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Regional Water Authorities (Monopoly Situation)

Volume 984: debated on Monday 12 May 1980

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asked the Secretary of State for Trade if he has any plans to refer any of the regional water authorities to the Monopolies and Mergers Commission under section 11 of the Competition Act.

Yes, Sir. Because there is widespread consumer concern about the charges levied by water authorities it would, I believe, be appropriate for the Monopolies and Mergers Commission to examine their costs and efficiency. I therefore made an announcement on 29 April that the Severn-Trent water authority will be among future references to the Commission.

I welcome my right hon. Friend's announcement. Is she aware that the commonest complaint about water authorities is that their charges are related to the rateable value of a property, not to the amount of water used in it? Is she further aware that that is grossly unfair to people living alone, to pensioners and to those with small families?

My hon. Friend has raised a point of great importance to consumers. I am extremely pleased to tell him that I learnt that after my announcement that a reference would be made of the Severn-Trent water authority, resolutions appeared calling for that authority to adopt a water metering option for its consumers. I know that a great many consumers believe that it is most unfair that their water rates should be assessed on the basis of the rateable values of their homes. I hope, therefore, that in reaching its decision, the Severn-Trent water authority will take full account of that.

What does the Minister hope to achieve by a reference to the Monopolies Commission? Does she not accept that she stands there naked of any powers of price control after the abolition of the Price Commission?

Any reference under section 11 of the Competition Act implies, as is correct in this case, that a monopoly exists and that therefore consumers need special protection. The purposes of these references, which vary from reference to reference, is to ensure that there are no elements of cost which are passed on in higher prices which may represent inefficiency or overmanning or are passed on in higher prices because of an abuse of a monopoly.

I am grateful to my right hon. Friend for announcing this reference, but did she not make a mistake in announcing that the reference was of the Severn water authority? Should it not have been the Southern water authority which has increased its rates by just under 30 per cent. in a year? Will my right hon. Friend think about that again?

I can understand the concern of my hon. Friend. The Severn-Trent water authority was chosen for reference because it is the second largest water authority in the country. It therefore seemed appropriate for reference. Naturally I shall bear in mind the remarks of my hon. Friend about the Southern water authority when we consider future references.

If concern for the consumer is to be one of the criteria for references, when will the right hon. Lady make a reference from the private sector? Let us take, for example, the price of bread, bank profits and oil profits. When will she use that part of the Competition Act?

The question refers to references under section 11 of the Competition Act. The kind of references referred to by the hon. Gentleman are not apposite in relation to this question.