Schedule 1 - The Water Services Regulation Authority

Water Bill [Lords] – in a Public Bill Committee at 4:45 pm on 14 October 2003.

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Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health 4:45, 14 October 2003

I beg to move amendment No. 239, in

schedule 1, page 133, line 8, after 'Chairman', insert 'a Chief Executive'.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following amendments:

No. 240, in

schedule 1, page 133, line 8, leave out 'at least two' and insert 'no fewer than four'.

No. 241, in

schedule 1, page 133, line 9, at end insert—

'(1A) Including the Chairman, the majority of members of the Authority shall be nonexecutive members.'.

No. 69, in

schedule 1, page 134, line 15, at beginning insert—

'(1) The Secretary of State shall, after consulting the chairman and the Assembly, appoint a person (who may, subject to subparagraph (2), also be a member of the Authority) to act as chief executive of the Authority on such terms and conditions as the Secretary of State may think appropriate.

(2) A person appointed as chief executive may not at the same time be a chairman.'.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

In approving clause 37, the Committee has just agreed to the proposal that the director general's office as an individual appointment should be abolished and a body corporate established. If one can characterise it in this way, that is the current best practice in terms of regulatory authorities and bodies. The form in which schedule 1 and the parts of it to which the amendments relate set up the Water Services Regulation Authority is very like the Utilities Act 2000. There is pre-history of this legislation there.

My hon. Friend the Member for Leominster (Mr. Wiggin) will speak to his amendments, but I think that we are of the same mind. The purpose of amendment No. 239 is to establish whether the Government intend, in establishing the Water Services Regulation Authority, to follow a further element of best practice: that the chairman and chief executive of the authority should not be the same person. That is a matter not simply of regulatory good practice but of good corporate governance as experienced in the private sector.

The Better Regulation Task Force report of July 2001 on economic regulators refers in page 33 to the response of stakeholders to economic regulation. It says that the stakeholder consultation gave rise to the view that most stakeholders

''felt the roles of chairman and chief executive of the board should not be combined. This is not best practice in public companies or in other public bodies. Postcomm, for instance''—

that is the new postal services regulator—

''has been set up with a board of seven commissioners, one of whom is part-time chairman and another is full time chief executive.''

Amendment No. 239 is pretty straightforward. It would put into the legislation a structure that requires that there be both a chairman and a chief executive.

Amendments Nos. 240 and 241 address the question of how many members the authority should have. Although schedule 1 is very like the Utilities Act 2000, for reasons that I do not understand, instead of saying ''no fewer than two'' it says ''at least two''. Amendment No. 240 is designed to examine whether there should be no fewer than four additional members, rather than at least two. Obviously, in the absence of amendment No. 239 that would be four in addition to the chairman. That would give the potential for there to be a non-executive majority while the chairman and at least one other member of the authority were executive, or regarded as tantamount to executive, members.

Amendment No. 240 is designed around the proposition that the chairman is effectively an executive member of the authority and that at least one other executive member is appointed, presumably a chief executive, even if that is not required in the legislation. There would therefore need to be three other non-executive members to make up the authority with a majority of non-executive members.

The point in amendment No. 240 is made more explicitly in amendment No. 241. The question is whether the non-executive members include the chairman—in my view, the chairman should be a non-executive member. The Minister may well draw the conclusion that the authority could have just three members: the chairman as a non-executive member, one other non-executive member and one executive member, who would be the chief executive of the authority. That would constitute a majority of non-executive members and be consistent with the structure in the schedule.

If the amendments are all rejected, we would need an assurance from the Minister on the Government's intentions. Otherwise, much of the good practice in corporate governance currently being followed in the private sector would not be reflected in the Bill, and many of the developments in best practice in relation to regulatory bodies in the public sector would also not be replicated.

I confess that I should have gone away and checked this, but from memory—the Minister will no doubt correct me if I am wrong—although Ofgem can consist of a chairman and no fewer than two other members, in practice it has a larger number of members. I think that it has seven members—the Minister's advisers will tell him if I am wrong—but the figure is either five or seven. Ofgem certainly operates on a corporate basis with a majority of non-executive members, and from this autumn it will operate with a chairman and a chief executive. Under Callum McCarthy, there was a chairman who was also effectively the chief executive. The principles have been introduced to Ofgem, which has the same structure that the Government are proposing.

The Minister could easily to say to me, ''Well, Ofgem has adopted those best practices and has done so with a legislative structure that is no different from that proposed in the Bill.'' However, the Bill should reflect our current understanding of best practice in regulatory structures. The way in which other utilities are regulated has moved on since the Utilities Act

2000, and it would be desirable to change the schedule to reflect those developments.

I commend amendment No. 239 to the Committee and am happy to acknowledge that the other amendments were tabled to explore the Government's intentions.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I concur with the hon. Gentleman's eloquent and convincing comments.

The evidence from other bodies, including Ofgem, is that it is generally regarded as healthier to have a separate chairman and chief executive. No matter how talented a person may be, combining the two posts risks concentrating too much power and authority in one person. Generally speaking, a critical mass of people who can exchange views and work together is a safeguard for anybody performing such a function. Once the number of members falls below that critical mass, there is the danger that one personality might dominate, which may not be helpful and may be contrary to the effective operation of that authority.

As a matter of practice, it is right to separate chairmen and chief executives. Some of the best organisations such as the Environment Agency do that very successfully. Although I have great respect for both the people at the top of the Environment Agency, I would not like to see one of them carrying out a dual function, which would be detrimental to both their performance and that of the agency. The same principle applies here: the division of roles between the chairman and chief executive should be generally endorsed as a matter of course in Government bodies, and it seems entirely proper to put that in the Bill.

It is wrong and potentially dangerous to permit as few as two members. The Minister may say that practice suggests that there will be more than two members. If that is the case, however, why not increase the number? There is nothing to be lost by that. Keeping the figure at two suggests that it is permissible but undesirable; if it is undesirable, we should increase the number.

I have one more point on staff matters. I notice that paragraph 3(2)(b) says:

''A person holding office as chairman or other member . . . may be removed from office by the Secretary of State on the grounds of incapacity or misbehaviour.''

One would not want any Secretary of State to be able to remove someone because they did not agree with what that person was doing, rather than because of incapability, so the word ''incapacity''—whatever it means in this context—is important.

I notice that there is the safeguard that there must be consultation with the Welsh Assembly, so if we believe that the Secretary of State is behaving inappropriately, we have to rely on the Assembly to protect us. That is not an appropriate mechanism.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

The hon. Gentleman is being a little pedantic. Presumably, if the chairman is dismissed by the Secretary of State on the grounds of misbehaviour

or incapacity, he can challenge that dismissal in the normal way. New legislation is not necessary for that.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

The chairman may be able to challenge the decision, but that does not mean that he or she will be reinstated. I want to draw attention to the need for a safeguard to prevent a theoretical Secretary of State from behaving inappropriately, although it is highly unlikely and I am not suggesting that it is on the horizon. The Welsh Assembly has to be consulted with regard to Wales, but no similar safeguard exists in England, because the Secretary of State is the authority.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

Without getting ahead of myself too much, as I did last time, I assume that we will have a debate on whether to agree to schedule 1, and I will reserve my comments on the appointment process for that debate. I will confine my remarks to the amendment.

I am reminded of a similar debate that we had in the Standing Committee on what became the Communications Act 2003 on the number of members of such bodies. I support the remarks of the hon. Member for South Cambridgeshire (Mr. Lansley) and the hon. Member for Lewes. We must depersonalise the issue of water regulation. If Committee members examine the reports of the Environmental Audit Committee, on which I have served, they will see its members' frustration at the attitude to the directors general of both Ofwat and Ofgem. There has been an inability to make individuals see the bigger picture, particularly in view of that Committee's interest in sustainable development.

Sustainable development was not part of the initial legislation that established those bodies, although I accept that the Bill will change that. However, Governments have moved on and have a wider context for the work of regulation in the water industry as well as the electricity and gas industries. Therefore, as sustainable development has become more important, entrenchment has increased on the part of the personalities who single-handedly led regulatory bodies and said, ''I am interpreting the law in this way. It is my decision and I stand or fall by it.''

Those people were perfectly at liberty to do that, but a more corporate body would allow for greater variation of discussion. It certainly requires more than two members to achieve that, and the fact that one of them may be appointed in consultation with the National Assembly introduces a strong geographic and national interest in relation to England and Wales. Wales produces a lot of the water consumed in England, and that important element must be considered.

What water industry regulation do we want? Do we want an individual to be the sole arbiter of what goes on in the industry? They might take a limited view of changing situations and Governments, and how Parliament changes its view on regulation. Their view would be set in stone, and the only option for change would be to sack that person. If policy priorities changed, the option of sacking an

individual would not be useful. Surely it would be better to have a more corporate body with several individuals and a wider range of opinions. Later we will discuss disability, which is an important issue for the water industry, as are low incomes and affordability. We need more than one or two people to weigh up all the issues in a measured debate, fully taking into account the social, environmental and economic considerations of an important industry. I support the amendment and the tenor of the debate so far.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs) 5:00, 14 October 2003

It is an important part of our duty as parliamentarians to hold the Government to account because of the particularly large number of powers in schedule 1. The Secretary of State not only appoints officials, but sets the pay scale, and if he decides to dismiss someone, he sets the golden farewell payment as well. That is a lot of power for a Bill to give the Secretary of State.

I am grateful to all Members who have contributed to the debate, and in particular to my hon. Friend the Member for South Cambridgeshire. Not only do his amendments show a great depth of understanding of how such legislation should be worded, but amendment No. 241 contributes a great deal of breadth and depth to how the authority will proceed.

I am particularly concerned to ensure that the chief executive and the chairman are separate people and, indeed, that there is a chief executive. Given the Government's record on cronyism, we are keen to see that it is not the same bloke; otherwise, we could very well see the reappointment of the right hon. Member for Hartlepool (Mr. Mandelson). We are doing our duty by tabling the amendments, and I hope that the Government will not only take them on board, but ensure that they are adopted in any other legislation that they propose.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

On that last point, I should remind the hon. Gentleman that the Government introduced the Nolan principles of appointment, which are far more open and transparent than any that existed before.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

The Nolan principles will apply to any appointments, including these ones.

I do not necessarily disagree with the case that has been made by hon. Members. They will be aware that the Bill provides flexibility to decide whether there will be one executive director or whether the post will be split into two, with a chairman and chief executive. The important test will be what constitutes the most efficient structure for the regulatory authority. Therefore, there is no problem with the principle, and if it is felt that the post should be split, the Bill provides for that.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

By extension, the Minister's argument is that the Bill contemplates the possibility that the chairman of the authority should also be the chief executive, which is the option that we seek to preclude rather than include.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Of course, I appreciate that point. If the hon. Gentleman had allowed me, I was about to argue why there should be some flexibility.

The main argument is that Ofwat is a much smaller organisation than some of the other regulators. By way of comparison, for example, Ofwat's budget is about £8.5 million, while Ofgem has £39 million and the Office of Fair Trading has £54 million. They are much larger organisations. However, that does not mean that there must be one person in the two posts. There should be some flexibility to decide what is most appropriate.

In a smaller organisation, we should also bear it in mind that we want to attract candidates of the highest quality, and if we have two posts that may be a problem. It may not be a problem, but the Bill provides the flexibility to approach the issue in the most efficient way.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

The Secretary of State will appoint this body, but the Minister asks for flexibility. Which is his preferred option?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I am grateful to my hon. Friend for his intervention. In all honesty, my preferred option, once the board is appointed, is to consult it on the most appropriate way forward and determine whether there is a desire to split the two roles.

I must correct the hon. Members who suggested that the unanimous feeling that emerged from the stakeholder consultation is that there should be two posts. I understand that Water UK, for example, has never expressed an opinion on the matter. Some water companies, such as Kielder and Wessex, have a combined chairman and chief executive, so the model is not unknown in the water industry. However, I emphasise again that that is not necessarily an argument for having one position. I am fairly relaxed about the matter.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

The Minister says that he is relaxed about the matter, and he mentioned earlier the size of Ofwat in comparison with the other regulatory bodies. However, the size of those bodies and the money that they spend is unimportant—what is important is the regulation that they undertake, its nature, and its daily effect on ordinary people's lives. There is no issue more important than water. People can do without gas and electricity, at least for a certain amount of time, but they cannot do without water. Even David Blaine cannot do without water. We must therefore ensure that the Bill is right.

I do not think that the Minister has answered the hon. Member for Sherwood (Paddy Tipping) yet, but when he does so, will he also take into account that he must consult the National Assembly for Wales on such matters? Has the Assembly said anything about the separation of posts?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I am not aware that the Assembly has expressed an opinion on the separation of the posts. I am a bit surprised at how passionately some hon. Members feel, bearing it in mind that we will replace one person—the current regulator—with a proper board.

On amendments Nos. 240 and 241, I do not disagree that the board should be of a reasonable size. The current wording is in line with that of the Utilities Act 2000, which covers Ofgem and other regulators. The current non-statutory advisory board put in place by Ofwat consists of the director general, four executive directors, and four non-executive directors. That is Ofwat's current structure, but it is non-statutory. Ofwat took the voluntary decision to set up that structure, and we support it.

If hon. Members want guidance from me on that matter, I can tell them that we would expect to see similar numbers and a similar structure in the new board—it is a good model.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

No one is against flexibility, but we are trying to set the parameters of that flexibility. The model preferred by the Minister still comfortably exceeds the proposal made by my hon. Friend the Member for South Cambridgeshire of a board with at least four members plus the chairman. Given that the Minister has a preferred model in mind, I find it difficult to understand why he cannot slightly tighten up the flexibility being given to the Secretary of State, so that we do not end up with a board of only three people, as could happen in theory.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I do not know whether the hon. Gentleman heard what I said earlier, which was that the Bill is worded to be consistent with the Utilities Act 2000.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

Unless I have got it wrong, we are discussing a new legislative framework. The Minister seems to be conciliatory towards the approach of my hon. Friend the Member for South Cambridgeshire. We seek to expand what is written in the Bill, so as to give the Secretary of State flexibility at a later stage.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I would argue the opposite. If prescriptive procedures for appointments were included in the Bill, which would be the effect of the amendments, that would not give flexibility, but remove it. I reiterate to the Committee that I do not disagree with the points that have been made in the discussion. There may well be a case for separating the posts of chairman and chief executive, and that should be examined. I do not disagree that the Water Industry Act 1991 stipulates a minimum number, not a maximum, and a non-statutory board seems a good model to me.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

One of the points is that amendment No. 241 reflects a separate issue—the point that the majority of the authority's members should be non-executive. The Minister is disclosing some ideas, as it were, and he talks about the advisory board having a director general, four executive members and four non-executives. That is a majority of executive members. The Minister is already contemplating an outcome separate from the purpose of the amendment and, I would submit, contrary to what is increasingly regarded as best practice in corporate governance.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Hon. Members invite me to give an opinion and suddenly the matter seems to be set in stone. I am only giving my opinion on the issues. I

return to the point that the Bill provides flexibility concerning the structure, shape and size of the committee. That is most appropriate and it is, incidentally, in line with the recommendations of the Better Regulation Task Force. I find it quite ironic that the Conservative party, which claims to be against bureaucracy and too much regulation, is arguing for tight restrictions and against the idea of flexibility. The Government are interested in what makes the most effective structure, not in setting matters out in stone as has been suggested.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I am grateful to the Minister for his remarks, knowing that his Department wants separation of powers to ensure that one person does not have too much power. The Secretary of State seems to accept that there should be four or more people on the board. He also has time for the idea of separating the posts of chairman and chief executive.

The Minister's argument for keeping the wording is not so much to do with flexibility as I understand it, but because it is taken directly from the Utilities Act 2000. A lot of this Bill is recycled from that Act. Why bother repeating wording just because it is in the 2000 Act? We have a consensus in the Room that the number of board members in the Bill is not right; people think that it ought to have more members. Why include that number because the 2000 Act has it? What has that got to do with anything? We are discussing the Water Bill. Does the Secretary of State believe that a board of three can ever be appropriate?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

In some circumstances, a board of three may be appropriate. I am a bit surprised about how excited some hon. Members are getting. If we stipulate numbers we then start arguing about whether it should be four, six, eight, 10—who knows?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

A minimum must be laid down, and that is stipulated in the Bill, but the point of the drafting is that there must be flexibility in the structure of the body because there may be regulation at some future date. The board may expand and take on more responsibilities. There may be an argument for a bigger board or a smaller one. If a number is stipulated, that flexibility is taken away.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons) 5:13, 14 October 2003

I do not follow the Minister's logic. If in future there was a requirement to expand or contract the board because of the pressures of more legislation, the Bill would have to be revisited anyway.

Sitting suspended for a Division in the House.

On resuming—

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 5:28, 14 October 2003

Perhaps I can bring the argument to a conclusion. I am trying to take into account hon. Members' views, with which I do not necessarily disagree. The argument comes down to the fact that the Bill stipulates a minimum structure for the board, which of course is the minimum protection. I do not disagree with many of the arguments advanced by hon. Members—they are perfectly reasonable points. The Bill allows flexibility in the size of the board and

what is most appropriate with regard to a chairman and a chief executive. Our guideline should be what is most effective.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

There does not seem to be a huge difference between what is being said on either side of the Committee. It is fair to say that Government Members would wish to adopt some of the principles of good corporate governance that were advanced by Opposition Members. I think that my hon. Friend the Minister would as well. Many of us would feel reassured if he could suggest to the Committee that before the later stages of the Bill, some of the principles that have been outlined could at least be seriously considered.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

The procedure will be that the appointments will be made by the Secretary of State. The size of the board will be agreed in consultation with the appointed chair and/or chief executive and in consultation with the Welsh Assembly. I will consult the Secretary of State to see whether we can give clear guidelines on Report on exactly what the thinking is on the structure in relation to the representations that we have received. We need to get the view of the Welsh Assembly on that as well, which I do not have at present. It may wish to express a view. That may help Committee members on Report. I am trying to take on board the concerns that have been expressed, while maintaining the flexibility that I think is important.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

In the spirit in which the Minister is responding to the hon. Member for Birmingham, Northfield (Richard Burden), will he undertake to go a little further and consider not only giving guidelines on Report but whether the Government wish to table amendments to achieve some of the objectives of good corporate governance that have been discussed?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

As the hon. Gentleman will appreciate, I cannot give guarantees on such matters at this stage. However, I can tell him that I will reflect on this discussion and consider that point.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

In one respect, I acknowledge that there is an argument for flexibility, particularly with a small regulatory authority such as this: it does not necessarily follow that one needs a large number of members of that body. However, when there is a shift from an individual to a corporate decision, by its very nature, that is an attempt to move from a position where the industry and stakeholders can speculate on the personality and character of the authority to one where corporate decisions are more transparent and there is greater continuity in the authority even when individuals change. If the body went down to three members, it is arguable that there would be continuing speculation by the industry on the balance of decisions inside the authority each time one member changes. I would personally argue for a minimum membership of five rather than three, but I shall not press amendment No. 240, because there is an argument for flexibility in the absolute number of members of the authority.

Amendment No. 239 is about the principle of separating the role of chairman from that of chief executive. It may be true that Water UK did not express a view on that when the Better Regulation Task Force undertook its review of economic

regulators, but it is not the view only of the BRTF, encapsulated in its report, that stakeholders found that to be the right way of proceeding. The hon. Member for Birmingham, Northfield and I currently serve together on the Trade and Industry Committee and we have taken evidence from the Higgs review of corporate governance. Not everything that Higgs said was non-controversial, but the desirability of separating the chairman and the chief executive is generally acknowledged and is increasingly included in codes. Likewise, the requirement for a majority of members of boards to be non-executive rather than executive is generally accepted.

In neither respect has the Minister set our minds at rest.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

I have a great deal of sympathy with what the hon. Gentleman says, but the Minister has said that he will reflect on the Committee's views. Some of us know that we should quit when we are winning.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I am grateful to the hon. Gentleman, but I am going to make the point. In his discussion if not in his conclusion, the Minister clearly contemplated the possibility that the chairman would be the chief executive. He repeated that more than once. In his discussion, he clearly contemplated the possibility that the current structure of Ofwat's advisory group would be reflected in the composition of the authority; that is, on the basis of a majority of executive rather than non-executive members.

It is down to me to see where we go with this. I shall not press the amendment to a vote, but it should be understood that the two issues raised by this group of amendments are important. The fact that the legislation looks the same as the Utilities Act 2000 is not a persuasive argument, because the regulators governed by that Act have changed their practice since 2000. The Higgs report on corporate governance has changed the wider environment within which corporate governance works. Therefore, it is entirely right to incorporate the best principles of current and prospective corporate governance in the legislation that governs the Water Services Regulation Authority.

Apparently size does matter, but the fact that a regulator is a small organisation—many in private industry would regard £8.5 million of expenditure as not necessarily small in corporate governance terms—is not the point. It is not how much the regulator spends but what influence it wields. The structure of competition in the water services industry may develop over time, and the issues are certainly of considerable importance to our constituents. The regulator itself may grow. It would not be the first such body to grow as it goes along. The Minister may not have the figures to hand, but I reckon from my experience that Postcomm probably does not spend much more than about £8 million or £10 million a year—I would be happy to be told if I am wrong about that—but it has adopted the two principles of a majority of non-executive members and a separation of chairman and chief executive.

It is not for the first time that Opposition Members have to do the job of connecting up bits of

Government that appear to be behaving in different ways on similar issues. The Department for Environment, Food and Rural Affairs, has not kept up with best regulatory practice as enshrined in, for example, the practice introduced for Ofcom by the Department for Culture, Media and Sport and the Department of Trade and Industry. Not only were both principles reflected in the Communications Act 2003 but there was even a long and serious debate about precisely how many members should be on the board, not a sweeping assertion that it should be a matter of flexibility to be determined after Parliament no longer has any influence. Such matters should be determined by discussion of the legislation on the basis of a set of principles.

The principles should be reflected in amendments that the Government table on Report. If they are not, I suspect that Opposition Members and one or two Government Members who recognise the force of the argument might have to try to persuade the Government to see things differently. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 121, in

schedule 1, page 133, line 33, after 'State', insert 'and published'.

In the last debate, the Minister mentioned the Utilities Act 2000, the Nolan principles, the Better Regulation Task Force but, most of all, transparency. The amendment, which is not enormously complicated, seeks transparency. I hope that the Minister will agree with the principle behind it.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Again, I do not necessarily disagree with the intention. I just do not think that it is necessary to include in the Bill a requirement to publish the remuneration figures, because such issues are already covered by best practice.

The code of practice of the Office of the Commissioner for Public Appointments makes it clear that all levels of remuneration should be publicised. The Cabinet Office also publishes those details for all public bodies and expects openness and transparency across Whitehall. I surely support that, and I assure the Committee that DEFRA will apply best practice when it comes to remuneration of the new authority. I do not disagree with the hon. Gentleman's sentiments, but the figures will be made available under existing procedures and codes of best practice that are applied by the Government.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

If I have understood the Minister correctly—it is possible that I did not hear the words exactly—the information is already made public, so the amendment is superfluous. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 56, in

schedule 1, page 134, line 29, at end insert—

'7A(1) Minutes shall be kept of meetings of members of the Authority.

(2) Subject to subparagraph (3), such minutes shall be available for inspection by any person, and a copy of them, shall be given to any person who requests one.

(3) There shall be excluded from the minutes to which subparagraph (2) applies such parts of the minutes—

(a) as may disclose the identity of any individual other than a member of the Authority or its chief executive;

(b) as contain information which the Authority is prohibited from disclosing by section 206;

(c) as require to be protected from disclosure in order to safeguard national security (which includes security of the provision of water supplies and sewerage services);

(d) as relate to the investigation of crime;

(e) as contain information in respect of which a claim to legal professional privilege could be maintained in legal proceedings;

(f) as contain price sensitive information (but so that such information shall not be excluded when it is no longer price sensitive); and

(g) as contain information the disclosure of which is prohibited by any rule of law.'.

The amendment outlines the minutes that should be kept by members of the authority. There are various disclosures and regulations that go with them. In a way this theme runs through a whole series of amendments. I hope that the Government will accept the amendment. It is not necessary to speak for a long time on it, because the information is pretty clear. I am simply curious to see what objection the Government can possibly have to such clarity and transparency.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

It is important to get a clear steer from the Government on this. They may reply that code of practice X requires Y and that it is all taken care of anyway. Practice varies across different arm's-length elements of government and across quangos. Some are very good and hold their meetings in public. They even hold public question times and publish their minutes. Others are far more secretive in their arrangements. There may be codes, but they are not conformed to with any kind of commonality across the different bodies.

When we are talking about something as vital as water—the key natural resource—and a body with the powers of the authority proposed here, the public are entitled to know what is done, not just with their money but with their resource. Minutes should be published and meetings should be open. That is not included in the amendment. Perhaps the Minister could say something about that. The public should be entitled to attend at least one meeting a year, the AGM. That is not an unusual arrangement for bodies such as this.

The amendment may not be perfect, but as far back as 1960 and the Bill that opened up local government introduced by Mrs. Thatcher, the principle was established that public bodies should be open and accountable and that minutes should be published. It is also standard practice in local government, for example, to have a two-part agenda. Parts of the meeting are open and parts are closed. The minutes reflect that. Undoubtedly minutes can be published that convey real information without infringing commercial confidentiality. That is perfectly possible—it depends how one structures the minutes.

I hope that the Minister can say that he is committed to that concept and that minutes will be produced in line with the amendment, although not necessarily following it exactly. I hope that he will also say something about meetings being open.

Photo of Robert Key Robert Key Conservative, Salisbury

This excellent amendment contains many echoes of the points I made earlier about the need for open government. I have pressed for this consistently. The amendment says

''such minutes shall be available for inspection by any person, and a copy of them, shall be given to any person who requests one.''

That little verb ''given'' is rather important. It raises the question of the cost of documents that are to be made available to the public. The price of the documents may be out of all proportion because of the very small print runs involved, which may amount to no more than photocopying.

For example, there is currently a dispute in the village of Stapleford in my constituency about a road extension. It is controversial, and unsurprisingly the 250 or so local residents want to know in great detail about the decision making in the process. However, they can access the information only by paying the price of £56 for a document, which is prohibitive for most of my constituents.

The Government should consider seriously the options concerning the enormous cost of documents. After all, we represent increasingly well-educated and articulate constituents, many of whom—soon it will be most of whom—have access to the internet. So, is there not an answer in the internet? We should perhaps amend the amendment to ensure that all minutes of authority members' meetings are available on the internet. The Government may already intend that to happen or have a code to ensure that it does, but it is an increasingly cheap option for local and central Government and their agencies to put information on the internet, and they can often do it within 24 hours. If the House of Commons can get Hansard on to the internet by 11 o'clock—although we have the privilege of having Hansard printed overnight—surely in the interests of good and open government, and e-government, we should ensure that minutes are available on the internet within 24 hours of a meeting.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 5:45, 14 October 2003

It is a funny evening, as I do not disagree with many of the points made on this topic either. However, we must be serious about some of the issues, and I accept the hon. Gentleman's point about the cost of documents. There was a big debate in relation to the Freedom of Information Act 2000 about the fact that although people have the right to information in return for a modest payment, the costs of providing that information can be enormous. Any responsible Government must balance potentially exorbitant costs to the taxpayer and the not unreasonable right of people to see documents.

One way of achieving that balance is to use the internet. How the new board conducts itself will be a matter for it, because it will be an independent body, but there is good practice to follow. Every document produced by my Department now goes on to the

DEFRA website, which has subsequently become an international resource. People from all over the world access the website because of our research and discussion documents, and there is huge interest in the GM debate at the moment. We follow that good practice, and that gives enormous access to everyone. I accept that not everyone has internet access, but they can go to a library and use its computers. I also think that it is good practice to publish minutes on the internet.

On amendment No. 56, I can reassure the Committee that clause 42(4) already places a statutory requirement on the authority to produce minutes of board meetings, and Ofwat's code of practice already commits itself to doing that. Most of our bodies conduct open AGMs, including, for example, the Environment Agency—I have been to a few myself. Again, that will be a matter for the board, because it will be an independent body, but it is good practice, and I am sure that the comments made in Committee will be noted by the new board when it is up and running.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

The Minister just said that clause 42(4) contains a statutory requirement. Can he point out exactly where?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Clause 42(4) says that the authority should act in a spirit of being ''transparent'' and ''accountable''. That includes making minutes available. Members will know that what is emphasised and clarified in Committee counts. The Government's interpretation of clause 42(4)—the Government are the promoters of the Bill—includes the publication of minutes. That is on the record and I have made it absolutely clear. I hope that I have provided the assurance that Members seek. I do not disagree with the principles. The body is independent, but we are talking about good practice and we expect it to abide by good practice.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I am grateful to the Minister for that constructive and helpful reply. As I said, this is a probing amendment. The Minister will be aware that we are particularly sensitive about the keeping of minutes after the Hutton inquiry, when we discovered that the Prime Minister is not quite so keen on keeping minutes as perhaps the Minister is.

It is important that the schedule 1 makes it perfectly clear how the proceedings should be carried out. The amendment is constructively worded, but as the matter is being given proper consideration by the Minister—

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

My hon. Friend is making interesting points, but could we just consider clause 42(4) again? Is the Minister utilising the Companies Acts to force the authority to keep minutes and amendments to minutes? That is not the same as publishing minutes within 24 hours. There is no statutory limit. If I remember rightly from my time in companies, the time allowed was 28 days. In reply to my hon. Friend the Member for East Devon (Mr. Swire), I do not think that the statutory requirement is included in the Bill.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

In that case, I am afraid that I am the wrong person to intervene on. However, the Minister

was listening carefully and I hope that he will intervene to answer that point.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I am grateful.

The key point is that we are trying to get a consensus organised so that the Bill does a proper job. It is not fair to say that clause 42(4) alone is sufficient comfort for those of us who want proper limits. The Minister's reply led the Committee to believe—I was grateful for this in some respects, but not completely happy with it in others—that remarks made in Committee would influence the interpretation of the Bill. If that is the case, splendid, but if we are seeking to influence the interpretation of the Bill, such points should be included in the Bill.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

The matter is one of best regulatory practice, which is covered by clause 42(4). Page 46 refers to that as including

''the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed''.

I must add the caveat that the body deals with many regulatory and economic issues. The amendment makes it clear that confidential issues would be excluded from the minutes. That would certainly have to be the case. To answer one of the questions about why some bodies are more open than others in the publication of minutes, I can tell the Committee that in the case of a body such as this, where there are an awful lot of commercially sensitive issues, such as merger, economic and pricing policies, the danger is that if we are too stipulatory about minutes, that would be an encouragement to use the confidentiality issue quite commonly. That would move away from the principle that we want to establish, which is to be as open and transparent as possible. I believe that, in this case, transparency involves the availability of minutes, but we should also recognise that an independent body that deals with economic and sensitive issues needs to have some discretion.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I think that we all agree with the Minister, but the question whether the Bill puts it in the best possible way will have to be left, perhaps until Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I beg to move amendment No. 242, in

schedule 1, page 134, line 36, at end insert—

'(1A) The Code shall indicate, insofar as the objectives and duties of the Authority may be regarded as potentially coming into conflict, how the Authority intends to interpret and discharge its objectives and duties.'.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following:

Amendment No. 243, in

clause 41, page 43, line 25, at end insert—

'(2A) That description must include, so far as the Authority believes it to be relevant for the financial year in question, a statement concerning how the Authority intends thereby to meet its objectives and duties.'.

Amendment No. 244, in

clause 41, page 44, line 15, at end insert—

'(bb) an explanation where relevant of how the Authority has reconciled any significant conflicts between the respective objectives and duties laid upon the Authority;'.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

To correct the record, may I refer back to the previous debate, in which I discussed Postcomm's expenditure? Postcomm, as hon. Members will recall, is a regulator with a chairman and a chief executive, seven members and a majority of non-executive members. I suggested that its expenditure might be comparable to that of Ofwat, at about £8 million or £10 million, but I was inaccurate; the figure is £5.8 million. That does not weaken my argument; it reinforces it. I just wanted to be completely accurate.

The three amendments relate to three separate areas of activity of the new authority. This is about making clear the way in which the objectives and duties of the regulator will be reconciled if they come into conflict. Clearly, if they do not come into conflict, stakeholders and the industry will not find it difficult to see what the purposes and activities of the authority are.

Where does the problem come from, and what problem are we trying to address? That question requires us to return to the Better Regulation Task Force. Of course, the report to which I am referring was published in July 2001 and therefore post-dates the Utilities Act 2000, so the fact that the Bill is in line with the Utilities Act is something of a non-argument. The question is what we are now trying to achieve.

The taskforce specifically addressed the question of prioritising objectives and the way in which economic regulators dealt with conflicting objectives and duties. The report said that

''the priority given to the regulators' different objectives . . . emerged as a key issue in our stakeholder meetings and written submissions.

We acknowledge that regulators have to make their most difficult judgements and trade-offs when addressing contradictory duties and objectives. But this is also when stakeholders most need assurance about how decisions were reached and implemented. At present stakeholders feel unable to predict how competing objectives might be reconciled, and what practical outcome will follow. This was described as a major cause of regulatory uncertainty.''

It might be argued that that did not necessarily relate to the water industry, but the taskforce also considered the duties of the director general of water services. It said:

''The duties of the director general of water services are clear in the present legislation. But this clarity may be lost given two changes proposed in the draft water bill.''

That was just after the Utilities Act had been changed and the Bill was in consultation form. The taskforce referred to

''an additional primary objective to protect the interests of consumers''—

that relates to clause 42, which we have yet to reach—

''and powers for the secretary of state to give guidance to the director on social and environmental matters.''

We shall come to that when we discuss clause 43.

The Bill will give rise to precisely the circumstances in which the taskforce concluded that the present clarity about the duties of the director general of water

services would become uncertain. People cannot say, ''Everything is fine at the moment and it will be fine in future.'' We need to see how the duties will be combined. The consequent recommendation made by the taskforce stated:

''Regulators' annual business plans should include a clear explanation of how they will prioritise their different objectives. Regulators should also explain how the decisions they take relate to their objectives.''

I hope that the Minister will, in the spirit of this afternoon's discussions, agree with the argument and explain how he will think about doing what is suggested, because the Bill does not set out how the authority will demonstrate to stakeholders how it reconciles its conflicting duties and objectives. We tabled three amendments because there are three possible ways of doing that, but they are probably not all necessary.

Amendment No. 242 relates to schedule 1 and the code by which the authority will set out how it conducts its business. The Minister might believe that the code is more concerned with the corporate process of governance than with reconciling policy objectives, in which case I would not press the amendment.

Amendment No. 243 relates to the forward work programme, which we shall discuss when we come to clause 41 and is expressly the equivalent of the annual business plans which the Better Regulation Task Force recommended as the place where those duties should be reconciled. It would give the authority the flexibility to include only those conflicts or questions relating to the objectives and duties that it sees as relevant to the annual business plan. That is precisely how that should be done.

Amendment No. 244 is about annual reports. In practice, it would be reasonable for stakeholders to be able to see two things happening. First, how does the authority expect to reconcile its policy objectives in the future and in the financial year in question in so far as it sets out what it wants to achieve? Secondly, a precedent being relevant in this context, when there are significant conflicts of interest, it should be set out clearly in the annual report how those duties have been reconciled so as to give guidance to stakeholders in future.

There are compelling arguments for including amendments Nos. 243 and 244 in the Bill, but amendment No. 242 is our first preference, to show how the argument runs from the code through to the annual business plan to the forward work programme and then to the annual report. I hope that the Minister will accept our arguments and perhaps also accept amendments Nos. 243 and 244 in due course.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 6:00, 14 October 2003

I certainly accept the argument about good practice in relation to how the bodies should operate. However, the amendments are unnecessary, bearing in mind the fact that the Better Regulation Task Force said that we should look at regulation and whether it is absolutely necessary. I do not believe that it is necessary, and I am happy to try to explain my reasons.

I recognise that the authority will have a wide range of duties that at times may throw up conflicts. That is inevitable, and no different from any other regulatory body or the structure of Ofwat, which already has a wide range of duties and functions. The problem when trying to write into legislation what those conflicts and resolutions will be is that they depend on individual circumstances. I do not believe that it is in the authority's interest or to the benefit of the industry or consumers for the authority to pretend that it can set out in advance all the various conflicts that might arise and how it can deal with them, because that would be too restrictive and difficult.

Publishing potential conflicts in a code, which is what amendment No. 242 proposes, would not reflect the true nature of the authority's functions and the complexity of its decisions. Good practice, as the hon. Gentleman said, is the way in which to deal with the matter.

Turning to amendment No. 243, assessment of how the authority's work programme will contribute to its overall objectives and duties is good practice. I do not dispute that, but it is not necessary to put it in the Bill. The authority would not have the power to carry out any activity that did not contribute to its overall objectives and duties. In addition, Ofwat has already committed itself to carrying out regulatory impact assessments of its policy initiatives, which will mean measuring them against its objectives. That is good practice, which we expect to see.

Amendment No. 244, which requires the authority to include in its annual report an account of how the conflicts were resolved, is also not needed, because the clause, along with clause 54 on the reasons for decisions, already achieves that. The authority is required under new section 192B(2)(a) to report on regulatory developments, which would include the reconciliation of significant conflicts. That is in the Bill. Under new section 192B(2)(b), the authority must report on the progress of projects described in its forward work programme, and it must report on its enforcement activity under 192B(2)(c). That connects with clause 54, which concerns publishing reasons for decisions, and it would also ensure that the authority accounts for how it reconciles its various duties, where relevant.

For all those reasons, I hope that the hon. Gentleman will accept that the reconciliation of conflicts is already covered in the legislation. I do not disagree with the points that he has made, but his amendments are unnecessary.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

I am content that the code of practice does not necessarily represent the best place in which to try to set that out. On the annual report, I accept that it is perfectly possible that new section 192B(2) should in all reasonableness require the authority to set out the development of regulation over the course of the year in question.

That brings me back to the particular recommendations of the Better Regulation Task Force. I understood that the Government had accepted that regulators should set out how they intend to prioritise their different objectives in their

annual business plans—the equivalent of the forward work programme. The Minister's argument that that was somehow an unnecessary regulation, and that it should not be included, as it is contrary to the best regulatory principles, does not wash. It is necessary in order to deliver best regulatory practice. The regulatory principles of the Better Regulation Task Force are not designed to protect the regulators from delivering the certainty that their stakeholders seek.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

The Government have responded to the Better Regulation Task Force, and it is for the regulators to determine how to prioritise and balance objectives within their statutory frameworks, which is not unreasonable.

We also agree that the annual business plan should include a clear explanation of prioritisation, but it must take account of how the body must operate. When we consider the objectives of the amendments, we are not very far apart, but we do not believe that the amendments themselves are necessary.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

Clearly, we are not very far apart, but prioritisation is not in the legislation. In so far as it is not therefore part of the statutory framework for the new authority, it is conceivable that when it considers the range of objectives and duties that it must meet for the financial year ahead, its annual business plan might not set out with sufficient clarity how its forward work programme relates to those objectives and duties and how it intends to prioritise between them.

I agree that it is reasonable to suppose that an effective authority would do that. Harking back to my earlier point, it is also entirely reasonable to include it in the legislation as one element of best practice for a regulator. It has been increasingly incorporated into best practice for economic regulators generally since the Utilities Act 2000. Again, it is a case of the legislation reflecting the 2000 Act rather than other legislation on economic regulators that has been introduced in the intervening period.

I will not press amendment No. 242; the amendment about which the Minister and I disagree is No. 243. The spirit of the debate is that we tend to agree but we are discussing the extent to which it is proper for certain things to be set out in the Bill. In this case, the Minister should reconsider whether the forward work programme should have an explicit objective. People will look at the structure of the authority and the additional duties and want to know how the authority proposes to reconcile and prioritise the consumer and competition objectives and how they will relate to the social and environmental objectives. The forward work programme is the best place for that to be done.

I hope that the Minister will decide that the proposal has the merit to be included on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That this schedule be the First schedule to the Bill.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

We return to where we were an hour ago. I half asked a question and got half a response from the Minister. I hope for a fuller response now.

I want to know the nature of the relationship between the new authority, the Minister exercising his powers in the name of the Secretary of State, and the National Assembly for Wales. It is clear from the schedule that the Assembly will have a consultative role in the appointment and de-appointment, as it were, of members of the authority and on the code of conduct that is to be devised for the working of the authority.

The Minister suggested in earlier debates that the Assembly's views would be taken into account, for example on the number of executive and non-executive roles and whether there should be a chairman and chief executive as one. I want to know how the Minister envisages that process taking place. We are discussing a measure that has significant effects for Wales, which has great water resources that we are delighted to share. However, there is a real impact on the communities that live near those resources. There is a significant element of devolution in the Bill in respect of reservoirs and their construction in Wales to meet not just Welsh needs but the general needs of the United Kingdom. Therefore, I would like to believe that the Minister wants the Bill to achieve a partnership of equals between the Assembly and his Department.

The consultation can be superficial or not, as the case may be; much will depend on the way in which it is undertaken, and I want to probe the Minister about the nature of that consultation. For example, in the appointment of members to the authority, will he suggest names that the Assembly can consider and comment on, or will there be a two-way process, in which the Assembly can make suggestions—I do not mean nominations—to him about super-members of the authority? Is it foreseen that a person on the authority would have a responsibility for Wales? In other words, if there is a four or five-member authority, will one of them, as well as being an England and Wales member, have a particular responsibility for or interest in Wales? The analogy is with the disability interests, which we shall discuss later. Disability interests will be taken into account; the question is how Welsh interests will be taken into account.

The second element relates to the exchange and processing of information. We have just had a debate about information for the public, and it is right and proper that minutes and so on should be made available. However, we acknowledged in that debate that certain information is perhaps not publicly available. A third type of information is highly relevant to the Department, which would want to see it, and I argue that it is also highly relevant to the workings of the Assembly. I would like to think that any information that the Department sees is available to the Assembly to consider as well.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Does the hon. Gentleman recognise a further problem from an English perspective? At least the Welsh Assembly may have those documents to share with its Members; we are not necessarily in

the same position. As English Members, we may have to look to the Welsh Assembly for information.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion 6:15, 14 October 2003

Indeed, as often we look to the United States and its Freedom of Information Act for information on what our country is now doing, and as we looked to Romania to find out what Mittal was really doing—but there we are. We shall discuss such points later.The hon. Gentleman raises a useful point, but I must say to him that I am trying to probe the relationship between the Executive of the National Assembly and the Minister's Department, to which they are analogous. Before the Minister says anything, I am talking not about publicly available information but about the sharing of information. For example, if the National Assembly is to be consulted over the deselection of a member of the authority, surely that raises the question of what information Assembly Executive members will have about that person. They would surely have the same access to that information as the Department. It would be ridiculous to consult the Assembly Executive and simply say, ''This is what I think, do you agree?'' rather than sharing all that information.

Kevin Brennan (Cardiff, West) rose—

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

I am Mr. Brennan.

Does the hon. Gentleman not agree that he is making a compelling argument for the unified United Kingdom civil service, which works in the National Assembly? The sort of matters that he is discussing are governed by protocols between civil servants in DEFRA and civil servants in the National Assembly. That means that information is already shared in exactly the way that he is arguing for.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

I am grateful to the hon. Gentleman who, of course, we in Wales recognise, even if not everyone does.

Protocol is the next thing on my list. What sort of protocol is envisaged for the work? I agree with the hon. Gentleman about a unified civil service, although that is possibly beyond the scope of this measure. That is improving in Wales, and we are trying to make it work better. What sort of protocol will there be between the Department and the National Assembly Executive on this matter?

I want to understand from the Minister's comments, which I hope that he will make in a second, that this will be a true partnership of equals. If that is to work, there must be an equal sharing of information and of ideas and suggestions. I understand why he has taken his approach, although I reserve my right to do something on Report if I am not happy with his reply now. I want him to have the opportunity to put on record how he foresees this relationship working and how we can be sure that in the Welsh context our real concerns and ideas about the use of a valuable resource will be reflected in the new Water Services Regulation Authority.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I can make it clear that the appointments to the new board will go through the Nolan procedures, which means that they will be

advertised in England and Wales. People will be able to apply. There will then be an implementation group to set up the new structure, which will consist jointly of DEFRA, the National Assembly for Wales and Ofwat. The Assembly will be a partner at every stage of the process.

The hon. Gentleman asked if the Assembly will be able to propose names. Yes, it will. I will go further. When the drawing up of a shortlist is proposed, the Assembly will be involved in that. It will be involved in the consultation on the appointments. When the full proposed board has been finalised, it will be consulted on whether it accepts it. The Assembly may have some nominations that reflect particular Welsh issues. It is free to make those and we would always be sympathetic to that. The Welsh Assembly may nominate some people who are not from Wales but have particular skills that are of interest and that it feels should be represented on the board. We are sympathetic to that as well.

I can assure the hon. Gentleman that the Assembly will be involved in every step of the process, as it is now. That is not the only structure that we put in place in consultation with the Assembly, because a lot of legislation concerns England and Wales, as he knows. In some cases responsibilities are split, and in others the Secretary of State takes the lead. Whatever the structure, we are keen to involve the Assembly as a partner, to listen to their views and to take those views into account and ensure that they are represented. In my time as a Minister, I can honestly say that I do not believe that I have ever had a disagreement with the Assembly on a point concerning the procedures or the final structures that the Department has put in place.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

It may be that I have missed something and the point has been covered, but will the Minister confirm that it is not the intention subsequently to confer order-making powers on the new authority? If it is the intention for it not to have such powers, I understand why the corporate structure set out in schedule 1 does not give any power of delegation to committees to make statutory instruments. I wanted to make sure that that was the case, otherwise there would be something missing from the structure as it applies to other utility regulators.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I can assure the hon. Gentleman that that is indeed the case. There are no proposals to do that. As a final point, I would say that clause 55 requires a memorandum of understanding between the Secretary of State and the National Assembly for Wales. There is a statutory requirement for such an understanding, apart from the fact that we enjoy good and constructive relations.

Question put and agreed to.

Schedule 1 agreed to.

Photo of Robert Key Robert Key Conservative, Salisbury

On a point of order, Mr. Amess. Given that the hon. Member for Falmouth and Camborne (Ms Atherton) is about to propose an amendment opposing Government policy, and given that she is very much feeling the cold, would it be in order for her to join us on this side, where it is warmer?

Photo of Sir David Amess Sir David Amess Conservative, Southend West

I think it best if I do not comment on that point of order.Clause 38 Consumer Council for Water