I beg to move amendment No. 3, in page 2, line 4, leave out from 'State' to 'authority' in line 6 and insert

'shall designate a member of each water authority as deputy chairman of that'.

This amendment meets the commitment given in Committee on 2 December to examine again the wording of clause 3(3), which would have conferred on the Secretary of State the power to designate one or more members of a water authority as a deputy chairman of the authority. As the hon. Member for Aberdare (Mr. Evans) said, that would have allowed the Secretary of State to designate no deputy chairman, one deputy chairman or more than one deputy chairman in different authorities. The amendment makes the position clear: the Secretary of State is to designate one, and only one, member as deputy chairman of each authority.

I beg to move amendment No. 4, in page 2, line 29, leave out subsection (2) and insert—

'(2) In Schedule 5 to the Local Government Act 1974 (matters not subject to investigation by Local Commissioner) the following paragraph is added at the end—

"6. Any action taken by a water authority (within the meaning of the Water Act 1973) otherwise than in connection with—

(a) any matter which is the subject of arrangements made with a local authority under section 15 of the Act of 1973 (arrangements for discharge of sewerage functions by other authorities); or

(b) those of their land drainage functions which are, by virtue of section 1 of the Land Drainage Act 1976, to be discharged by their regional land drainage committee."'

With this it will be convenient to take amendment No. 5, in page 2, line 29, leave out subsection (2), and Government amendments Nos. 29, 33, 35 and 36.

These amendments arise out of the discussion in Committee about the role of the Commissioner for Local Administration—the local ombudsman.

As I explained in Committee, the main provision of clause 1 alters the constitution of water authorities so fundamentally that it is necessary to make these changes. Whereas at present a majority of members is appointed by local authorities, in future all members will be appointed by the Secretary of State and, although there will be some local government members, they will be only a small component.

I promised the Committee that we would ensure that the local ombudsman's remit would not be removed until the new consumer consultative committees were in operation. The amendment will enable the Secretary of State to implement the changes to the local ombudsman's remit whenever he chooses, and I assure the House that we shall not end that remit until the new committees are in being.

Concern was expressed about cases where local authorities and water authorities were both engaged in the same area of business. The two cases are sewerage, where local authorities in most areas discharge the sewerage responsibilities of water authorities, and land drainage, for which both local authorities and water authorities have responsibilities. Concern was expressed that, whereas a local ombudsman might investigate a local authority's part in a particular sewerage or land drainage matter, under the Bill as it stands if he wished to continue his investigations into any part played by the water authority he would not be able to do so. We accepted that this was an anomaly and that the ombudsman should not find an investigation brought up short in this way but should be able to follow it through to a conclusion.

I am pleased to tell the House that the amendments are designed to meet the point. Their effect is simply to allow the local ombudsman to investigate a water authority in respect of any sewerage matter arising where there is a sewerage agency which accounts for about 400 local authorities out of 450 in England. The amendments also allow him to investigate a water authority in respect of any land drainage matter. In short, the amendments represent a useful improvement to the Bill brought about by our discussions in Committee, and I commend them to the House.

Although Government amendment No. 4 fulfils the undertaking given by the Minister in Committee, it does not meet the charge that the Bill materially reduces the rights of individuals, certainly as they were exercisable through the local government commissioner. Most Members who spoke in the Committee debate took the view that a whole range of water authority activities should remain subject to investigation by the ombudsman. Many people in this country have valued that right and if there are weaknesses in the ombudsman argument in that it relates only to maladministration, it would seem far more reasonable to improve and strengthen his role rather than to weaken it as the Bill does.

Government amendment No. 4 means that certain matters that are the joint responsibility of water authorities and local authorities—sewerage and land drainage functions—will remain subject to investigation by the ombudsman, and we are grateful for that. Nevertheless, even with that amendment, the new subsection (2) still means that rights will be removed that individuals have enjoyed for many years. The right to put complaints to the ombudsman was given to water consumers by Parlaiment in 1974 and very few of us see any reason why it should be removed.

The fact remains that water consumers frequently feel aggrieved by the activities of these large and sometimes remote organisations. In many cases the area covered is very large, so remoteness is a major factor, and very few ordinary members of the public are aware of the membership of water authorities. An individual's right to take a complaint of maladministration to the ombudsman is one that the House ought not to throw away lightly. The importance of the ombudsman is as an organisation or person to whom people can complain. It is an independent agency and not part of the water authority set-up. It has investigative powers and power to publish a report. That is a strong defence for the individual water consumer against the much larger and more powerful water authorities.

The only defence that the Government have been able to advance is that that provision is no longer necessary with the wonderful consumer committees which will do the job that is now being done by the ombudsman. The consultative consumer committees are no replacement for the ombudsman. The independence and investigative powers of the ombudsman are its two main features. Nobody can argue that the committees have the same powers. Their independence is a myth. It depends on the water authorities. The staffing of the committees depends entirely on the water authorities. The details that their investigative powers require also depend on the water authorities. They are no replacement for the ombudsman.

That is why we believe that the powers of the ombudsman should be retained. That is the purpose of our amendment. If the Government had any concern for the right of the individual to complain against the water authorities, they would not wish to remove those powers. Rather they would wish to increase them.

I beg to move amendment No. 7, in page 4, leave out lines 41 and 42.

With this it will be convenient to take Government amendment No. 17.

The amendment tidies up the definition of a statutory water company.

I beg to move amendment No. 8, in page 5, line 8 after 'to', insert '(a)'.

With this it will be convenient to take amendment No. 9, in page 5, line 10 at end insert—

'(b) the means proposed by any water authority for ensuring that a proper proportion of any additional work that would be undertaken by that authority as a result of the ending or, as the case may be, varying of the arrangements in question, and proposed to be carried out by direct labour, would he subject to competitive tender.'.

The sewer work that is currently carried out by local authorities is subject to the direct labour section of the Local Government, Planning and Land Act 1980. It lays down accountancy and competition requirements, including compulsory competition for all such work that is valued at more than £50,000. No such requirement applies to the water authorities, although many of them require, through their own standing orders, that there be compulsory competition for work that is valued at more than £600,000. That is clearly unsatisfactory from the point of view of competition.

The Water Bill would, to some extent, worsen the problem. After consultation, it would make it possible for agency arrangements to be wound up. That means that work that has previously been carried out by local authorities and which is subject to competition would be carried out by water authorities which are not subject to competition, except voluntarily.

The amendment would ensure that Ministers would at least satisfy themselves that the new arrangements are as effective as the existing ones. Direct labour by water authorities is a large-scale business. Ministers calculate that roughly 10 per cent. of capital expenditure is carried out by direct labour organisations. That represents about £80 million each year. In addition, an unquantifiable amount of maintenance work is carried out by direct labour organisations. That may represent some £400 million.

The Federation of Civil Engineering Contractors, which has advanced this suggestion, would like there to be complete application of the local government direct labour organisation rules to water authorities. It therefore hopes that the amendment might be accepted so that they are brought in line with local authorities, which the Government have dealt with in previous legislation.

I entirely agree with my hon. Friend the Member for Reading, North (Mr. Durant) that public bodies should ensure that their work is put out to competitive tendering whenever that is appropriate. We carefully considered the merits of including a provision extending to water authorities statutory competition requirements such as those applying to local authority direct labour organisations, including their sewerage activities. We decided on balance against that course. However, we have agreed with water authority chairmen that a code of practice will be drawn up to ensure adequate competition.

My hon. Friend's amendments do not deal directly with the subject but seek to make it a factor that the Secretary of State must take into account in deciding appeals. While it may be important in deciding the balance of costs between a water authority and a local authority, I do not believe it right to single it out among all the other relevant factors to be taken into account. I ask my how Friend to accept that the Government are committed to ensuring competition where it is sensible, and to withdraw the amendment.

I beg to ask leave to withdraw the amendment.

I beg to move amendment No. 34, in page 6, line 32, at end insert—

'(c) that adequate arrangements have been made to ensure that non-metered water consumers pay reasonably comparable rates for their water supply.'.

I am sure that the amendment was expected by hon. Members on both sides of the House following our debate in Committee and the miserable response from the Under-Secretary of State for Wales.

Few people can deny that there is a sense of unfairness—not only in Wales but throughout Britain—about the system of charging for water supplies. That sense of unfairness has, as I am sure the Under-Secretary will willingly concede, reached the point of outrage in Wales. I gave figures in Committee that showed the wide disparity of water charges in Wales compared with the England and Wales average. It has been shown consistently that the charges for water in Wales have been about twice the average charge for England and Wales combined.

It is not only a question of being unfair to Welsh water consumers. If the system continues, it will be a threat to the water industry and the planning and sensible use of vital and essential natural resources. If there is a lesson to be learnt, it should be from the 1976 drought. There are occasions, and that was one, when we need to be able to transfer water from areas of plenty to areas of shortage. It was our experience then that if the drought had continued much longer the changes in the distribution of water to ensure that all parts of the United Kingdom had enough would have been considerable indeed.

If the free transfer is necessary—I believe and accept that it is—it depends upon a national policy. With the abolition of the National Water Council it is difficult to envisage how that will be achieved under the Government's proposals. It also depends upon cooperation between water authorities and on the good will of those who live in areas that have abundant water supplies. In Wales, that good will has been deliberately dissipated by the Government through their decision to abolish the Water Charges Equalisation Act 1977 and through the announcement by the Under-Secretary of State in Committee that the Government found it impossible to devise a fair equalisation scheme. As that good will is dissipated, so the threat to the free transfer of water grows.

I do not condone the recent action by a minority in Wales, but the Government have themselves to blame for many of the problems that are developing there. The Government have consistently, not only through the Welsh Office but through other Departments, admitted that there is a problem. The newly appointed Secretary of State told the Tory party conference in 1980 that he recognised the unfairness under the present charging system and that the Government intended to find a fairer scheme. Nothing has been done about that.

The Secretary of State for Wales told the Welsh Grand Committee in July 1979 that water authorities were an issue of major current concern in Wales. It was of such major current concern that even now, in 1983, the Government have not only managed to do nothing about the matter but have made the position infinitely worse. Not only have they failed to remedy the defects which they admit exist but they have made the position worse by clause 8, which repeals the Water Charges Equalisation Act 1977.

Many odd reasons are given as to why the Government can do nothing. Water is now apparently considered to be an industry. I shall argue that point, which may be theoretical, but both gas and electricity are considered as industries and we do not see the wide disparity of charges for those utilities that we do for water. If one took the opposite view and said that water was more of a service than an industry, one could equally say that we did not have the same wide disparity of charges between services such as the Post Office and British Telecommunications.

If it is the correct way of charging to ensure that, inside the boundaries of each water authority, water equalisation shall prevail, why is it wrong to have no system of equalisation across the boundaries between each water authority?

I admitted in Committee—I have said it many times —that when we introduced the Water Charges Equalisation Act 1977 we did not expect it to last for ever. We believed that its effects and the benefits that accrued to the Welsh water authority and to other authorities would wear off in time. However, the Act should be repealed only if the Secretary of State is satisfied that reasonably comparable rates are applied for non-metered water supplies. That is not an outrageous suggestion. British people, wherever they live, as equal citizens, should have largely equitable charges for essential services such as gas, electricity, postal services or water.

The present charges in Wales are far from reasonable and certainly far from comparable. That is not because of any inefficiency on the part of the Welsh water authority.

I notice that in Committee the Under-Secretary said that a new measure to equalise water charges would tend to encourage the wasteful use of resources and lead the water authorities to be less efficient than they would otherwise be.

The high charges for domestic consumers in Wales have nothing to do with any inefficiency by the Welsh water authority, but are due to the higher costs of distribution in Wales, which are a factor of geography and little or nothing else. That was something that came out very strongly in the report of the Daniel committee, set up by the previous Government, which led to the Water Equalisation Act.

Comments have been made on the problem in Wales. Welsh Members will be aware of the role played by Mr. Haydn Rees, who had been the chairman of the Welsh water authority and the man who had had considerable experience in local government and in public life in Wales. The last annual report issued by the Welsh water authority when Mr Rees was the chairman stated:

"As I have publicly stated on several occasions, whatever decision is reached I personally believe that sooner or later—and the sooner the better—our legislators will have to realise that the water services industry is the only important public utility service that does not have either a common base charge or an equalisation of charges. That this, the most important, civilised and civilising of all the public services should not have similar treatment is, I believe, unacceptable and inequitable to the people in the area in which we serve."

It is true that the present system of charging in Wales is inequitable; because it is inequitable, it is unacceptable.

It is no good the Under-Secretary or anyone else suggesting that there is no alternative. A variety of alternatives have been put forward at various times.

One alternative would have been to allow the Welsh water authority to charge more for the water which is exported. That was turned down by the Government. Another alternative would be a return to the principles, or something like them, of the Water Equalisation Act. That has been turned down by the Government. Another alternative would have been rebates. An amendment to that effect was tabled, but unfortunately was not called. The fourth alternative is a form of capital debt write-off.

It is not true that there are no alternatives. The alternatives may not be acceptable or pleasant to the Government, but there are ways if the Government were to try to meet what they genuinely accept to be a problem in Wales—the unacceptable and inequitable nature of water charges.

Despite all the crocodile tears of the Under-Secretary, I recall that in July 1979 the Secretary of State for Wales admitted in the Welsh Grand Committee that water charges in Wales were a major current problem. Nothing has been done by the Government.

The majority of the people in Wales are far more concerned with the level of charges than they are with the structure, and now find that a new quango has been devised in total contradiction to the Minister's views on quangos when he sat on Opposition Benches.

Not only has nothing been done by this Government, but nothing will be done for Wales and for water consumers in Wales as long as we have a Government of this persuasion. When we return to office, a Labour Government will remove this injustice. We will restore a water equalisation scheme so that water charges, like gas, electricity and the postal service, are broadly in line throughout the United Kingdom. By doing that, we shall deal fairly and justly not only with Welsh water consumers but with water consumers throughout the United Kingdom and at the same time safeguard the efficient use of the nation's water supply.

I always like to follow the right hon. Member for Rhondda (Mr. Jones). I should like to ask what he will do if ever the Labour Party is returned to power. Although he indulged in a clear and specific condemnation of the negation enshrined in the clause, in that it destroys any residual legislation that would make for equalisation, he was unable to say that the next Labour Government will legislate for complete equalisation on water charges, at least throughout England and Wales.

I should like the right hon. Gentleman to give that assurance, because there has been speculation in the press and elsewhere that the Labour Party in England is trying to develop a policy to return the water service to local government. That would enable the water service to be maintained as part of the local government system and, therefore, subject to the rate support grant.

There have been other attempts within the Labour Party at some kind of regional policy, including the idea of elected regional tiers, I am not sure where that proposal now stands, but that would create another option whereby it might be possible to have democratically elected regional tiers of government that could take control of the water industry regionally. There could then be equitable redistribution of both water and its costs.

I advance those two propositions for the right hon. Member for Rhondda to think about, and if he wishes to intervene in my brief speech, I shall be happy to give way.

On Second Reading I tried to set out some of the options then available to the Government. Since then, we have had another negation—the announcement of nothing by the Secretaries of State for the Environment and for Wales, who have thrown the ball back to the Welsh water authority, the Severn/Trent water authority and the North-West water authority. If accepted, the amendment would open up a number of alternatives. As I have just said, it would return control of water to local government, therby ensuring that the water service could be subject to RSG as a form of redistribution of costs and benefits of supply.

Another option is complete equalisation. I am certain that the Under-Secretary of State for Wales is an avid viewer of the Welsh channel four. He will have seen on "Y Byd ar Bedwar", "The World on 4", the current affairs programme produced by HTV, the new chairman of the Welsh water authority declare in favour of equalisation. To the extent that he can indicate a policy option, he did so. He referred to the invidious position between different utilities, whereby there is almost complete equalisation among utility charges such as gas and electricity but no such equality between water charges. That clearly shows where he stands and where his authority would stand.

The attempt to secure a higher level of return from the Severn-Trent water authority and the North-West water authority was the only option available in the context of policy laid down by the Government. The failure of the Government to adjudicate clearly as between Severn-Trent water authority, the North-West water authority and the Welsh water authority, as they had a responsibility to do, and the throwing of the whole issue back to the Welsh water authority is an indication that the Government are prepared to do precisely what I alleged at Second Reading, to regard the different level of charge between Wales and the regions in England which are served from Welsh reservoirs as being legitimate and acceptable.

When the Prime Minister decides to call the election—no doubt it will be her decision and hers alone as in so many other things with this Government—thousands of Welsh consumers will respond by rejecting a party that is prepared to allow those inequitable differentials to remain.

The other option is to allow a commercial free-for-all in water transference. Many Welsh domestic consumers will have seen with interest the recent proposal to start exporting United Kingdom water to Arab countries at a commercial rate. The Welsh water authority and many consumers in Wales will have seen what the new market value of water is. If the Government are committed, as they are in most areas of their policy, to an out-and-out market value and ensuring a full commercial return, no doubt they will be prepared to allow the Welsh water authority, if it wishes, to go to the Severn-Trent water authority and demand the levels of water charges that are likely to be offered commercially by those who want to import water from the United Kingdom.

The fact that this amendment is likely to be rejected by the Government shows that they are not prepared to meet the real differential. They are prepared to tolerate a situation whereby Welsh consumers are unfairly exploited. For the historical, emotional and, indeed, justifiable reasons of community resentment that I set out on Second Reading, it is reprehensible that the Government should take this view.

It is as a direct result of Government policy that many consumers in Wales are either unable or unwilling to pay the inflated water charges. A community, or individuals, resort to forms of direct action only when it is apparent that a constitutional response on the part of Government is not forthcoming. It is regrettable in the view of the Government that people should resort to forms of direct action, including the withholding of payments. I take the view that when a Government who have no mandate in Wales and who clearly do not represent the interests of the majority of the Welsh people are not prepared to respond sympathetically—

Is the hon. Member seriously contending that if the views that he expresses are not immediately translated into action by the Government, even though his views are supported by an insignificant minority of the people in Wales, there is any justification whatever for breaking the law? If so, then he has to face up to the consequences that others may take it into their heads to defy legislation requiring the teaching of Welsh in schools, which is very much resented by the English majority in a great many regions. It is only because the people of Wales on the whole are law-abiding that there has been such progress in the teaching of Welsh in the schools.

I am aware that this is not a debate on the teaching of Welsh. However, one local authority in Wales is, I believe, in serious breach of the law and so far the Department responsible has not acted.

However, I understand from the figures made available that about 20,000 people in Wales have not paid their water bills this year in full. That shows that at least a significant proportion of the population feels strongly about the issue. I tried to say that of course there was in general an obligation on members of the community to abide by that community's laws. There is also an obligation on the authority in a community to be responsive towards minority demands. The test of a democracy—whether in the United Kingdom or anywhere else—is the extent to which it can maintain the will of the majority while ensuring that the rights of minority groups and regions are respected.

In that sense, the Government should reconsider their view. Otherwise, it will serve only further to alienate water consumers in Wales and will increase exploitation of Welsh resources by those regions outside Wales that take advantage of them. I do not want law-breaking campaigns to increase. However, when a Government refuse to respond to the demands of consumers and are unable to adjudicate in regional conflicts, minorities that feel hard-pressed by the level of wather charges will want to assert their position. It is not as if this is a new issue. It has been controversial for as long as I and most hon. Members can remember.

The issue is being scrutinised by the Welsh Affairs Committee. Those of us who are not members of that Committee regret that the report has not yet been forthcoming. It would not be in order to comment on that now, but press reports suggest that this is the result of a difference of opinion between Conservative and Opposition Members on the Committee. We assume that the Committee would adopt a slightly more critical line than the Welsh Office or its supporters are prepared to accept. As a member of another Select Committee, I regret that the deliberations of that Select Committee should be held back for that reason. The Select Committee's report was seen in Wales as an opportunity to scrutinise an area of policy and to make constructive recommendations for ending the conflict between domestic consumers and the regions outside Wales that take advantage of our water resources.

This issue will not go away. [Interruption.] Perhaps the Minister wishes to intervene. I see that he cannot take it. The issue of the water supply and natural resources in Wales and their use by outside regions, has been controversial for several years. Those domestic consumers who are unable or unwilling to pay the high water charges and the further increases likely next year, will not give up easily. They feel strongly about the way in which Welsh resources are exploited. I am sure that the Government are only creating opposition and increasing the determination of consumers in Wales to obtain justice.

Clearly, the Government will not accept the amendment. I can tell that by the expression on the Minister's face. However, if he rejects it, I hope that he will put forward cogent arguments to the Welsh electorate, telling us why we should continue to suffer such high charges.

The cogent argument, imposed on the Minister by the Secretary of State, and which he has been forced to use, is that there are 11 marginal seats in the area of the Severn-Trent authority. In an election year, that dominates the Government's thinking.

I am sure that my hon. Friend is, in this case, as in many other cases—although perhaps not always—right. He has pointed out that political issues affect the Government's decisions. I do not want to anticipate what may emerge later this week, but Governments are sensitive on such matters whether they concern keeping open railway lines in marginal Welsh constituencies, or water supplies. Therefore, a marginally higher charge to the consumers of water in regions that take advantage of Welsh resources would be sufficient to persuade the Government not to equalise or to attempt to provide some recompense. That is another example of the way in which the Government treat Wales. They have disregarded Welsh opinion in their economic and social policies and are now doing so in their environmental and natural resources policies.

That is not surprising because the Government have no mandate in Wales and they are clearly prepared to sell the needs of Wales down the river, as it were. In this case it is down a river regulated by reservoirs built in Wales, the advantages of which accrue to consumers outside Wales.

We have recently seen another graphic instance of the way in which differential water charges operate in a border village between Clwyd and Cheshire. I congratulate those people who found themselves back in the area of the Cheshire water undertaking, and who therefore had cheaper water rates. However, I remind them that one day they will be back in Wales and we hope that that will be at a time when water rates between the north-west, Chester, and Wales are equalised so that they will not have to pay more.

I press the Minister to give some rational response and to set out what options he thinks the Welsh water authority can realistically take in its negotiations with the Severn/Trent and the North-West water authorities to try to obtain a more equitable level of charges and to ensure that the major consumers of Welsh water outside Wales make some recompense to lower the charges to non-metered water consumers in Wales.

I hope that the hon. Member for Cardigan (Mr. Howells) will join my hon. Friends in voting for the amendment. It is important that we should show the Welsh people that there are strongly held views on this and that the Government are deliberately resisting an attempt to bring equality to Welsh domestic water consumers.

I support what my right hon. Friend the Member for Rhondda (Mr. Jones) has said about this amendment. This is a deplorable Bill. We have come to it after the reorganisation in the Water Act 1973 by a Conservative Government, who I think it is now agreed did not do a good job on that occasion. I am pleased that my right hon. Friend said that it will be a high priority for the next Labour Government to amend the damage that the Bill will inflict on the British water industry. It is significant that a Water Act was rushed through the House in 1973, prior to the 1974 election, and now we shall have the 1983 Bill which might well lead to an election in 1983 or 1984.

The amendment relates to clause 8, which is one of the worst features of the Bill for Wales. The people of Wales would have wished the Government to address themselves to the injustice in the differentiation between the water charges in different parts of the United Kingdom. There is no justification for it. We are given no justification by the Government for those differences.

Under the Bill the regions are allowed to have a system of equalisation. Within the Welsh water authority the people in the urban areas pay towards the cost of distributing water to the country areas. However, because of the geology and demography of Wales there is an added cost in the distribution of water compared with, for example, the city of Birmingham, which is a comparatively small area where distribution costs are not great. Therefore, it is possible for the cost of distributions in one part of the United Kingdom to be far less than those in another part.

Britain does not have a system in which it costs more to post a letter in the country than from one part of London to another. The Government do not seem to realise the injustice of people being compelled to pay more for their water because they live in a certain part of the United Kingdom. Matters have been made worse. When the water industry was closely linked to local authorities, and people paid one rate that covered the local authority rate and the water rate, if they were in financial difficulties or had small means, that was taken into account, and they had a rebate that covered both water and local authority services. The present rating system is not just. The payment for services according to the size of one's property is something that a future Government will have to examine.

There is injustice in the present system under which the local authority and water rates have been separated. Elderly people who live in large properties are able to obtain a rate rebate from the local authority if their means are small. But they have no water rate rebate. It is not how much water is consumed in the house that determines the water rate; it is determined by the size of the house. One could have two houses of equal size, in one of which an elderly person of small means has to pay the same rate as the family next door with seven or eight earners.

The injustice is that this system varies between one part of the country and another. Wales has a large rainfall, and supplies water not only to Wales but over the border, but water is cheaper over the border. The Leader of the House is present. His is an area that benefits from this system. Why is it allowed? How can one justify the fact that the water that comes from Wales can be obtained by his constituents at far less cost than it can be by the people of Wales?

I do not agree with the hon. Member for Merioneth (Mr. Thomas) about taking the law into one's own hands. That is not the answer. The answer is in the ballot box, which will be available in the not-too-distant future. People must exercise their right to vote. If the Government will not address themselves to the serious problems of the water rates, as they are not doing in the Bill, we have to seek democratic ways to bring about democratic changes.

The hon. Gentleman rightly says that we shall soon have the ballot box as a means of expressing our opinion. If the Labour Party is elected at that election, can he give a pledge that it will achieve what the previous Labour Government did not achieve—equalisation of water charges?

My right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) has given certain commitments.

I should go further than equalisation. Water is an essential service. We did not have a local rate for the Falkland Islands expedition. The money came from taxation.

Increasingly there should be an Exchequer contribution to the water industry. It is increasingly through taxation that we should pay for our water service rather than by the iniquitous method of people paying according to the size of accommodation in which they live. It is scandalous that a family in a house where an additional room has been built should have to pay higher water rates. Instead of perpetuating the situation, the Government should accept this modest amendment. The Opposition tried in Committee to bring about more fundamental change.

Is the hon. Gentleman making a bid for the votes of the landlords in my constituency? I am sure that Lord Longford would be delighted to hear that he will be required to pay the same water charges as the tenant of a modest semi-detached council house.

If the hon. Gentleman had been listening, he would have heard me suggest that payment should be based on taxation. It would be payment from each according to his ability and to each according to his needs.

A wealth tax, not a Welsh tax.

That is right. There should be a tax on wealth rather than a tax on the Welsh. This is a tax on the people of Wales. They have to pay more for water that comes from their area than people in other areas. I have no wish to quarrel with the people of Birmingham. Many Welsh people living in Birmingham moved there at the time of the last depression. Such a move cannot be made now because the depression even affects Birmingham. It is necessary to deal with the matter through the Exchequer. I hope that the next Labour Government will give it priority.

Unfortunately, the 1973 Act was a shambles. However, the view was taken that, following reorganisation, it would be impossible then to dig up the roots. That explains why there has been delay. The mistakes of the previous Conservative Government in local government, the Health Service and the water industry are known. Now that they have come back to their own problems, their answers are worse than the previous ones. Their solutions are worse than the problems themselves.

We should move to greater equalisation. Because of the recession, the Welsh water industry has lost £6 million. The sum of £3 million has been taken by the Government. It is no good Ministers saying that the Water Charges Equalisation Act did not achieve much. It might not have achieved as much as it should have done, but it has proved better than what is now happening.

I hope that the Government will agree to a concession to deal with an issue that is not a minority problem in Wales. It concerns the vast majority of people. There is deep anxiety in Wales which cuts across party political boundaries. People of all political persuasions cannot understand the injustice that has been imposed.

The hon. Gentleman said that he did not agree with the hon. Member for Merioneth (Mr Thomas) about equalisation charges. He said that he would go a little further. He suggested that he would go for greater equalisation. Will he clarify what he means by "greater equalisation"?

Instead of equalising the existing rate between different regions in Wales and the rest of England, we should relate it to the tax that people pay. There is no boundary. One pays tax according to one's income. The Government should pay a greater contribution from their revenue. That form of equalisation would make a better and more just system than comparing the water rates paid in, for instance, the Severn/Trent area or the Thames area with other areas. We need to tackle the problem in a more fundamental way.

The hon. Gentleman is saying that the amount of money that is paid in the present form of water rates should be paid in local income tax, according to a person's income tax.

Nationally.

Yes. But will he follow it through? It would be strange if the money now paid in water rates were paid as an income tax, a poll tax, but the rates themselves remained on the old basis of rateable value. Would that not be a contradiction?

As I said earlier, we should look at the iniquitous rate system. The water rate and the local authority rate, which originally were one rate, have now been separated. The system was unjust before, but now it is even more unjust. There should be a check on local authority spending. We have to think again about the formula whereby the Exchequer makes a certain contribution and the local authority makes a contribution. People talk about abolishing local authority rates, but it is not easy.

The only argument for water rates is that if people pay for water it inhibits people from wasting it. That is not so. People have water on a meter. Whether or not they pay a water rate does not conserve water, unlike electricity, gas, or other forms of energy, where consumers pay a price to equate supply and demand, and make sure that they do not waste it. People can waste water and pay lower water rates than people who do not waste water. So that argument falls by the wayside.

Last winter people were deprived of water and could not use the toilets. That makes one realise how important water is. In my opinion, it should be made free, and if it were free, we should have to move away from the existing water rate system.

We must look at the matter in a more fundamental manner. Instead of doing that, the Government have made a fundamental mistake in removing the compensation that was introduced in an attempt to deal with the injustice between Wales and the other regions of the United Kingdom.

It is abundantly clear that there is no lack of variety of solutions to equalisation on the Opposition Benches. We have had a tremendous variety of solutions and clearly there is no unanimity on the Opposition Benches about which of the different solutions is most applicable. The pledge of the right hon. Member for Rhondda (Mr. Jones) that a future Labour Government will equalise does not sound convincing, especially if the amendment is the best attempt that the Opposition can make to date at achieving equalisation. It certainly represents an attempt at introducing back-door equalisation.

Clause 8 is intended to repeal the Water Charges Equalisation Act 1977. The scheme established by that Act was clearly the best scheme that the Labour Administration could devise. However, we must not forget that it was thoroughly unsatisfactory. In the third year of its operation it had the effect of moving the average bills of unmeasured consumers 42 per cent. further away from the national average.

Equalisation, by its very nature, must penalise some areas, and it could certainly inhibit efficiency and distort investment decisions. We do not believe that the answer lies in central Government setting the level of charges for non-metered water supply. A standard national price implies subsidy of some areas by others. Those who advocate subsidy must decide where it will end. Is it to end with water charges or will it extend to general rates?

The Government believe that the right solution—it is in the Bill—is for the Welsh water authority and the regional water authorities to keep their charges under control through greater efficiency. It has been alleged that we have done nothing, but we have changed the structure and organisation of the Welsh water authority to achieve the greater efficiency that we believe is the best means to reduce water rates and to keep the level of rates as low as we can.

What is the effect on individual domestic consumers of the alleged efficiency that the hon. Gentleman has established and what contribution has it made to reducing water charges and introducing greater equality between English regions and Wales?

The new authority came into existence as recently as 1 April 1982. It has barely had an opportunity to prove its mettle. We expect considerable progress to be made by the new business-like and compact authority that we have installed in Brecon. We expect rather greater financial gains by the new authority than would have been achieved had my right hon. Friend determined in favour of the Welsh water authority and against the Severn Trent and North-West water authorities.

We have made it clear during our debates that had my right hon. Friends decided in favour of the Welsh water authority and granted its claim in full against the other authorities, the effect would have been a reduction of £1 in the average Welsh domestic bill this year of £79.

I say to the hon. Members for Merioneth (Mr. Thomas) and Caernarvon (Mr. Wigley) that of course water is an emotional issue in Wales, but no one has done more than they have to stir up emotions and to encourage Welsh people not to pay their water bills. That means that an additional cost falls on those who pay their bills because money has to be borrowed by the Welsh water authority and the interest on that has to be paid by the consumers.

Let us put the matter into perspective. We acknowledge that water is an emotive issue in Wales. It is the most outworn cliché in our political vocabulary, but the fact is that we are not top of the league with regard to the average domestic bill. Two out of the 10 water authorities have higher average charges then we have. There are higher average charges in Anglia and the south-west region in the current year.

Does the Minister accept that if he and his colleagues had fought and won the battle to get the £4 million for Wales, albeit only £4 million, the ratepayers in Wales would have had a reduction this year as opposed to the increase that he says is happening because of the campaign that is being waged, minimal though that increase may be? Why did the Minister's Department take 15 months to reach the decision? When he said last year that the Government were willing to move away from the no-profit, no-loss conception, why does he now adhere to it? Will he admit that his Department has suffered defeat at the hands of the Department of the Environment?

The hon. Gentleman has not studied the decision and the way in which the decision was arrived at by my right hon. Friends. He will be aware that that was the first determination of its kind. He will be aware that a procedure had to be devised. He will be aware that my right hon. Friends could decide only upon the submission made to them by the Welsh water authority, as commented upon by the other two authorities. He should also be aware that an application was made by the new Welsh authority that came into operation last April to change and add to the submission that was made by its predecessor. That is why it took a certain amount of time to reach the decision.

I have stressed that my right hon. Friends could come to a decision only on the submission that was made to them. Therefore, there is no sense in which my right hon. Friends were defeated. I have said that the no-profit, no-loss principle has been operated by successive Governments in the past, including this Government. It is a clear principle, upon which my right hon. Friends decided to base their determination.

The prime purpose of the Bill is to allow water authorities to exercise better control over the management of their activities. That point has not been fully appreciated, even now, on Report.

Will the Minister tell the House and the people of Wales whether it is his view that people living in Wales should pay higher rates than people living in Birmingham and London?

It is clear that in practice the rates vary in different parts of the country. It is in the essence of the Bill to allow variable rates. I have explained that Wales is third from the top of the league. If the hon. Gentleman is asking whether I am happy with that position, I have made it clear that we were the first to go in for structural reorganisation to promote efficiency in the Welsh water authority. The hon. Gentleman should not forget that the authority has considerable business, with a revenue income of well over £150 million per year. We believe that the authority can be run more efficiently in the future, that savings can be achieved and that that is the way to keep charges to consumers down.

rose—

As I have said before, no one has come up with a scheme for the equalisation of water charges that does not in some way inhibit good cost control. The right hon. Member for Rhondda is delightfully vague in his amendment about what is "reasonably comparable". The amendment would completely nullify clause 8 and I must ask the House to reject it.

I have never heard such a nonsensical and ridiculous reply. In view of the stupid nature of the Minister's reply, I am so full of contempt that I shall not even bother to vote on the amendment.

Is it your pleasure that the amendment be withdrawn?

Yes.

No.

Order. I was asking the right hon. Member for Rhondda (Mr. Jones) whether he wished to withdraw the amendment.

On a point of order, Mr. Deputy Speaker. Do we not have the right to vote on the motion before the House? We wish to vote in favour of the amendment.

As I do not have the agreement of the House, I shall have to put the question on the amendment.

After that startling Division result, which clearly showed that the policy of the right hon. Member for Rhondda (Mr. Jones) does not command the full support of the Opposition, I hope that we can deal quickly with the next amendments.

I beg to move amendment No. 26, in page 16, line 5, at end insert—

Although other hon. Members may wish to intervene, it may expedite our proceedings if I speak now before the Minister. That may get us home a little earlier than would otherwise be the case. I must register our disappointment and concern over a number of areas, but I assure the House that I shall do so as expeditiously as possible.

It is no accident that in committee we spent 14 hours on clause 1. We have been unable to say anything about clause 1 on Report for the very good reason that Mr. Speaker did not select the brilliant amendment drafted by the Opposition, which sought to put on the statute book a substitute for the National Water Council.

That is a great pity. We totally opposed the decision to kill off the National Water Council. It was an ill-conceived decision, but I shall not bore the House by repeating the 14 hours of argument now.

What obviously emerges at the end of this long examination is that important national decisionsstill have to be taken within the water industry. We are in the ludicrous position that the Government propose to abolish the statutory National Water Council and at the same time to establish a national association of water authority chairmen which will have to do all the things which the National Water Council was charged with doing.

There is no escape from the fact that a national water strategy is needed, but the Bill does not say how it is to be achieved. One can only assume that it is to be done within the Department, so giving more and more centralised power to Ministers who will be taking decisions about subjects which we will not be advised upon and will have little opportunity to comment on.

There must be a national water strategy. It would have been much better if that could have been done by the Government accepting our amendment, although I admit that, as it was not selected for debate, it would have been a little difficult. However, Parliament has to be taken as a whole, like many other things, which means, thank goodness, that there is another place where the Government and other people may return to these issues.

The Under-Secretary of State referred to an association of water authority chairmen. In our new clause 2, which we would have preferred, we called it an association of water authorities. It means the same thing—a national water council by another name. Although the Government have not written this into the Bill they have, by providing for an association of water authorities, conceded the case that we have been making. All right. Perhaps they wanted it to have more of a consultative and advisory role than the old statutory National Water Council. I hope the Government, even at this late stage, will decide that provision for that authority should be put into the Bill, outlining some of the functions with which it should deal, such as the provision of advice to the Secretary of State on matters of national planning of water resources and a national strategy for water disposal and waterways. We lament the demise of the National Water Council.

With that comes the most fundamental objection to the Bill, which again we have not been able to deal with at all today, apart from a cursory reference by the Under-Secretary of State—the decision to remove from all positions of influence any elected local government representative. This is the first time it has happened since the inception of the water industry. It is very serious. As I have already conceded, no doubt the Secretary of State will show enough wisdom to ensure that there are on the water authorities people experienced in local government, but that is totally different from killing the concept of direct election and nomination of local authority interests. Who would have thought that it would be a Conservative Government who would strike this blow at the heart of local government democracy? Had the proposal come from a Labour Government or a Government of another complexion, the sounds of protest would have been reaching up to heaven.

Eastern Europe.

Absolutely. As I said when these proposals were first brought forward, nothing so despotic in its intention can be found this side of the iron curtain. These proposals are coming from a Conservative Government.

Some of us, especially those of us with experience in local government, must stand up and say that this is a sad day for local government democracy and accountability. As the Government know, all the local authority associations, when pressed, have been forced to say that this is a lamentable day for local government and that the Government have behaved disgracefully.

I repeat that every one of our major water undertakings stemmed from local government. They were all provided by local government. Similarly, the great schemes for drainage and water disposal were provided by local government. They were provided by ratepayers throughout the country. It is a shocking state of affairs when local government is prevented from making any direct nominations, or from holding membership of such bodies.

That point must be considered alongside the other Government proposals that we regard with great suspicion and sadness. There is to be no local government membership, no ombudsman, no press representation at water authority meetings, no national joint industrial council and no national wage negotiations. We still do not know what will happen in that important area. There is no statutory provision for the representatives of sport and recreation. The abolition of the items on that shortlist means that considerable rights and safeguards are being removed from the people. It is our duty to bring that to the attention of the House.

There is to be no sensible system of equalisation or fair charging between one region and another. We should have preferred to debate amendment No. 16 rather than the amendment upon which minority interests have just forced a vote at a very late hour. It would have been much better if the representatives of those interests had been in Committee to vote with us on the subject. However, they chose not to be present and not to vote. Nevertheless, we must return to this issue. The politics of the situation will not allow any Government to leave it as it is.

Therefore, in the absence of the strident voices of any representatives of the Liberal and Welsh nationalist Benches, I shall make it clear that we give a firm commitment—along the lines of amendment No. 16—to achieve fairness of charges by equalisation mark 2, or some other means. That is the inescapable commitment that I must give on behalf of the Labour party. As I have said, there is no provision for wage negotiations. It is incredible that, despite their seriousness, the Government are leaving a decision about whether to have any national joint industrial negotiations to the authorities.

I shall not talk about the wage dispute now, but I am sorry that the Minister did not take the opportunity to face up to the question of how, when the chairmen have decided how they will negotiate with the unions, to prevent any majority decision in favour of national negotiation from being undermined by allowing one or two authorities to go it alone and to opt out of any system. I hope that the Minister will give the matter further thought before the Bill returns from the other place. That is the point that we have tried to make.

Most regional water authorities think that there should be some national joint industrial negotiations. They are right to do so, but there is a minority who think the opposite. If my information is accurate, any such system must apply to the 10 water authorities and the Welsh water authority. It would be catastrophic if that was not so. Therefore, I hope that that is made clear. I should like it to be written into the Bill. I hope that if the chairmen have reached their conclusions before the Bill goes to or returns from another place the Government will take the opportunity to do so. I assure them that the writing in of a provision for national joint industrial negotiations will go a long way to remove many of the misconceptions and some of the bitterness that exist at present.

There is nothing in the Bill about the important question who will finance research in the industry. The water industry has had a good research record. One knows the different views that exist in the industry. Some of the regional water authorities do not see why they should contribute to a national research programme, because they think that they are big enough to do their own. However, it must be extremely wasteful to have 10 separate research programmes without any co-ordination or central direction. That again is a cause of considerable anxiety to us.

For all those reasons, we find the Bill disappointing and inadequate. Obviously we must accept what we have been able to achieve in the Bill. In Committee we were co-operative despite the clear divisions of principle between the two sides. We achieved some things and tried to improve some of the provisions. Obviously the country must have some machinery for providing for the industry's future. Therefore, this is not the time to vote against the Bill on Third Reading, although we opposed it in principle on Second Reading. We can only hope that in another place it is even further improved and that when it returns to the House some of our points will, on reflection, be conceded. In that belief I shall support the Third Reading of the Bill.

I wish to intervene for only a moment, first to thank my hon. Friend the Under-Secretary of State for his co-operation and help on the Bill, and, secondly, to ask him whether an amendment will be tabled in another place on the sewerage arrangements for local authorities. The local authorities are anxious about this. We had a debate on it in Committee. A new clause was tabled, but naturally it was not selected because of the rules of the House. However, I should like an assurance from the Under-Secretary that there will be an adequate amendment tabled in another place to deal with this important question of sewerage arrangements for local authorities.

I agree with all that my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) said about the Bill, but he was too kind. It is a destructive Bill. It takes away rather than builds up, and it destroys relationships and organisms which after 10 years are beginning to settle down and could have been improved by a different Bill.

It has been said recently that the House is a charade. I do not agree with that. However, as I knew something about water before I came to the House, I can well see why some people outside sometimes take that view of proceedings here on matters about which they have knowledge.

Conservative Members are debating an arcane subject late at night, and they want to go home, but they are being kept up. I point out to them that the Bill will have the same effect as the Acts that introduced health reorganisation and local government reorganisation. Like those Acts, this one is not fitted to the needs of the nation, the consumers or good government. We have this bad Bill because we have a bad Government, and—I have to say this, although the Minister is here—bad judgement by Ministers when they were looking for a solution to the problem of how to improve what we have.

When the Secretary of State, as a junior Minister, made a statement some months ago about what the government intended, he knows that I very nearly lost my temper with him. I intervened from a sedentary position, with some effect, as he will see if he reads Hansard. The proceedings today show just how bad a Government can be when they are dealing with matters that need improving, but they take the wrong turning.

When I came to the House, London's pure water was the responsibility of the Metropolitan water board, and the drainage was dealt with by the GLC board of works, an ex-LCC department. It was a large organisation by any standards. We did not wish it to be merged with the Thames water authority, and I moved an amendment, although not against the water cycle, which we all wanted to be brought into the water organisation. The amendment was for a number of small regional authorities coordinated nationally to provide a comprehensive system of water co-operation and government.

The Government of the day—some present hon. Members were here at that time—attempted to put water into the straitjacket of something that they understood to be a public utility. The original Bill as conceived by the then Secretary of State aimed to treat water like electricity and gas. Perhaps the Ministers had played "Monopoly" too much when they were young and thought that they were all the same. They are not.

Electricity and gas may be natural phenomena, but they are channelled, stored, supplied and measured by man. Water is not like that. It is around us all the time. It is in the streets, on the roofs, on the roads, in the gardens, on agricultural land, on the mountains, on the moorlands, on the seas and in the estuaries. It is a natural phenomenon that would exist if we were not here. Yet the Government are putting it on a par with the other public utilities. Water impregnates the environment and the soil.

One cannot run an organisation dealing with this essential substance on the basis of a Whitehall bureaucracy. However, that is what the Bill is trying to do. I am not suggesting that the original water authorities were ideal: there was much wrong that should have been improved. They were probably too large and perhaps too remote. That could have been dealt with in other ways. There is certainly a need for a national co-ordinating mechanism.

I criticised the National Water Council when it started because I thought that it would be too weak. It has done a reasonably good job, but the Secretary of State now wants to destroy it. However, to do so, the Government are having to get together an association to fulfil those very important national functions that even the Government admit have to be carried out. We are taking away those functions by statute and having to create something else in their place. That is not a very sensible thing to do. I do not know the Government's objectives. They have never been explained in terms that make sense to anyone who knows anything about the water industry.

I appreciate the spirit in which the Minister replied to my proposal in the opening debate. He said that the job of the Water Space Amenity Commission had largely been done. Its pioneering work may have been done, but continuation of its executive work remains. The putative association of water authorities will certainly set up a replacement for the Water Space Amenity Commission, although not one with statutory responsibilities and powers. There is nothing in public life between hon. Members and the Secretary of State and every tap, cistern and pipe in every house in the country. It may be true that hon. Members cannot ask direct questions about day-to-day management, just as we cannot ask the Secretary of State for Transport why the 5.25 was late. Years ago, when the British Railways Board was first established, such questions could be asked.

Under the Bill, hon. Members will not be able to ask the Minister about the detailed conduct of any of the boards that he has appointed. That will be part of day-to-day administration. I make no complaint about the practice of the House under which hon. Members cannot ask such questions. If, however, it is argued that these matters are too detailed to be dealt with here, there should be machinery for them to be dealt with elsewhere. All that the Bill contains is the apology for consumer councils contained in clause 7, which is not really concerned with consumer councils at all. They exist within the clause but the obligations are concerned with reporting arrangements. The councils are not even set out in constitutional form. Everything will depend upon the guidelines about which the Minister has spoken.

The Government will be reneging on their responsibilities if they fail to state in statutory form how the consumer councils should work. Otherwise, there is nothing between every tap, cistern and lavatory and this House and the Secretary of State. It is certainly not desirable that the right hon. Gentleman should be burdened with those responsibilities.

The Bill creates further bureaucracy without accountability. It gives enormous powers of patronage to the Secretary of State. I trust that the right hon. Gentleman will not exercise them in the manner that the Secretary of State for Social Services appears to be exercising such powers in respect of health boards. However, if one Secretary of State can behave in this manner in health matters, another Secretary of State can do the same in respect of water.

There have been complaints by the Minister and Conservative Members that councils have not been too careful about their appointments to regional water authorities. It has been a place where old horses go out to grass or where people can be sent to Coventry. This has not been stated in so many words, but it has been the implication. What will the Secretary of State do? How will even the best Secretary of State be able to choose between the merits of the nominees to be appointed to regional hospital boards? He will be even more reliant on ladies and gentlemen to whom, by custom, we cannot refer in this place even if some of them are present.

The Government, who have views about Whitehall and the Civil Service, are adding to a machine that they criticise, not always properly. It is another feature of the Bill that is destructive and regressive in terms of good public administration. Almost every feature of the Bill is backward and is dismantling what has been started. It should never have been brought to the House. It should not be passed.

My hon. Friend will remember that in Committee I expressed concern about the powers to be vested in the water authorities to assist in winning overseas business, and I said that the Association of Consulting Engineers had expressed grave concern about possible unfair competition by water authorities. My right hon. Friend gave certain assurances, and concluded his remarks by observing:

"Why the involvement of the public sector is so important is that we can have this co-operative approach of enabling overseas customers to visit water authorities and water companies and actually see British plant operating and to see something of the success of their work".—[Official Report, Standing Committee B, 9 December 1982; c. 205.]

That was important, but it appears that the rules to be laid down for this type of operation will be by the issue of guidelines. Can my hon. Friend tell me whether he has made any further progress in preparing those guidelines, and whether they will have the force of law? If not, presumably they could be breached at any time, and therefore would not provide safeguards likely to last as long as the Bill, when it becomes law. That would be less than satisfactory.

The consultation document on the matter published in June 1981 said:

"It is not intended that the export activities of the bodies should extend to competition in the fields of design, engineering construction or supply of plant which is the province of the private sector. The exercise of export powers by the bodies would be subject to the written consent of the Secretary of State who would be able to impose conditions".

It is clear from this that it is the Government's intention not to allow unfair competition at the expense of the water ratepayers. If my hon. Friend acknowledges the very real concern that was expressed in Committee and accepted by my right hon. Friend, now the Secretary of State for the Environment, will he please be more specific about what he has in mind to allay that fear?

At 12.56, I am well aware of the lateness of the hour and the desire of most hon. Members to be in another place—and not necessarily the place at the red end of the Corridor. I am also aware that on 19 January, the day after the publication of the Franks report, there is little general interest in our affairs from the press, which earlier was notable for its absence. I believe that it was at a party elsewhere in the building—whether to celebrate the Prime Minister's acquittal, I do not know. However, the results of the Government's reorganisation of the water industry may have a much greater effect on the lives of my constituents than the Franks report that is getting all the attention today.

I want to put one or two questions to the Minister, and one or two to the right hon. Member for Birmingham, Small Heath (Mr. Howell). The right hon. Gentleman did a rollcall a short time ago. It amounted to about half a dozen Members on the Opposition Benches—now three enthusiasts, all men—and half a dozen enthusiasts on the Conservative Benches, and possibly 154 pressed men and women to maintain the Government's majority. The right hon. Gentleman said that he intended to support Third Reading. Perhaps he would have been more accurate if he had said that he would not oppose Third Reading.

That is exactly the position.

As a former colleague, I just wanted to clarify that. The fact that there is no formal Note against Third Reading does not mean that we approve the Bill, as cosmetically amended. We accept the reality of the situation that there are 160 votes on the Government side.

Some changes have been made. As I said, they are essentially cosmetic. The balance that we had on Second Reading between a service authority and a service industry, between an efficient authority and an accountable authority, has gone too far. We have virtually excluded the formal interest of the press, local authorities and the ombudsman, and so the accountability of the water authorities comes direct to this place. I shall be interested to read the Minister's replies about what questions we can ask and what we cannot.

If we are formally to exclude local authorities, the press and the ombudsman, and if this is to be the only place in which questions can be asked, a responsibility is placed on hon. Members to organise their affairs in their parliamentary activities within the districts and the regions. The relationship of hon. Members to the water authorities in their areas must be much closer and perhaps much more formal than hitherto. In the past we could leave it to local authority members, the ombudsman and the press to be the public's watchdogs, but it will be necessary now to achieve a more formal relationship. I shall be asking for that in the North-West and no doubt the hon. Member for Stockport, North (Mr. Bennett) will be asking for the same thing.

I ask the Minister to help encourage a more formal link and association. This will not mean committees, but if we are the only ones who will be able to call the authorities to account through Parliament we shall want to establish closer links for the sake of the authorities and the consumers. I do not support Third Reading, but I recognise that it is inevitable that it will receive it tonight.

I want briefly to share the concern expressed by my hon. Friend the Member for Reading, North (Mr. Durant) about the change in arrangements for sewerage agencies that is contained in the Bill. I urge my hon. Friend to examine carefully the change that is proposed. In my experience the arrangements whereby district councils have the right to exercise the agency work effectively, informally, efficiently and cheaply. It could be costly to change the present arrangement and I hope that my hon. Friend will re-examine the proposed change.

We are about to complete the second reorganisation of the water industry in 10 years. Rather than having learnt by the mistakes of the previous reorganisation, the Government are extending and enlarging the mistakes. The Conservative Government between 1970 and 1974 reorganised local government, the Health Service and the water industry. They were all pretty disastrous reorganisations, but of the three I believe that they made the worst job of the water industry. They have done little to remedy their earlier mistakes. Indeed, they have made them far worse.

The Government have attacked the principle of local democracy. It is odd that a Government who are so dependent on the principle should be so happy to erode it at local level. Unless we are prepared to defend local democracy we can hardly expect others to defend and subscribe to the principle of national democracy. As long as the water authorities had an element of local democracy in them, it was considered necessary for an ombudsman to scrutinise individual complaints, to allow the press into their meetings and to have a substantial number involved in the letting of contracts so that it would be extremely difficult for an individual to be bribed or persuaded to allow a contract to go in a certain direction. The Government have decided drastically to reduce the element of democracy and the number of those involved in decision making, and at the same time they have made it far easier to corrupt the whole process. It seems that the Government feel that they no longer need to check.

It is odd that when the Government set up a quango and appointments are made purely on the Government's whim, it is thought unnecessary to involve an ombudsman. This means that no one can make individual complaints aout maladministration. It is considered unnecessary for the press to be at meetings and no major safeguards are built into the new system to ensure that there are no allegations of corruption, or that no corruption actually occurs in the granting of contracts.

Does my hon. Friend agree with the cynic, who may be the realist, who said that the only thing that makes sense in the proposals is the whiff of contracts?

I accept those comments. It will be difficult for the new water authorities to establish confidence in the general public on the basis on which they are appointed when there are none of the checks and balances that existed in the past.

I very much regret that the Bill in no way deals with the major complaint of most constituents about the water authorities. The problem is that one has no control over the size of the bill. If one consumes less, the bill is not less. The Government keep saying that the water authorities should be treated like public utilities. The one thing that distinguishes the gas and electricity boards from water authorities is that the amount of gas and electricity that my constituents and others consume determines their bills. However, for water, there is no way in which they can control their bills. The Government should have introduced into the measure some rebate for those on low incomes, pensioners and others so that the ability of individuals to pay their water rates is taken into account.

The Government should take account of people's consumption of water. Water consumption, by the elderly is small compared to that of neighbours who live in identical houses, who at the moment pay identical water rates, but consume different amounts.

I deeply regret the fact that the Government have not looked at one of the reasons why the sewerage element of the water charges has gone up dramatically in many areas. In the north-west of England one of the major problems is sewer dereliction. A number of sewers have collapsed. Most sewers in the big cities in the north-west were built last century, and were built well. They would have every prospect of lasting a long time if they had to deal merely with the sewage that travels through them. What has been destroying the sewers is not the sewage but the number of heavy road vehicles, particularly the heavy lorries, which now move about the city streets. It is a question whether those who are damaging the sewers should make more contribution to their renewal rather than letting the charge fall on those who live in the area, who in many instances do not want the heavy lorries there anyway.

I also deeply regret the fact that the measure does not deal with water conservation. The demand in the water industry for new reservoirs has slackened because of the general malaise in the economy created by the Government. If the economy were to pick up, there might be demands for more reservoirs in areas of outstanding natural beauty.

We should consider water conservation. It is crazy that considerable volumes of water fall on the roofs of most houses, and are used in no way, but become a further problem to be dealt with by the sewers. We should make some use of that water.

With regard to domestic appliances, there are continual efforts to sell dishwashers and washing machines, which use vast quantities of water and are not designed to conserve water. In building regulations the systems for toilets are supposed to be designed now so that two different quantities of water are used, but there is no encouragement to individual householders to instal in replacement of a damaged system one that conserves water.

There are no measures to encourage the sensible use of water in this country. The Government have missed an opportunity to bring some sense into water conservation and to ensure that we do not keep demanding more and more reservoirs all over the country to meet future needs for water when simple conservation measures and modifications to domestic appliances would enable us to make far better use of existing resources.

We had a long debate earlier on the use of leisure facilities. Again, the Government have missed an opportunity to make far better use of those facilities and to do a little more to try to bring together the conflicting interests of the many groups that want to use water for leisure purposes.

If the Government are so determined to break the link between the water authorities and local government, I hope that they will encourage local government to ensure that enforcement of proper standards is imposed on the water authorities and that the public health departments of many local authorities will be encouraged to take action against water authorities when failures of sewage works and equipment lead to major pollution problems.

Finally, I am disappointed that Opposition Front Bench spokesmen did not give a clear undertaking that as soon as they have the opportunity they will reorganise the water industry and bring local democracy back to the collection and distribution of water and the collection of sewage, even if that means a national measure in relation to water collection. I deeply regret that after the 1973 reorganisation had made such a mess of the water industry the Labour Government merely embarked on consultations rather than actually putting the mess right. I hope that we should have a clear commitment today that the next Labour Government will not simply wait and consult but will take action to put the industry back under local democratic control at the earliest possible opportunity.

Having served on the Committee and spent a great deal of time trying to persuade the Government to think again on many of the matters that we have discussed on Report and now on Third Reading, I hope that there will be some deep thinking by the Government when the Bill is considered in another place and some serious amendments made before it returns here.

My hon. Friend the Member for Stockport, North (Mr. Bennett) described what a future Labour Government should do. I am sure that he is right and that my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), who is present for this debate, will agree that a Labour Government should not allow this legislation to remain on the statute book. I appreciate the feelings of my hon. Friend the Member for Stockport, North about what the last Labour Government should have done about the 1973 Act, but he will realise the difficulties that we had in that parliament. I think that the belief was that one should not start reorganising again immediately after a major reorganisation but should first consider the effects.

It is important that Governments should think things through before introducing legislation. The weakness of the Government is that they are still thinking about the Bill on Report and Third Reading. Indeed, Ministers have told us today that they are still not in a position to say how they will proceed but are having consultations. That is scandalous.

If we were to nominate the 10 worst Bills in this Parliament, this Bill would certainly feature in the list. It is a damnable Bill. It does nothing to solve the problems facing the water industry. The Government recognise that the 1973 reorganisation was wrong, but this Bill is even worse. At least the 1973 Act allowed for the representation of local authorities. The Bill cuts out local authority representatives completely.

We have heard a great song from Conservative Members about not wanting a lot of quangos. They say that they want bodies to be accountable, yet we are creating 10 quangos, the members of which are nominated by and are the servants of the Secretary of State. Moreover, we have a Conservative Secretary of State for Wales in a country which is predominantly Labour. He will nominate those who will serve on a body that will not represent the beliefs of people in Wales. The same will happen in many regions in England, such as the north and the midlands.

I congratulate the Secretary of State on being the successor of the present Secretary of State for Defence. If we are to have regional bodies, I should have thought that they would be more accountable if they consisted of people who had been elected to local authorities rather than those who are nominated by the Secretary of State. Local authority representatives served water authorities well, but the fact that they are democratically elected representatives is of no account to this Government.

The Government say that they will consider making appointments. We are to have the farcical circumstance that some members of the bodies will have experience of fishing, others will have experience of agriculture, still others will have experience of local government. There might be a councillor who does a little fishing and a little farming, but there is no guarantee that there will be accountability.

Will my hon. Friend put on record his anxiety, which is shared by the rest of the Labour Party, that the executive appointees will not be subjected to any scrutiny through election? What is more, the press is to be excluded from meetings of water authorities. They are to be shut out of them deliberately and will be limited to press conferences afterwards. That is a real step backwards for democracy.

All hon. Members who have served on the Committee have expressed deep anxiety about the way in which local authorities are being treated. Local authorities throughout Britain, their members and their associations oppose what the Government are doing about local government representation. There is no justification for doing away with such representation.

The Government have paid tribute to the work of the National Water Council. In Committee, we discovered the emergence of an association of the water regions. There is to be a National Water Council under another name. We do not know what will happen. Presumably consultations are still taking place. I hope that there are consultations before the Bill returns from the other place, but they just go on and on. We do not know what body will replace the National Water Council.

The Government's action is deplorable. If we have a regional system of organising water, not a national one, there must be a national water policy. If there is a national water policy—every nation must have one—there must be an organisation such as the National Water Council.

The Water Space Amenity Commission has also been abolished. The Government have made only a few concessions in that regard. In Committee, we found that the National Water Council dealt with the activities of overseas water authorities.

Other countries are developing their water industries. The National Water Council has put them in touch with regional water authorities. That has meant trade for our industries. We have put them in touch with companies that can help them to develop their water industries. When I challenged the Minister on that point, he said that a company would be formed. One of his colleagues said that it would be named the Aberdare company. We can take jokes, but it is a serious business. What about the company? We have not been told the details yet. What will happen to the important work of the National Water Council in dealing with other countries?

The House as a whole has realised the importance of developing the role of the local authority commissioner. Local water industry boards have been responsible to the local authority commissioner. People who felt that there had been maladministration complained to the ombudsman. The Government are abolishing that role. It is not a step forward. We had hoped that there would be a role for the ombudsman in other Government activities.

Hon. Members have referred to the Water Charges Equalisation Act 1977. The Labour Government's activities were not sufficient to deal with injustices whereby people in different regions paid a different price for an adequate water supply. There are great injustices. My right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) dealt with the matter. We have heard assurances that a Labour Government will tackle the problem. Someone said that it was a burning question in Wales. It is an importat and serious question which the Government have ignored.

The Franks report and the way in which the press was treated have been referred to today. The Prime Minister, in her maiden speech, said that the press should be allowed access to certain discussions. Yet the Government will exclude the press from discussions among the water authorities. Until the Bill is enacted, the press are allowed to attend meetings. We have heard quotations from numerous editors who are deeply concerned about the effect of the Government's proposals. There are to be arranged meetings—no doubt they will refer to recommendations being made by the water boards—

Paragraphs in the report.

They will refer to certain of their activities. Until now members of the press hae been allowed to listen to the deliberations.

There is a need for national negotiations on wages in the industry. The Government's proposals are a major step backwards and a recipe for chaos. Different arrangements will be made at different trade union negotiations in different regions. Will there be a great disparity in the wages paid to workers doing a similar job?

The Bill is deplorable. I hope that major amendments will be made in another place. If not, I hope that my right hon.and hon. Friends, who said that a Labour Government will not sustain the measure, will make it a priority to introduce legislation to organise the water industry on a far better basis.

Of course, there are those who see no prospect of improvement for the water industry in this Bill and who wish to oppose the principles on which it is based. Therefore, it is unlikely that my remarks will help to alleviate their worries. However, I make it clear that we must form the association of water authorities. We have always said that there are some essential functions on which there should be consultation between regional water authorities and agreements on policies to be pursued. They should be the basis of agreement between the authorities and not emanate from a statutorily based, separate organisation. Those consultations, and the policies that emerge from them, should be provided at a lower cost to the consumer and should be more efficient. The association of water authorities has issued its memorandum of association. Matters are proceeding, but the consultations are incomplete.

The hon. Member for Aberdare (Mr. Evans), who has now resumed his silent seat on the Opposition Front Bench, rather than his loquacious seat, should bear in mind that the continuing negotiations show that progress is being made. He would be the first to be upset if we did not have full and adequate consultations about such an important industry. We are even consulting the House of Commons and have made significant changes to the Bill as a result of that consultation. Let us draw pleasure and, I hope, comfort from that.

The right hon. Member for Birmingham, Small Heath (Mr. Howell) mentioned research. There is a commitment that research should continue. The water authority chairmen recognise that fact and they also recognise the collective importance of backing the water research centre, which is a crucial part of the research in the industry.

My hon. Friend the Member for Reading, North (Mr. Durant) asked about sewerage arrangements, as did my hon. Friend the Member for Dorset, North (Mr. Baker). I know about the worries of local authority associations on such matters. Hon. Members who served on the Committee will know that we distributed the consultation paper on amendments, and it is likely that amendments will be made in another place which will have resulted from the consultations that are still being assessed. However, I assure my hon. Friends that the Government emphasise the fact that there should be no fundamental change in the present position. The Government do not intend to go beyond the recommendation of the Monopolies and Mergers Commission, which was that no fundamental changes should be made. The agency arrangements should continue to play a major role in the way in which sewerage and drainage are undertaken by local authorities. The Monopolies and Mergers Commission confirmed that, in many cases, those arrangements work well. When we have reached firm conclusions, we shall introduce amendments in another place and there will be a subsequent opportunity for the House to discuss those issues.

My hon. Friend the Member for Ilford, South (Mr. Thorne) asked about export powers. In addition to the assurances that I gave to him in Committee, may I say that we shall ensure that water authorities which set up arrangements for overseas ventures will be strictly controlled. The bodies will be required to report to the Secretary of State any likely loss under a contract and how they propose to remedy it, to keep separate accounts for overseas business—which in many cases will be business undertaken by a separately established company—to take one year with another to meet their outgoings, to meet on their overseas activities any financial targets set for that business as a whole and, finally, to take out insurance and require bonds where necessary. In that way, proper competitive and fair conditions will be applied to the activities that water authorities undertake in overseas markets. However, they should be encouraged to take those opportunities where there are export orders to be won.

I agree with the hon. Member for Liverpool, West Derby (Mr. Ogden) that there should be close contact with Members of Parliament in the new phase of water authorities. Water authority chairmen would welcome that, and I am sure that that is the case in the north-west as it is in other areas. Assistance with water bills is available under DHSS arrangements but is not available in the same context as a rebate for local rates, as water bills are charges for services that have been delivered.

I am well aware that there are some major differences of view. The hon. Member for Newham, South (Mr. Spearing) launched his attack on what is proposed in a most extraordinary way. I take note of his views on this matter. Many hon. Members have played a part in the proceedings. I thank my hon. Friends who served on the Committee and my hon. Friends who are present tonight. I value their support and help in processing the Bill. It is a further step forward in trying to make improvements in the way in which water authorities discharge their functions. Based on principles with which my hon. Friends will be content, I trust that commercial operations run in the water authorities will gain the confidence of the House and of consumers.

I was not in the Chamber earlier as I have been in the Committee dealing with the Transport Bill. If Conservative Members are worried about the Bill going on into the night, they should not be trying to trample through Parliament in such rapid succession legislation which takes many hon. Members into Committees because the Government want to get the transport legislation, for example, on the statute book in order to affect the position of local authorities in the next financial year. If the Government had any sense, and introduced legislation in a more ordered way, it would not be necessary to have to spend long hours in late sittings, as Parliament would not be subjected to the pressure it is under purely as a result of the action of the Government.

It is a matter of concern that bodies that are already regarded with some dissatisfaction by the consumer because of their remoteness, should be made even more remote by the Government by replacing the indirect nominations from the elected bodies—the local authorities—with executive appointees, who moreover, will not be subject to proper and adequate scrutiny through the local press. The local papers keep an eye on what local water authorities are doing and report to the consumers in their regions. Many local papers have expressed strong criticism of the Government for taking away the obligation of local authorities, including the water authorities, to be subject to such scrutiny. Indeed, local authority representation on the water authority is indirect. There are no direct elections.

The Opposition should seek, when we get into government after the next election, to replace these appointees with directly elected representatives on the water authorities so that there is more accountability, and give the press access to their meetings.

As my hon. Friend the Member for Stockport, North (Mr. Bennett) said, there will be a strong feeling that behind closed doors funds may be misapplied, tenders wrongly allocated and rules bent instead of the open decision-making to which our democratic bodies are subject. This Bill is a retrograde step. It is a move closer to central government control. That is characteristic of this legislation and of other Bills such as the Transport Bill. The Government's claim is that the man in Whitehall knows best.

We see Conservative Members of Parliament on television talking about abolishing the metropolitan county councils and suggesting that those elected bodies should be replaced by boards of people nominated from metropolitan district councils, the very system which the Conservative Government are abolishing for the water boards. If it has merit for metropolitan county councils, it is strange that in another area the self-same Government formed by the Conservative Party are abolishing the system which they propose as a suitable replacement for metropolitan county councils.

The best method of accountability in a democracy is a democratically elected body. We are a democratically elected body. If anybody interferes with Parliament or makes suggestions about interfering with Parliament, there are cries about breach of privilege. When people stand up in the Gallery and make suggestions about what we should be debating there are great cries about non-interference with an elected body. But when it comes down to water authorities, even the modest vestiges of democracy are swept aside by the very people who talk in such glowing terms about parliamentary democracy.

This is simply a further aspecct of the corporate state which is developing under the present regime and is a half-way stage towards privatisation. Some of the water concerns are potentially highly profitable. By virtue of their organisation they are bound to be monopolies. Under this sort of system, with a narrow group of executives running these businesses, they would be much more easily sold off to private enterprise. Indeed, some water supplies are already operated by the private sector.

The trade unions do not want that sort of reorganisation. They view it with apprehension and concern. If the Minister is not aware of it, there is the making of a major dispute in the water industry. It is very much to be hoped that the Minister will keep the House closely informed.

This Bill clearly cannot assist in maintaining good industrial relations within the industry. Therefore, on those counts hopefully it will not come into operation by virtue of the curtailment of the life of the Government. When the Labour Party gets into power we will establish a democratically elected system which is genuinely accountable. We will not only apply our policy of open government in central Government but will restore open government at this level by giving the press access to the control of these important bodies.