Trimble moves Amendment to the Water and Sewerage Services (Northern Ireland) Order 2006

In a debate on the Water and Sewerage Services (Northern Ireland) Order 2006 in the House of Lords on 11 December 2006 Lord Trimble said,

Lord Trimble rose to move, 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”.

The noble Lord said: My Lords, I want to make clear what this amendment is not about. It would perhaps have considerably shortened the Minister’s speech had I been able to say this to him before he started. My amendment does not indicate opposition to reform of the water service in Northern Ireland, nor does it in any way indicate opposition to the payment of charges. Both reform and payment are necessary. The Minister acknowledged that this started under the Administration whom I had the honour to head. We knew that it was a serious issue. I am sure Mark Durkan shares my view that one of the most significant things we did in office was to put in place the reinvestment and reform initiative—which the Minister referred to at the end of his remarks—which created a borrowing power for the Northern Ireland Administration designed to deal with this. Of course, we knew that the borrowing would have to be paid for by charges.

Unfortunately, we did not get the chance to carry it much further. Privatisation was not in our mind, but we were conscious of the examples in Scotland and Wales, where water services operate commercially without being fully privatised. We would have looked closely at those examples. Speaking entirely for myself, I would have wanted to move towards metering as rapidly as possible, if for no other reason than general grounds of conservation. I am sure that, had the Administration remained in place, the issue could then have been dealt with. We would have carried this through and had it completely done and dusted by now—three and a half years have been lost since suspension.

The Minister also referred to the legal action of the consumer council. I am glad that he did so, because a veil of silence was drawn over this in another place which did not, to my mind, pay due respect to the judgment of the court. I am delighted that the Minister has put that court judgment and declaration before Members of the House. If the Minister does not mind, I shall say that I think that he was misleading the House ever so slightly by trying to indicate that he had won 15-to-one on the points. A better indication of success or otherwise is the court’s order as to costs: it awarded 80 per cent of the costs against the department, so the consumer council won four-to-one. That is a more balanced judgment on the matter.

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:

“Our line up to now has been that privatisation has been ruled out for the foreseeable future”.

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 the Government, it quickly opens the door to partial privatisation and who knows what beyond that. There is considerable concern.

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 important questions are about matters that are not in the legislation, such as the licence. A draft licence was published only last Monday. Some people have been able to read it, but I have not. I have been given some information about it, but I doubt there are many noble Lords here today who have heard of or read the licence. It was not available for the proceedings in another place, although it has been published in time for the proceedings here.

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 nice to see, but it is only funded up to 2010. He said that he was sure that after 2010 the Assembly would want to continue to do that. If the Assembly is there, perhaps it will, perhaps it will not; perhaps it will have the finances to do so, perhaps it will not. The noble Lord is clearly indicating that if he and his colleagues have anything to do with it, the affordability tariff will not continue after 2010.

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 terms of the rate of return to the Treasury. The current provision is most unfair and I want the Minister to dwell on that—ideally, to do more than dwell on it. I beg to move.

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”.

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11 December 2006


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