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The court’s declaration contained a reference to the Government’s decision not to bring this matter before a Grand Committee. As a result of a discovery during the court action, it came up that the Government decided not to proceed with a Grand Committee hearing because they said that it would only involve the “repetition of entrenched views”. I do not know where they would be. Maybe the Government were thinking of their own entrenched views, rather than those which we would have brought to the matter. We certainly do not have entrenched views on this.
Leaving procedural issues aside for the moment, we have some serious concerns about the substance of the matter. The Minister touched on one when he referred to land disposal and privatisation. I intervened, asking him to make the power of the regulator absolutely clear from the word go. I am sorry to say that I had difficulty following his answer. I think he was saying that the regulator would have immediate power over disposals, but want him to come back to that in his wind-up. It was not clear to me from what he was saying.
On privatisation, one of the advantages of the consumer council’s legal action was what came up in discovery. I heard what the Minister said; it was very familiar. I shall read from an e-mail sent by a senior civil servant to the Secretary of State’s political adviser in September. It starts exactly as the Minister said in his speech:
It goes on—as the Minister also helpfully said—to state:
“If necessary, we can go further and say categorically that this ministerial team will not privatise. (We have not deployed this publicly yet.) However, as you will know, the Treasury are pressing us to review whether there would be benefits from greater private sector participation in 2008. Such a review could conclude that there would be advantages to bringing in a private equity partner, which would mean selling a minority shareholding”.
So while the formal position of the Government is that they are not going to privatise, there is recognition of Treasury pressure in that direction and that, even as soon as 2008, we would see a partial privatisation. Selling a minority shareholding would get in underneath the safeguard that the Minister emphasised, so that safeguard regarding disposing of control of the company will not bite on what the Treasury is going to bring pressure to bear to do. As noble Lords well know, the Treasury has a habit of getting its way on these matters. It is therefore fair to say that while the present position of the Government is understandable for the foreseeable future—however long that may be—when we see the permanent position of the Government, it quickly opens the door to partial privatisation and who knows what beyond that. There is considerable concern.
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One of the reasons for the procedural concern is that this is a major piece of legislation. It is a couple of hundred pages long. There has been a certain amount of consultation about it, but the most
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The strategic business plan has not been published. The consumer council received a draft in September, which I hope has been superseded. The expert advice we received was concerned about its viability. I do not know whether that concern is justified because nobody has seen the strategic business plan. Can the Minister tell the House whether it will be published, when it will be published and what opportunity will there be for people to comment on it? If there are confidential matters in it, as I dare say there might be, will there be an independent review? Can the Minister tell the House whether the consumer council will be able to conduct an independent review of it? That would build confidence. At the moment, we do not know what the strategic business plan is. There is also a governance letter that nobody has seen.
These matters are crucial to whether the operation will succeed. I understand that the target is for the water undertaking to be commercially viable by 2010. That is very ambitious because everything the Minister said about the poor state of the water undertaking in Northern Ireland is absolutely true, and infraction proceedings are lurking in the background. Indeed, I recollect that a letter from the European Commission came out in the legal proceedings and that it stated that the present legislation in Northern Ireland on water is not compliant with European directives. I think that this legislation is also not compliant. I understand that the Commission and the Government are corresponding on this matter, and that it is not concluded. That also raises considerable concern.
Lord Rooker: My Lords, I have taken advice. The Commission has ruled that the current legislation does not conform. This legislation solves that problem.
Lord Trimble: My Lords, I thank the noble Lord for giving us that information. On regulation generally, some of what the Minister has said about the powers of the regulator give a little comfort. There is still real concern about the regulation. Again, I would like the Minister to comment on that in his winding-up speech.
My understanding is that the regulator’s powers are derived solely from the licence, which the Government have issued for consultation, and there is no power in the legislation. For a regulator to be genuinely independent there must be some statutory basis for his activity rather than being dependent on a licence issued by the department, which can be changed by that department without the same formalities as would apply in other matters.
The noble Lord made much reference to the affordability tariff. It is good to see it there. He said that it was being funded by the Government, which is
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My amendment calls for this matter to be deferred to the Assembly. I do not accept that that would involve a two-year delay. It would involve the Assembly having to make some decisions and address some of the issues that I mentioned. At least it would ensure that the community in Northern Ireland discovered what were the financial plans, the strategic business plan, the governance letter and so on, and that decisions were taken. It would be very good for the Assembly to have quickly to address this very difficult issue because it will not find its feet and develop properly unless it does.
I should parenthetically point out that the reference in my amendment to the Programme for Government Committee of the Assembly sounds curious but it is in substance the shadow Executive. The committee was reconstituted in November, precisely as the Executive would have been: containing only those parties that would be in an Executive, according to the number of ministerial departments that each would hold. We had a briefing by the Secretary of State, Peter Hain, here a few weeks ago. He accepted that the Programme for Government Committee was the shadow Executive—so we have reached the point in Northern Ireland where there is a shadow Executive considering policy matters. The committee wrote again last Monday, I think, to the Secretary of State, asking for the matter to be deferred to it. We should have regard to that request.
By way of conclusion, I want to emphasise one further matter. Within the financial structures for the new undertaking there is provision for a dividend to be paid to the Treasury from the Water Service in Northern Ireland. It is set at 5.8 per cent. In England the equivalent figure is 5.1 per cent and in Scotland it is 4.1 per cent. I am sorry that the noble Lord, Lord Barnett, is not here because I would be delighted to point out to him that he and his formula are not to blame for that. Those are decisions taken entirely by the Treasury, and we can only speculate why it is so generous to Scotland. I would not like to speculate on the reason for that. I will not take Scotland as a comparator for these matters, but quite seriously—I want to press the Minister strongly on this—there should be parity between the return charge to England and that to Northern Ireland.
The Minister made many comparisons between England and Northern Ireland. Consequently, he ought to accept this comparison. That would go a long way towards easing the difficult adjustment that there will be for people in Northern Ireland in having to pay significantly more than they have done in the past. They will have to pay more, and that will not be popular, but it would help the Government enormously in gaining popular acceptance if they could say that they were treating people in Northern Ireland in just the same way as people in England in
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Moved, as an amendment to the above Motion, to leave out all the words after “that” and insert “this House, having regard to the declaration of the High Court of Justice in Northern Ireland that the draft order has not been subject to full consultation, and the repeated request of the Committee on the Programme for Government of the Northern Ireland Assembly that the legislation should be deferred, declines to approve the Water and Sewerage Services (Northern Ireland) Order 2006”.—(Lord Trimble.)
Lord Glentoran: My Lords, I thank the noble Lord, Lord Rooker, for moving the Motion so succinctly. Perhaps I should also thank the noble Lord, Lord Trimble, for making his case so elegantly and clearly. Her Majesty's Government have put us in a pretty intolerable situation. They have brought legislation before your Lordships' House which, in anyone's language, is a significant and sizeable Bill but, because it happens to be Northern Ireland legislation, has to be treated as a statutory instrument.
The Government have made the situation more complicated because the order is very controversial, as the noble Lord, Lord Rooker, said. To complicate it even more, the Secretary of State has said that he will call a general election in Northern Ireland—on 30 January, I think. Although it may not be very significant, the Conservative Party has a region in Northern Ireland which will be putting forward candidates for seats in the Assembly. That makes it even more ridiculous because those in my party—I think, in all parties, as the noble Lord, Lord Trimble, said—accept the need for charging for water and sewerage in Northern Ireland. No one has denied that water rates and the whole water and sewerage service infrastructure in Northern Ireland need serious attention. Certain parts of Northern Ireland still boast the worst-polluted beaches, thanks to sewerage breakdown and failure.
Her Majesty's Government, in their wisdom, have prevented us doing what Oppositions ought to do in your Lordships' House: take a government Bill and attempt to improve it, amend it and shape it—sometimes, if I can be so I unkind, to bring it from cuckoo land to reality and make it of practical use. That is our job in this place. This time, because it concerns Northern Ireland, we cannot do that. All we can do is defeat the order and tell the Government to go away. In so doing, we will defeat something that we believe is necessary. I find that appalling.
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However, to compound the matter, the Government have a very reasonable way out: they believe, and I would like to believe, that we will have devolved government in Northern Ireland in three and a half months. They already started this process three and a half years ago, as the noble Lord, Lord Trimble, said. They know what they are on about. The history is already there and the plans are probably already there
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Having said all that, I believe that the Government have moved quite a long way towards helping us, thanks to the meetings that my colleagues and I have been able to have with the Minister and his officials. The Minister’s clarity when presenting the order and the things that he covered reinforced my thoughts along that line. Had I wanted to amend the Bill as opposed to giving a straight yes or no, the first thing that I would have said, wearing my businessman’s hat and my Northern Ireland inhabitant’s hat, was that I was not happy with how the order was going to proceed—if I am repeating things that the noble Lord, Lord Trimble, said, it is probably because we have been meeting the same people, reading the same briefs and drawing more or less the same conclusions. There was not enough clarification, even though there was a judicial review which helped to provide some. It was quite clear that all sorts of things were going on that made people suspicious. We are suspicious of how much money will go directly to the Treasury. We all know that the Treasury’s hands are ready to grab anything that might be coming; as we have heard, it very often pushes government departments to create more wealth for it. We therefore wanted some assurance about how the whole process will work financially.
I, for one, attempted to run a sizeable business in Northern Ireland in the 1970s, 1980s and 1990s, but suffered by paying the highest price for energy in the whole of Europe, thanks to my own party’s incompetence. I have said that before quite loudly to the person concerned. I am delighted to hear that the Minister has committed the Government to not making that mistake again and to looking to the future. However, much boils down to the debate that we have had so far on what powers the regulator will have, when those powers will commence and how clear and visible the business process of the GoCo—government-owned company—will be. I hate those acronyms.
I want to ask one or two questions similar to those of the noble Lord, Lord Trimble. First, on regulation, I received a letter with annexes from the Department for Regional Development, for which I thank the Minister and his officials. Will the Minister be good enough to place annexe A of the covering letter to me, dated 8 December, from Mr John Mills, acting director of the policy and legislation division, in the Library, because there is a lot of detail in it and, for those who are interested, it clarifies quite a number of issues about which I was concerned?
Following on from that, I will repeat a few questions that the noble Lord, Lord Trimble, repeated. Will the draft strategic business plan and its underlying assumptions be made available for public scrutiny before the Minister signs it off? I have an addendum to that question: I accept that any business plan will have business confidentiality clauses, which I would not expect to be shown. Secondly, how much money will be collected from domestic consumers and
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Finally, I want to repeat another point made by the noble Lord, Lord Trimble. Why should poor, little Northern Ireland have to pay 5.8 per cent interest against 5.1 per cent in England and 4.1 per cent in Scotland? That is totally unjust and I shall be very interested to hear whether the Treasury has come up with a wonderful ruse on why interest rates in Northern Ireland are so much higher than anywhere else. Having said that, I await the Minister’s speech on where the Government are going before I decide whether to support the order.
Lord Smith of Clifton: My Lords, I wish to reinforce what the noble Lord, Lord Glentoran, said about the Minister’s speech and that of the noble Lord, Lord Trimble. The Minister’s speech brought him back on form since our rates order debate. It was interesting because it was comprehensive and acknowledged many noble Lords’ reservations. Had the Government adopted that mode in the other place, they would not have aroused the suspicions that were aroused in parts of your Lordships’ House. I commend him for that change of manner and for the comprehensiveness with which he has attempted to answer many of the reservations. In its own way, this is a mini case study of how representations can be made and how Governments can seek to accommodate them in the various stages of legislation, which I commend to future textbook writers.
The noble Lord, Lord Trimble, presented a very cogent case in support of his amendment, although he, too, recognised that much of what the Minister had said allayed some of our worst suspicions. There are some specific issues still, particularly in relation to the GoCo, on precisely the assumptions and built-in elements in the business plan. I endorse the request made by the noble Lord, Lord Glentoran, for greater glasnost on that and I will certainly await the Minister’s reply. It is quite impossible for us to be asked to give a free hand, sight unseen to the Government.
The noble Lord, Lord Glentoran, has reinforced what I have been saying for a very long time. Northern Ireland legislation is most undemocratic and unparliamentary. The lack of amendability, which I know the noble Lord, Lord Rooker, has acknowledged in the past, makes it extremely difficult for us to nod these things through because we are faced with no opportunity to change the legislation.
I follow very much the point by the noble Lord, Lord Trimble, that this issue should be dealt with by representatives of the Assembly rather than imposed by Westminster. If the Government are confident that the devolved institutions will be restored by March, after the lengthy period of failure to address the problems of water supply and sewerage in Northern Ireland, three months is neither here nor there; in legislative time it is petty cash.
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Like the noble Lord, Lord Glentoran, I will wait to hear how the Minister addresses those problems in his winding-up speech. I will not look forward to a number of orders coming forward in the new year, before we know about the restoration of the Assembly and the Executive, if we are always going to have these arguments and be told that the orders have to go through. The Government would be advised to be very parsimonious in the number of orders they bring here before the spring, otherwise they will attract increasing opposition if they use these arguments time and again to push through unamendable Orders in Council. I shall await the Minister’s response before deciding what we will do regarding this amendment.
Baroness O'Cathain: My Lords, will the Minister explain a couple of points? I acknowledge that he is one of the most deeply concerned in this House about climate change and its impact on sustainability. Why, therefore, when he uses the words “fair contribution” with regard to pricing and to ensuring that pensioner households would be the first group to be offered the choice of a meter, is he tying the Assembly’s hands behind its back so that it will not be able to introduce meters generally in Northern Ireland? That would solve the problems brought about by the sustainability argument apropos of climate change. It is such a backward step when we all know that in England, Wales and Scotland, if we were starting from scratch, we would make sure that every household had a meter. We now have a great opportunity to do so. At the same time it will look affordable and fair—the very words used were “fair contribution”. However, how can the Minister square the fair contribution argument with the statement,
- “all households will pay a direct charge for water and sewerage services received, consisting of a standing charge and a variable element based on the discrete capital value of each property”,
and not based on whatever drop of water they consume?
I am really concerned about this. The order has been brought forward by people who have a much shorter-term vision and strategy for the country as a whole than us here in the House of Lords. They are obviously worried about the next general election, but we can think about the elements the Minister is so concerned about: the impact of climate change, and sustainability. I do not want to put him on the spot, but why oh why are they not taking the opportunity to allow meters to be introduced generally?
Baroness Harris of Richmond: My Lords, I echo what the noble Baroness, Lady O’Cathain, has suggested. In fact, that was going to be my point. Why can householders who are not pensioners or in newly built houses not have water meters fitted during the early period of charging? Do the Government not think it would be a good idea to provide the meter free and let people install them at their own expense? That would demonstrate good faith. As the order suggests in Chapter II of Part V, “Promotion of the efficient use of water”:
“It shall be the duty of every water undertaker to promote the efficient use of water by its customers”.
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It would show good faith on the part of the Government if they were to provide meters and let people install them at their own expense.
Lord Browne of Belmont: My Lords, it is clear that the water and sewerage infrastructure in Northern Ireland needs to be brought up to modern-day health standards. We all agree that it has to be paid for, but at a time when direct Ministers are trying to restore democratic institutions in Northern Ireland, it is regrettable that they continue to implement policies that contradict entirely the agreement of the people, their political representatives, the trade unions, the business community and other interested bodies.
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The Minister referred to the judicial review held in Belfast High Court on 22 November. The General Consumer Council for Northern Ireland had a victory because it was agreed that a full consultation process had not taken place. I agree with the council’s concern about the lack of consumer protection contained in the order comparable to the gas and electricity industries. That is regrettable as well. The order places the water service as a government-owned company—GoCo—and while the Government will remain the overall shareholder, the option is available for the company to be passed into private hands. That led to a £1 billion loss to consumers when the electricity sector in Northern Ireland was privatised.
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