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Welsh Water Authority

Volume 14: debated on Monday 30 November 1981

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4.7 pm

I should like to make a statement on the reorganisation of the Welsh water authority.

Hon. Members will recall that in July this year I issued a consultation document proposing changes in the structure of the Welsh water authority. My main proposal was for a reduction in the membership of the authority from its present 35 to about 10 members. I also put forward three possible options for safeguarding the interests of consumers: first, the appointment of local committees based on the WWA's seven divisions; secondly, a single committee for the whole WWA area; thirdly, consumer representation on the WWA itself.

I have now considered the responses—over 100 in number—to the consultation document. Apart from the local government bodies, a majority favoured the proposal to reduce the size of the authority, and most responses also preferred my first option for consumer representation.

However, in recognition of the arguments put forward by the local authority organisations, I have decided that the authority should be somewhat larger than the number I originally proposed. Instead of 10 members, I now intend, subject to parliamentary approval, to appoint 13 members. Of these, one will be the chairman, two will be appointed for their knowledge of fisheries and land drainage respectively, four will be appointed to represent the interests of county and district councils, and the remaining six to provide the widest possible expertise, including experience in management, finance, business, including agriculture, industrial relations or personnel matters. A board of 13 members, plus the chief executive who whould normally attend their meetings, will, I believe, be small enough to secure the speedier decision making and other improvements in management which I regard as necessary.

As regards the consumer interest, I have decided in favour of a modified form of the first option set out in my consultation paper. I propose to ask the authority to set up five local consumer advisory committees covering district council areas approximating to the various WWA divisions, or combinations of them. I envisage that consumer, agricultural, industrial, commercial, local government, and amenity interests will be represented on these committees, the membership and functions of which will be laid down in guidelines drawn up by my Department in consultation with the various interests concerned. These arrangements will be subject to review in due course in the light of wider decisions by the Government on the structure of consumer representation in publicly owned industries generally.

My proposals relating to the membership of the authority itself will need to be implemented by means of an order, subject to the affirmative resolution procedure, made under sections 2 and 3 of the Water Act 1973. I will lay the draft of such an order before Parliament tomorrow.

As I am sure the Secretary of State will realise, most of us on the Labour Benches cannot understand the undue haste in connection with the reorganisation of the Welsh water authority. The consultation document was issued on 27 July. The deadline for observations was 11 September, 46 days afterwards and that included the holiday period, which certainly affected local Government. In addition, an order will be placed tomorrow regarding the membership of the authority. Is the Secretary of State aware that the order is being placed exactly one day before the Secretary of State for Wales meets the Select Committee on Welsh Affairs to discuss this matter?

Does the right hon. Gentleman accept that it seems to the Opposition that if there is an urgent problem affecting the water authority in Wales, it is one not of organisation and structure but of the level of charges that the authority has to impose now that the equalisation Bill has been withdrawn?

A membership of 13 for the council is better than 10, but the reduction in members of the authority from 35 to 13 is going too far. Does the right hon. Gentleman accept that that number does not enable the authority adequately to represent the various interests in Wales and that four places for county and district councils is not adequate?

My reading of the proposals for the membership of the authority is that the Secretary of State will make all the appointments. May I remind him of the comments made by the Conservative Party when it was in Opposition about the number of quangos set up by the Labour Government? Is not the Secretary of State now making the strongest quango in Wales and one that is under his direct control?

Does the Secretary of State agree that local consumer advisory committees are desperately important to us and that it is a pity that the statement did not include guidelines that would have given us details of both the membership and function of the committees? I regret that there is no suggestion of an all-Wales consumer body because the Labour Party holds the view that there are all-Wales issues that affect consumers generally inside Wales. They should have some representation on consumer matters.

The consultative document suggested that the local consumer advisory committees could be something akin to the community health councils. Is the Secretary of State aware that most people to whom I have spoken believe that the community health councils are toothless tigers and do not wish to see the same happen in the water industry?

Will the Secretary of State delay the introduction of the order until those who are interested have had the opportunity to comment on it and certainly until the guidelines that he mentioned have been seen by those directly affected?

I cannot accept the accusation of undue haste, as we put forward the proposals on 27 July. Responses to the document were asked for by 11 September. We extended that period for a large number of individuals and took account of representations after that date. I met local authority organisations on 1 October. There will be a further opportunity for consideration before we debate the proposals.

My hon. Friend the Under-Secretary will be giving evidence to the Select Committee this week. The practice of Government has always been that they must be allowed to proceed with their legislative programme, even if a Select Committee subsequently decides to look into the matter. Subsequent to our putting forward the original proposals the Select Committee took the decision to examine the subject of water generally.

The level of charges is a matter of concern to everybody. Precisely because of that, I wanted to strengthen the management arrangements of the authority. The right hon. Gentleman referred to appointments being made by the Secretary of State. They will be made after widespread consultation. The original system, under which 20 members of the 35-strong authority came from the local authorities, does not provide an effective control system or proper consumer consultation. I shall certainly bear in mind the suggestion that the guidelines should be published before the order is debated. If it is possible, I shall seek to do that for the help and guidance of the House.

I note what the right hon. Gentleman says about an all-Wales body. A clear majority of representations were in favour of the solution that I have adopted, or something similar. I remind the right hon. Gentleman that the Welsh water authority's responsibilities cover parts of England as well as Wales.

Many community health councils will resent the way in which the right hon. Gentleman derided them as toothless tigers. During consultation on the reorganisation of the Health Service we received wide representations in favour of maintaining community health councils, including some from the right hon. Gentleman, who then said that the councils were extremely important for the Health Service.

Order. If hon. Members are as brief as Welsh Members usually are, I hope to call all those who have been standing up.

Does the Secretary of State accept that members of an authority who are appointed almost exclusively on functional criteria are almost bound to adopt a corporate rather than a representational view of their duties? Does he also accept that the appointment of four additional members from local authorities will perpetuate the confusion about the authority's precise role, and that for a genuine marriage of local democracy and operational efficiency a more radical solution is required?

I cannot accept that the presence of four members from local government will have the adverse consequences suggested by the hon. Gentleman. I am sure that they will seek to carry out their corporate responsibilities as well as any other members of the authority. The view of the Monopolies and Mergers Commission in its report on the Severn-Trent authority was that the previous cumbersome structure inherited from local government, with its variety of committees, was totally unsatisfactory for managing a business such as the water industry.

Is my right hon. Friend aware that most of my constituents think that the Welsh water authority is a cumbersome and over-large organisation and that they will be pleased that he is doing something about it quickly? However, is he also aware that they will not be impressed by members of the Labour Party who seem to want the Government to do nothing and whose remedy seems to be to advocate the formation of larger committees?

I thank my hon. Friend. As the MMC report said, the size of the Severn-Trent authority resulted in a complex committee structure requiring expensive administrative and other support services. One of the benefits that I hope to obtain from the reorganisation is a saving of about £100,000 a year on administration alone.

Does the Secretary of State agree that if the reorganisation of the Welsh water authority is to run smoothly and successfully he must give an assurance to the people of Wales that they will pay less for their water than their counterparts in England? They have paid more in past years. Will he also give an assurance that the land under the jurisdiction of the Severn-Trent authority will be handed to the Welsh authority? Why does not the Secretary of State introduce a system of election for members of the authority instead of appointing them?

The hon. Gentleman refers to the cost of water. I do not believe that the best way to lower charges in such an industry is to have an elected membership for the authority. It is important to select members on the basis of the wide management and business experience which they can bring to the task. I can, of course, give no assurance about charges, but one of the objects of the operation is to improve organisational efficiency. We were finding it increasingly difficult, with the previous cumbersome structure, to attract the type of people who were likely to run the organisation efficiently because people were not prepared to work in such an organisation. As to the hon. Gentleman's suggestion that we should change the geographical boundaries for which the authority is responsible, we have no proposals to do so.

Is the right hon. Gentleman aware that what matter most are the prices and charges made by the Welsh water authority, especially now that it is going over to direct billing? When will the right hon. Gentleman make a statement about the greater equalisation of water charges throughout the United Kingdom, because within the Welsh water authority, consumers are paying very nearly the highest charges?

The Government have made their position plain on previous occasions. We replaced a system which, far from providing for the equalisation of water charges, transferred considerable resources to those authorities that did not need them from authorities that did.

My right hon. Friend's statement is consistent with the recommendations of the Monopolies and Mergers Commission regarding Severn-Trent, which is a comparable body. The plan has been endorsed by the chairman of the Welsh water authority, which will commend it to many people in Wales. Will my right hon. Friend answer one question to clarify the responsibility of members of the authority in respect of the new local advisory committees? Does he intend that one director should be particularly responsible for the areas of each of those five committees?

There is no intention to break up board responsibility in that way, but it is intended that those consultative committees should have access to senior management and to the chairman and members of the authority's board. Therefore, they will have the right to make their views effectively known to the authority.

I thank the Secretary of State for making this statement to the House rather than to the very select Select Committee on Welsh affairs, because an opportunity is thereby given to less select Members to join in. Answerability is a big problem for the people of Wales. Will there be any requirement for the 13 members to visit the advisory committees, so that there is some liaison? Will the Secretary of State tell us whether there will be any geographical balance among the 13 members, and say why there are only five, rather than seven, advisory committees? Might there not have been a stronger argument for eight committees and for saying that they should be related to the county councils and therefore have some relation to directly elected members?

What is the likelihood of the 13 members of the authority, receiving payment, in view of the £20,000 per annum salary of the part-time chairman? Finally will there be an opportunity to debate the order on the Floor of the House?

There will be an opportunity to debate the order on the Floor of the House. With regard to payments, changes in the arrangements are not possible under existing legislation, but they could be considered at a future date, if we should decide to legislate further.

On the questions of answerability and geographical balance, in making the selection I shall certainly have in mind the desirability of members coming from different parts of Wales, but there will be no need for individual members to be responsible to particular parts of Wales. They will act as a collective board, taking collective decisions. I shall explain the arrangements for the consultative councils in greater detail when the House debates this issue. We considered the proposal that they should be based on county council boundaries, but there is no correlation between county council boundaries and the operating divisions of the water authority. With regard to the proposal to reduce the number of bodies, there are at least a number of divisions that fall naturally together, and the decision to bring them together makes the relationship to the county councils in those particular cases, rather easier than it would otherwise have been.

When will the new Welsh water authority begin its duties? Does the right hon. Gentleman realise that Welsh local authorities will be deeply disappointed—because they have been strongly represented in the past—that 36 districts and eight counties will have only four representatives altogether? Is the right hon. Gentleman prepared to reconsider that point, as the Select Committee on Welsh affairs is looking at the whole issue and will be taking evidence from those local authorities?

I hope that the authority will take over in its new shape from 1 April, which will coincide with the appointment of a new chairman. I have considered local authority representation carefully. My original proposal was that there should be no direct local authority representation. I now propose to have four such representatives. There were several possibilities. We considered having two representatives. However, I felt that if we had four representatives there would be a reasonable chance that the interests of the districts and counties would be taken into account. There was also the possibility and desirability that the interests of the English parts, covered by the Welsh water authority, would be taken into account. I remind the hon. Gentleman that every district and county will be represented on the consultative bodies, at a consultative level.

Will my right hon. Friend note that I welcome his statement? Does he think it prudent or tactful to make the statement today? Does he not think that accusations will be levelled at him, saying that his statement has shown some discourtesy towards the Select Committee?

The simple fact is that I announced my intentions in July, before the Select Committee on Welsh Affairs decided to consider the subject of water. It has always been the practice that the Government put forward their legislative programme and proceed with it—if they can get the consent of Parliament—whatever Select Committees may subsequently decide to do. It is probably not possible for the Select Committee to produce its report in time for us to proceed before the chairman retires. However, I shall take note of any deliberations that take place in the Select Committee during the intervening period. I have made a statement on the Floor of the House and have had widespread consultations. The matter will be debated in the House so that Parliament, including members of the Select Committee, will have every opportunity to make their views known.

Is the Secretary of State aware that when the Select Committee embarked on the current inquiry no sign was given that a decision was imminent? Therefore, the Secretary of State has acted with an unnecessary urgency, which has been caused only by the chairman's impending retirement. It has been suggested that one of the vice-chairmen should have specific responsibility for consumer interests. Does the right hon. Gentleman accept that?

I cannot accept what the hon. Gentleman said about timing. I have made my intentions clear from the beginning. Indeed, I made them clear when we began consultations and when I made my original statement to the House. The right hon. Member for Rhondda (Mr. Jones) has pointed out that I had laid down the date by which responses should be received. Since then, I have extended the date.

The hon. Gentleman asked about a vice-chairman or other member of the board having specific responsibilities. I decided against that course. Emphasis on consumer consultation should be made at the divisional level. Those bodies should have a right of access to the chairman and a right to make their views known to the board. It would not be right to place that responsibility on one member of the board.