Water Bill

Hywel Williams Excerpts

Monday 6th January 2014 Commons Chamber

[Hywel Williams (Arfon) (PC)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Retail exit—

‘(1) The Secretary of State may by regulations make provision about the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company.

(2) Regulations under this section are to be made by statutory instrument.

(3) Regulations under subsection (1) may, in particular, make provision for any such transfer to be subject to—

(a) approval by the Secretary of State;

(b) any such safeguards as may be specified in the regulations;

(c) the transferee company holding a licence containing a retail authorisation pursuant to section 17A of the Water Industry Act 1991;

(d) the provision of any information or other such assistance from the relevant undertaker as may be required by the Secretary of State for the purposes of approving the transfer.’.

New clause 11—Duties of undertakers to furnish the Secretary of State with information: annual review—

‘(1) Section 202 of the Water Industry Act 1991 (duties to undertakers to furnish the Secretary of State with information) is amended as follows.

(2) After subsection (1A) there is inserted—

“(1B) Any company with a duty under subsections (1) and (1A) must furnish the Secretary of State and the Authority with an annual review which provides information about—

(a) their performance;

(b) the total amount of investment;

(c) their taxation structure;

(d) their corporate structure; and

(e) the total amount of dividends paid to shareholders.

(1C) Information under subsection (1B) must be provided prior to the publication of the annual statement of the Secretary of State under section 2A.”.’.

New clause 12—Oversight of charges—

‘In section 2 of the Water Industry Act 1991 (general duties with respect of the water industry), after subsection (2C) there is inserted—

“(2CA) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the rates of charges to—

(a) household premises; and

(b) non-household premises.”.’.

New clause 14—Privatisation of water supply: review—

‘(1) Chapter 1 of this Act shall not come into force until the Secretary of State has laid before Parliament a report on the performance of the water companies since the privatisation of the arrangements for water supply came into force under the Water Act 1989, the Water Industry Act 1991 and the Water Consolidation (Consequential Provisions) Act 1991.

(2) A report under subsection (1) must in particular review—

(a) the cost of water to the consumer,

(b) the number of disconnections of water supply,

(c) the purity of the water supplied and the number and consequences of water pollution incidences attributable to the operation of the water companies,

(d) the incidences of leakages, low pressure and disruptions to water supply,

(e) the levels of investment in the water supply infrastructure by the water companies,

(f) the profits made and dividends paid to shareholders by the water companies,

(g) the levels of management remuneration of the water companies,

(h) the levels of taxation paid by the water companies, and

(i) the adherence of the water companies in their operations in the UK and internationally to the national legislation and international conventions and treaties on the protection of the environment, human rights and wages and employment conditions.’.

Government amendments 13 to 22 and 59.

Amendment 12, page 124, line 1, in clause 80, at end insert ‘(h) section [Retail exit].’.

Government new schedule 1—‘Orders under section 77: further provision.

Government amendments 23 to 28, 60, 29 to 46, 61 to 64, 47 to 50, 52, 53, 65 to 87 and 54.

[Hywel Williams]

As is often remarked, Wales is the land of mountains and valleys, and of lakes and rivers. It is therefore very appropriate that I, as a Welsh Member, speak on the Water Bill.

Water and lakes have had a central part in Welsh culture for many centuries. We witnessed astonishing discoveries some decades ago at Llyn Cerrig Bach, the lake on Ynys Môn, of metal offerings to the gods from 2,000 years ago, including some gruesome slave chains.

There is the story of Llyn y Fan Fach. The poor farm boy wins the love of the maiden of the lake. By intrigue, they marry and prosper. He strikes her inadvertently three times, and on the third blow she returns to the lake with all their worldly wealth. There are many other such stories.

Our lakes have inspired poets—too many to quote. One very short extract, which I will translate, will suffice. Gwilym Cowlyd, in his long poem to the mountains of Wales sings thus:

“Y llynnau gywyrddion llonnydd - a gysgant

Mewn gw as gawd ofynydd

A thynn heulwen ysblennydd

Ar len y dwr lun y dydd”.

That translates as: the still green lakes sleep in a waistcoat of mountain, and splendid sunlight draws on the sheet of the water the picture of the day.

Our lakes and rivers inspired Welsh artists such as Richard Wilson, who is sometimes called the father of “English”—sic—landscape painting. His two substantial paintings of Afon Dyfrdwy, the River Dee, can be seen in the National Gallery. His defining painting of Llyn-y-Cau on Cader Idris can be seen at Tate Britain.

So far, so uncontroversial. That fits into the usual Wales box—it is nothing to disturb Front Benchers on either side of the House—and is the conventional picture of our country as a place of extreme natural beauty, and of a long-lived, varied and inspiring culture, but water has also been an emotive, emblematic and defining political matter in Wales for many decades. Let no one in the Chamber doubt or underestimate the power and significance of the water issue in Wales.

I referred in Committee to the controversy and conflict in the 1950s and 1960s over the drowning of Welsh valleys to supply English conurbations against the will of the people of Wales. That was demonstrated in this very House of Commons, when all but one of Wales’s MPs voted against the removal of the people of the village of Capel Celyn and the drowning of their valley to supply the burgeoning and thirsty industrial development of Merseyside.

At the time, the developers saw that as the entirely reasonable harnessing of readily available natural resources for much needed development. They wondered what all the fuss was about. Many Welsh people saw it as straightforward expropriation, akin to the highland clearances. Chillingly, the drowning of Welsh valleys led to the first sustained campaign of bombing in Wales, which, in a further development, led tragically to the injury of an innocent schoolboy, and to the deaths of two of the bombers and the jailing of some of the key perpetrators. Some hon. Members will be familiar with the pictures taken by Geoff Charles, the photo-journalist, of the 1956 demonstration in Liverpool. The people of Capel Celyn marched through the streets of the city to the council buildings, only to find the doors barred against them. Their banners, carried through a city still bearing the many scars of aerial bombardment, said: “Your homes are safe. Save ours. Do not drown our homes.”

One of the leaders of that march in 1956 was Gwynfor Evans, the president of Plaid Cymru, who in 1966 was elected as the MP for Carmarthen. He was the first Plaid Cymru MP, a political earthquake that still reverberates today. Let no one here today doubt or underestimate the power of the water issue in Wales. To borrow RS Thomas’s line, rather than

“Worrying the carcass of an old song”,

let us look at the situation facing us today.

Dwr Cymru Welsh Water is the provider for most of Wales and for parts of England. Dee Valley Water supplies part of north-east Wales and part of the north-west of England. Severn Trent Water supplies mid-Wales and benefits from its water resources. Indeed, it has a 99-year contract with Welsh Water, dating most recently from 1984, to supply up to 360 megalitres per day of non-potable water. That contract ends in 2073.

This arrangement has its roots in the Birmingham Corporation Water Act 1892. It might appear to some as reasonable and practical at the height of municipal power at the end of the 19th century or when water was in public ownership. Indeed, it was the pattern adopted on privatisation and it continues today. To others, it is nothing less than a clear injustice, with a private sector organisation from another country benefiting from a substantial part of what should be a valuable public resource for Wales.

The water industry in Wales is different from the industry in England and in Scotland. It is run on a non-profit distributing basis. Any profits are channelled into lower prices or investment in the service. This has led to below-inflation price rises for the past three years, with a promise of similar for the future; to a sustained lowering of the gearing of the organisation in an industry where gearing is notoriously high; and to a substantial and sustained investment programme.

To get to the nub of the matter before us in new clause 1, the current arrangements are that the National Assembly for Wales has responsibility for water in Wales, save for that water which flows from mid-Wales to England. New clause 1 provides that the National Assembly for Wales shall have legislative competence for water up to the geographical boundary with England—nothing more and nothing less. It is a reasonable aspiration for any legislature to have legislative competence for important resources within its territory, and it is reasonable that the current arrangements should be changed.

[Mr Philip Hollobone (Kettering) (Con)]

I am listening to the hon. Gentleman’s speech with great interest. When the water industry was established, the boundaries were set on the basis of natural watersheds, which, unfortunately, do not coincide with the boundary between Wales and England. Would the new clause not cause unnecessary and potentially expensive administrative complexity which would benefit neither Dwr Cymru customers nor those in England?

[Hywel Williams]

I thank the hon. Gentleman for his intervention. He anticipates my next points, though he is welcome to intervene again should he still be unsatisfied.

We are not in a static, pre-privatisation and pre-devolution situation. Things have moved on, not least in respect of the current status of the NAW as a legislature following the most recent Act—I note that some hon. Members still call it a Welsh Administration, but that is another matter—and there is the prospect of further change as a result of the Silk commission’s reports. Change is central to the relationship between England and Wales, and has been so at least since the establishment of the Welsh Office in 1964. The pace picked up enormously since 1997 and 1999, with the establishment of the Welsh Assembly. The then Labour Secretary of State for Wales said famously that devolution is a “process, not an event”. That is a truism, whatever the current Labour First Minister in Cardiff might wish for as a constitutional settlement, so that it will “all just go away” and he can continue on his unambitious meander.

Plaid Cymru tabled amendments to Labour’s Government of Wales Bill in 2005-06 that would have had a similar effect to new clause 1, but the then Labour Government rejected them. They retained what, as a shorthand, I call the “London veto on Welsh water”. Their attitude was in contrast to that of the then hon. Member for Suffolk Coastal and former Environment Minister, John Selwyn Gummer, who is now in another place. In response to my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd), he said:

“Under the clause, a Secretary of State, by diktat, would be able to say that a Measure that has a passing or glancing effect on some matter of importance—sufficiently important for the Assembly to feel that a Measure is needed—should be stopped because he has ‘reasonable grounds to believe’ that it would have an ‘adverse effect’. It is difficult to imagine that a Secretary of State would not be able to stop anything that he did not like. The condition of having ‘reasonable grounds’ does not help, so vague is the wording used in the following paragraphs.”

It was not just the Plaid Cymru MP who was sceptical about the Labour Government’s attitude. John Selwyn Gummer went on to say:

“I agree with the hon. Member for Meirionnydd Nant Conwy.”

That was his constituency at the time.

“Either we trust the Welsh people or we do not. It is extremely difficult for me to accept that the Welsh people have to be singled out and measures taken to ensure that, where water is concerned, they should not in any way or in any circumstances be able to do anything that might upset the plans of English Ministers.”—[Official Report, 24 January 2006; Vol. 441, c. 1359.]

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate my hon. Friend on making a powerful case for the full devolution of Welsh water resources. Is it not the case that were his new clause successful, the people of Wales would be in full control over their entire water portfolio and that those who abstain or oppose his new clause when we divide will essentially be saying that large parts of Welsh water resources should be under the control of the British state?

[Hywel Williams]

My hon. Friend makes a telling point that I shall refer to later: there is no centre ground on this matter. Either the Assembly controls Welsh resources or the Government here in London do so. It is a question of whether the Welsh people have self-determination on this matter or whether there is a veto from London. I know which option he favours—it is the same one I favour.

[Jonathan Evans (Cardiff North) (Con)]

The hon. Gentleman rightly referred to the Capel Celyn situation—I remember it from many years ago when I first entered politics—and rightly said that across the political spectrum there was universal opposition in Wales to the drowning of valleys. Today, however, he should help the House. What is the mood in Wales today? He obviously feels that this is yet another step in devolution, but there is no great appetite for it elsewhere in Wales.

[Hywel Williams]

That is an interesting point. At every turn, when further devolution is proposed, right hon. and hon. Members of all parties always say that there is no appetite for it, and they point to polls allegedly showing no appetite for further change, but subsequent polls always show that the Welsh people support further devolution. They support devolution that goes further than the Government’s proposals. They supported further devolution before and after the Government of Wales Act. The hon. Gentleman has his own opinion and I have mine, but I think I have my ear closer to the ground of Welsh people’s opinion.

[Jonathan Edwards]

The hon. Member for Cardiff North (Jonathan Evans) might have noticed over the summer that the Silk commission undertook the most detailed study of devolutionary attitudes in Wales since the Senedd was created in 1999, and it clearly indicated overwhelming support for the people of Wales getting control over their natural resources, be that wind, water, shale gas or whatever. The people of Wales want those resources in the ownership of the Welsh people, and the guardian of the Welsh people is our own sovereign Parliament in Cardiff.

[Hywel Williams]

I am grateful to my hon. Friend for that further point, however disappointed we both might be with the guardianship of the current Government in Cardiff.

Eight years after the Government of Wales Act, circumstances on the ground are much more pressing. For example—a small example, perhaps—the fracking industry, if it proceeds, will be a heavy user of water, and as the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), has confirmed:

“Water sourced from local water companies for projects in England could potentially originate from Wales.”—[Official Report, 18 December 2013; Vol. 572, c. 640W.]

At the very least, there is the threat of history repeating itself—of industrial development and growth in wealth in England being based on resources from Wales, of the benefits to Wales being limited and of the legislative control of the Welsh Government being limited to part of the country only and being subject to a London veto. I believe that that is insupportable. It would be seen by many as Capel Celyn and Tryweryn once again.

[Bob Stewart (Beckenham) (Con)]

Does the hon. Gentleman’s new clause imply that the Welsh Assembly could stop water coming into England if it wished to do so?

[Hywel Williams]

The hon. Gentleman anticipates my next point: it is a matter for the Welsh Government to decide what they would do; they have the right to decide for themselves. What I am against is this place’s veto and this place telling the Welsh Government what they would or should do. I think that in a reasonable world—and I think the Welsh Government are very reasonable people—they would be highly unlikely to turn the off taps, but they might be able to reverse what I described earlier as a patent injustice. What might the Welsh Government do with legislative competence up to the border? That is a matter for them.

This Water Bill introduces competition into water provision. Water companies in Wales are wholly or mainly exempt, but that still leaves open to competition a huge area of Wales owned by Severn Trent, which is expressly against the wishes of the Welsh Government—at least for that part of Wales for which they have the power to decide.

[Mr Hollobone]

I am following the hon. Gentleman’s speech with genuine interest. If water is abstracted from the area within Dwr Cymru’s competence and Dwr Cymru receives proceeds from that abstraction, could that money be used to keep water bills down for the vast majority of Welsh Water customers?

[Hywel Williams]

I thank the hon. Gentleman for his intervention. As I said, the agreement with Severn Trent predates privatisation, and the amount of money that changes hands is, I think, nominal. I have to confess that I do not know precisely how much it is, but my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) has referred in the past to a very small amount of money changing hands, which has only a marginal effect on what Welsh Water is able to achieve. I would also point out that what it achieves by being a not-for-distributive-profits organisation is enormously greater than any money it might get from Severn Trent.

[Mr Hollobone]

The hon. Gentleman mentioned fracking, which could well be a growth business in Wales as in England. From what he says, it seems to me that any water abstracted from Dwr Cymru’s area could mean a negotiation between Dwr Cymru and the users of that water. If it wanted to do so, Dwr Cymru could charge quite a high price for what is a very valuable resource.

[Hywel Williams]

The hon. Gentleman makes a fine point. That would be the case if, say, Northumbrian Water sells to Yorkshire Water: there are different prices in different parts of the country, depending on the economics of the transport of water. The moot point about water is that it is in some ways a transport business rather than a water supply business, because water is extremely heavy and difficult to move about. It would be a matter of negotiation. As I pointed out, however, Welsh Water does not have control of some of the more significant water resources in Wales—the water sources in mid-Wales. Incidentally, I do not want to stray from the water industry, Madam Deputy Speaker, but fracking might take place in south Wales and possibly not in north-west Wales—the part I represent. Someone has to say that, I suppose—start at home.

Ofwat addressed the matter of realigning legislative competence in its evidence to the Silk commission. People who frighten the horses over the costs would do well to listen to what Ofwat had to say about the “potential impacts” of moving away from the “wholly or mainly” boundary—that is, the current situation. It said:

“During our evidence session I was asked about any possible impacts of moving away from the current policy boundary definition. We believe that there are likely to be some administrative costs to companies (and customers) from such a change and that there could be some incidence effects on customer bills (which could be positive or negative for different customers).”

In other words, it will impact differently, but Ofwat says:

“Generally we would expect both of these to be relatively minor.”

I do not think that there is a reason to be particularly frightened of any costs that might be involved.

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[Jonathan Edwards]

Considering the clear position of the Labour Welsh Government, does my hon. Friend share my surprise that there is not a single Labour MP based in Wales in the Chamber today to defend that position?

[Hywel Williams]

Alas, I am not surprised at all by the complete lack of Labour MPs from Wales in the Chamber. They might still be celebrating, who knows?

In conclusion, if the coalition Government are unwise and refuse to accept the new clause and we are forced to press it to a Division, I expect the main Opposition party, which is also the Government party in Wales, to join us in the Lobby. After all, this is not just a Welsh test for the coalition Government. It is also a test for the Opposition in this place and for their friends in Wales of their consistency and commitment to the people of Wales. Are they serious about devolving power to Cardiff, or is this to be a case of echoing St Augustine: “Make me pure, but not yet”?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

It is a pleasure to follow the hon. Member for Arfon (Hywel Williams), who moved his amendment so eloquently.

I want to speak in support of two little amendments that have been grouped under the heading “Regime of the water industry”. New clause 2 and amendment 12 have been tabled in my name and those of a number of colleagues on the Select Committee on Environment, Food and Rural Affairs. We followed the proceedings in the Public Bill Committee with great interest, but chose to bide our time until the remaining stages before we entered into the legislative process, having done what I thought was a welcome piece of work in the pre-legislative scrutiny of the draft Bill.

New clause 2 specifically considers the possibility of allowing a retail exit. It would empower the Secretary of State to make provision by regulation for the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company. Regulations would be made in the normal way by statutory instrument and would make provision for any transfer to be subject to the approval of the Secretary of State and such safeguards as may be specified in the regulations. Amendment 12 would amend clause 80 by inserting the relevant section on retail exit.

We considered retail exit during the pre-legislative scrutiny. Inevitably, a number of companies may not necessarily fail but will regrettably have insufficient customers to allow them to stay in the market. New clause 2 and amendment 12 would simply recognise that impact and allow companies to function in what would be considered a normal competitive market. An exit clause such as we propose would facilitate new entrants, particularly larger ones, into the water and sewerage retail markets.

We recommended in our report during the pre-legislative scrutiny that the Bill should include such provisions to enable incumbent companies to exit the retail market voluntarily. It would be helpful to hear from the Minister whether he is minded to accept new clause 2 and amendment 12. During our inquiry, both regulators—Ofwat, which covers England and Wales, and the Water Industry Commission for Scotland—said that incumbent companies and, indeed, new entrants were united in calling for the Bill to include an exit route.

During the Public Bill Committee, Opposition Members proposed a new clause to allow incumbent companies to choose whether to provide to the retail or wholesale market only, subject to approval by the Secretary of State. Regrettably, the Opposition’s new clause was defeated in a vote. New clause 2 would have a different effect from the new clause proposed by the Opposition in Committee, as it would specifically enable companies to exit the retail market by transferring their retail contracts and liabilities—that is, their retail business—to a third party where they chose to do so. That would open up the market to new entrants who hold a retail authorisation, by allowing them to acquire whole retail businesses, rather than acquiring one contract at a time. That would allow economies of scale.

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[John McDonnell]

I agree that significant investment has been made in the infrastructure, but the problem is that since the 1990s that has declined as a proportion of the overall turnover of the industry. So the record is not glowing by any means, and the cost of that investment has been paid through significant debt burdens on those companies, which is eventually then paid for by consumers

[Hywel Williams]

I am sure the hon. Gentleman would agree that the level of investment would be even higher if all the profits were devoted to investment in the infrastructure, rather than being siphoned off abroad.

[John McDonnell]

That is one reason why I support the Welsh model of a not-for-profit company, because, as I say, I feel that the general public have been ripped off throughout this period.

Let me just finish off with my last couple of examples, because I would not want to miss them out: United Utilities was fined £75,000 for management failures that contributed to a fire in October 2013; and Severn Trent Water received a £30,000 fine for sewage pollution in September last year. The performance record of these companies is that not only do they not tackle the leakages and the real need for infrastructure investment, but they are polluting the very water they are supposed to be protecting and supplying.

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[John McDonnell]

Former Ministers need an element of retraining, so may I say to the hon. Gentleman that he can intervene on me as often as wants, but perhaps he could be a bit briefer?

The issue is this: we are not talking about advocating a return to the previous model of nationalisation here; we are talking about the long-term future of the water industry, which is why this debate is important. My view is that privatisation and competition has not worked, but there are other models that we should explore. The Welsh model of a not-for-profit organisation ploughing the money that comes back into the infrastructure and into quality of service is the one we should now be exploring.

[Hywel Williams]

Does the hon. Gentleman agree that this can be clearly seen in Welsh Water’s response to the cryptosporidium outbreak in my constituency some years ago, when it managed to spend £1 million almost immediately on installing new mechanisms to get rid of the cryptosporidium and then spent £7 million on further treatment works? It responded appropriately and quickly to the outbreak.

[John McDonnell]

Competition and privatisation have not worked, which is why I do not think that the Bill, the main thrust of which is to introduce more competition and privatisation, represents the way forward. It provides further opportunities for exploitation. I think that we can all agree to condemn the level of profiteering that has taken pace, particularly in recent years.

I wish to put on the record what has been happening, as independent examinations have shown. Sir Ian Byatt, Britain’s top water regulator throughout the 1990s, wrote in the foreword to a report by the think-tank CentreForum that

“many companies, especially the private equity infrastructure funds, have paid out excessive dividends to their owners.”

He went on to argue for some form of dividend control. That was echoed by Jonson Cox, Ofwat’s chairman, who has called for water companies to share unintended gains with consumers, arguing that the profits and tax- reducing corporate structures were “morally questionable”. I can understand why.

Let me give some examples of the profiteering that has gone on. Northumbrian Water is owned by Cheung Kong Infrastructure Holdings, which is based in Hong Kong. Last year its operating profits were £154 million, but it paid nothing in tax. Its debt was £4 billion. Its chief executive, Heidi Mottram, received a salary, bonus and benefits worth £595,000. Yorkshire Water is owned by Citi, a US company, GIC, which is based in Singapore, Infracapital Partners and HSBC, based in the UK. Last year its operating profit was £335 million, but it paid only £100,000 in tax. Its debt was £4.7 billion. Its chief executive, Richard Flint, received a salary, bonus and benefits worth £800,000.

Anglian Water is owned by Canadian Pension Plan, Colonial First State Global Asset Management and Industry Funds Management, which is based in Australia, and 3i, which is based in the UK. Last year its operating profit was £363 million, but it paid only £1 million in tax. Its debt was £6.9 billion. Its chief executive, Peter Simpson, received a salary, bonus and benefits worth £1,024,000. Thames Water is owned by Macquaire Group, which is based in Australia, China Investment Corporation and Abu Dhabi Investment Authority. Last year its operating profit was £577 million, but it paid minus £70 million in tax, because it is receiving grants from the Government, as the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) pointed out at the time in his article in the Standard on behalf of the Liberal Democrats. Its debt was £9 billion. Its chief executive, Martin Baggs, received a salary, bonus and benefits worth £845,000.

South Staffs Water is owned by Alinda Capital Partners, which is based in the US. Last year its operating profit was £16 million, but it paid only £200,000 in tax. Its debt was £488 million. Its chief executive, Elizabeth Swarbrick, received a salary, bonus and benefits worth £202,000. Sutton and East Surrey Water is owned by Sumitomo Corporation, based in Japan. Last year its operating profit was £17 million, but it paid only £1 million in tax. Its debt was £219 million. Its chief executive, Anthony Ferrar, received a salary, bonus and benefits worth £290,000. Those are obscene levels of profiteering at the expense of the consumer.

Why is the borrowing level so high? It is not because it is all going into infrastructure. It has now been exposed that some of the borrowing is being used to pay dividends to shareholders and high salaries to chief executives and board directors. That was not the intention of the Thatcher Government’s original privatisation—well, it was not the stated intention. Privatisation was meant to reduce prices, increase investment and make the industry more accountable to the wider public through shareholding. That has not been the case. It is not more accountable through shareholding, because most of the companies that now own British water are owned by overseas shareholders. It does not make it any more efficient for the consumer, because prices have gone through the roof in recent years, which people are angry about. It does not make it more accountable to the taxpayer. In fact, the taxpayer is being bled dry as a result of tax avoidance and the various scams that have been going on, which have been explored by Richard Murphy, the tax justice expert.

Corporate Watch has produced an excellent report on some of those issues. It reports that six UK water companies took high-interest loans from their owners through the Channel Islands and then converted them into euro bonds. They then lent them back to the companies and paid virtually no tax on them whatsoever. This is a tax scam for which these water companies are used as a vehicle. Corporate Watch found that the six companies it looked at—Northumbrian, Yorkshire, Anglian, Thames, South Staffs, and Sutton and East Surrey—had borrowed £3.4 billion using this method. It highlights Northumbrian Water as “the most brazen case” as it paid 11% on just over £1 billion of loans it had taken from its owner, the Cheung Kong group, a Hong Kong-based conglomerate run by the world’s ninth-richest person. No wonder he is the world’s ninth-richest person—we are making him so. This is a scandal. The Bill does not go any way near addressing this rip-off of the British consumer or tackling some of the tax evasion and tax avoidance by these companies that has gone on. People are angry about this. In recent reports in the media there has been exposure after exposure, and people expect this House to act on these matters.

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[Dan Rogerson]

I thank my hon. Friend for that intervention. As he is not always an enthusiast for what water companies do, it means all the more that he is prepared to offer those words of congratulation. It is fair for hon. Members across the House to express clearly their view that water companies should offer a fairer deal to consumers. That is what the Government want to see as well. That is why I am pleased that water companies are responding positively to the process.

[Hywel Williams]

The Minister talks about fair deals between water companies. Is he satisfied with the terms for the supply of water from Wales to Severn Trent, especially given that Severn Trent is apparently selling on 30 million litres of water a day to Anglian Water at commercial rates? Of course, that is happening on the back of Welsh resources.

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[Dan Rogerson]

The hon. Gentleman hopes that his new clause would require further reports to be made to the Secretary of State. However, that information is already in the public domain. That is why supporting new clause 11 would not be helpful. I understand and respect his desire to ensure that the industry is as transparent as possible. I understand the ambition behind the new clause, but I do not share his enthusiasm for the wording that he has chosen.

The privatisation of the water industry has been a success story in terms of investment. Helpfully, the hon. Member for Hayes and Harlington pointed out that I represent a constituency in the South West Water area. The coalition Government have recognised that there were a few flaws in the privatisation process, so there is now extra money to support bill payers in the south-west, who paid for the clean-up of the beaches around the south-west peninsula.

As was pointed out by my predecessor, my hon. Friend the Member for Newbury (Richard Benyon), there has been huge investment in infrastructure since privatisation. That is one of the key successes that we want to build on and not jeopardise. The stable regulatory framework for the water sector has enabled companies to attract more than £111 billion of low-cost investment to upgrade water and sewerage infrastructure and to improve customer service and environmental standards.

I agree that we should be putting pressure on the water sector to act as transparently and responsibly as possible. Ofwat is already doing excellent work on the issues that have been raised by hon. Members. I do not believe that duplicating the reporting requirements would help. For that reason, I believe that new clauses 11 and 14 should be resisted.

New clause 12, for which the hon. Member for Dunfermline and West Fife argued, would place a duty on Ofwat to have regard to the charges to household and non-household customers. That would simply duplicate Ofwat’s existing duty.

I turn to a number of technical amendments, which the hon. Member for Dunfermline and West Fife charitably referred to. I will move amendments 13 to 50, 52 to 54 and 60 to 87 formally at the appropriate time. They will mainly make changes to schedules 5 and 7. Schedule 7 makes consequential changes to the Water Industry Act 1991 and other primary legislation as a result of our reforms, and schedule 5 makes further changes should the Welsh Ministers decide to adopt the reforms being introduced in England. Amendment 59 and new schedule 1 will provide the Secretary of State with the power to produce transitional orders that allow us to deliver retail and upstream reform separately.

Taken together, our amendments will provide Ministers with the maximum flexibility to commence the different market reform provisions transparently and in stages, as per our commitment to stagger the implementation of our retail and upstream reforms. They will enable the current arrangements to continue without diverting attention from the immediate priority of preparing for the opening of the reformed retail market in April 2017.

[Hywel Williams]

We have had an interesting debate, and I was glad to hear the contributions of the Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), and the hon. Member for Hayes and Harlington (John McDonnell), with whom I yet again agreed entirely. I was also glad to see the hon. Member for Newbury (Richard Benyon) taking an interest in his former beat, and to see the hon. Member for Brecon and Radnorshire (Roger Williams) in his place, although essentially in a non-speaking role.

I was disappointed by the lack of contributions from Welsh Members, and disappointed that the hon. Member for Dunfermline and West Fife (Thomas Docherty) did not make any reference to my new clause 1. Pretending it is not there does not mean it will go away.

[Thomas Docherty]

The hon. Gentleman should have intervened on me if he was concerned that I had not covered his new clause. I echo the point that the Minister made—the Silk commission is examining the issue and will report in the spring. [Interruption.] We think that will be the right time to consider the matter properly.

[Hywel Williams]

My hon. Friend the Member for Perth and North Perthshire (Pete Wishart) asks from a sedentary position, “What do you think?” The Minister might choose to enlighten us, but possibly not—he would prefer to listen to the Silk commission.

My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) made a point about legislative competences and borders. In Northern Ireland the matter is not considered problematic, because the national or state boundaries are followed; nor is it considered problematic for legislative competences to cross the border in the case of Wales. Legislative competence seems to become a problem only when proposed by Plaid Cymru. Of course, it is also proposed by the Labour Welsh Government, but they are not here to make that point. That does not seem particularly fair dealing.

The Minister said that the status quo is the status quo, and that the matter is not devolved because it is not devolved, and presumably it will not be. He gave us no indication of what the Government would eventually propose following Silk. We look forward to that with interest.

On a personal note, I missed many of the sittings of the Public Bill Committee—

[Thomas Docherty]

And we missed you.

[Hywel Williams]

The shadow Minister is very kind. I was disappointed to have missed those sittings, and I apologise to Members of the Committee. Unfortunately, it was unavoidable.

It is my pleasure to press new clause 1 to a Division.

Question put, That the clause be read a Second time.