope of the water protocol to cover all water-related functions, not just those relating to water resources, water supply and water quality. I know that my noble friend has unrivalled expertise in this area but the amendments go much further than Silk recommends on the replacement of the existing intervention powers with a water protocol. As I have already mentioned, my noble friend appreciates the challenges around changing the devolution arrangements as they relate to Wales. I fear that the amendments are unnecessary and would no doubt be seen by the Welsh Government and the Assembly as a retrograde step.

Amendment 50 introduces new duties on the Secretary of State which, in practice, will fall on the Secretary of State for Environment, Food and Rural Affairs and on the Welsh Ministers to have regard to the interests of water consumers across from their respective borders when carrying out their water functions. The amendment mirrors the definition of consumer interests in Section 2 of the Water Industry Act 1991. This defines the interests of consumers as being the interests of those that receive water and sewerage services from the networks of water companies. It is not affected by, and does not affect, the consumer objective set out in the 1991 Act. The new duties will require both Governments to consider the likely impacts of their policies on customers outside of their respective jurisdictions. This additional check will help ensure that, like the intervention powers, the disputes process contained within the protocol may never need to be used by either Government.

Amendment 44, tabled by the noble Lord, Lord Wigley, on the extraction of water from reservoirs, is the same as one tabled in Committee. I acknowledge the massive role that he has had in looking at this area. The Assembly already has legislative competence for environmental controls over abstractions in Wales. It therefore has the ability to introduce such a provision for Welsh reservoirs, should it require one.

The amendments in my name 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 inter- governmental protocol. Again, this illustrates the capabilities of mature institutions developing these things together. These new arrangements are in the best interests of water consumers on both sides of the border.

I look forward to hearing noble Lords speak to their amendments. I beg to move.