Greater London Authority Bill

I am glad to be able to contribute to this Committee and I apologise for the delay in the proceedings. There is no doubt that all three amendments, as the noble Lord said, stand on their own. I have to say that they are very seductive. The letter of 26 April was brief and to the point. As the noble Lord said, it was signed by two important people. A reply, which is somewhat lengthier than the original letter, has been sent. I suspect that the gist of what I will say is in the reply. It does not completely close the door, but we certainly do not feel that we can accept the amendments. As the noble Baroness said, Amendment No. 103 would give the Mayor a duty to produce and keep under review a water and sewerage strategy that includes proposals and policies for making sure that the water and sewerage infrastructure is able to cope with the ““actual and planned”” developments. I fully note what the noble Baroness said about planned developments. This would, in effect, purport to make the Mayor another water regulator in an already fully-regulated area. The water sector in England has three core regulators: namely, Ofwat in relation to economic regulation; the Drinking Water Inspectorate looks after water quality; and the Environment Agency is responsible for water resources and the environment in its widest sense. In terms of development, the Environment Agency is already a statutory consultee on sewerage infrastructure, and water and sewerage companies are consulted at local level when new developments are being considered. Water companies also have a fairly new statutory duty to produce 25-year water resource management plans that make provision for future developments. Development issues relating to water and sewerage are already very much under consideration by the regulators and the companies themselves. Having been in the ODPM and partly responsible at one time for the four growth areas and then the three, I well understand the reasons for that. I understand the approach of the fairly large-scale construction in the wider south-east where the infrastructure is more than the roads; it is also the social infrastructure. The utility infrastructure is crucial and to keep water as neutral as possible is very important. These developments do not take place without the planning and knowledge of water resources, but we are looking at the four major growth areas of the south-east over a 25-year period with the water resource management plans produced by the companies. This is an important, ongoing issue, which has not been parked away and forgotten about. The regulation of water is far more complicated than the other utilities. As has been indicated, it is based on water areas which are based on the river catchment boundaries rather than political or administrative boundaries. It is a constant reminder of my former constituency and the people of Wales where most of the water is in the Severn Trent area and is not relevant to the Assembly. That is the way it has to be because of the geography. Any policies or proposals that meant an increase in expenditure in London by the four regional monopolies operating in the area would have an impact on water bills outside the London area, right across the south-east of England. So it is well beyond the Mayor’s jurisdiction. I am not saying that that is the sole reason, but it is an important factor which has to be taken into account. We understand that the Mayor intends to produce a non-statutory water action framework for London, which could usefully add to the debate on water resources and efficiency. As the noble Baroness, Lady Hanham, said in opening, that could be useful in opening the debate on the activities—I am putting this as politely as I can—of Thames Water. The Secretary of State for Environment, Food and Rural Affairs has already reaffirmed in his reply to the letter that he will take the Mayor’s water action framework into account in the run-up to the next price review for the water sector. I turn to Amendment No. 119. The case has been made for me by my noble friend Lord Whitty. This amendment would give the Assembly new powers to require the water regulators to appear. For water this would include Ofwat, the Environment Agency, the Secretary of State because of his responsibility for drinking water quality through the Drinking Water Inspectorate, and Ofgem to cover the energy aspects. Currently the Assembly has powers to summon certain categories of people to give evidence at its meetings, but they are persons with whom the Assembly has direct relationships such as contractors and those in receipt of financial grants. The new proposal is very wide-ranging and would set a precedent that significantly widens the power of the Assembly. The Assembly does not have a direct relationship with the regulators, and while I fully accept that it is an important body, the regulators are accountable to Parliament, not to local or regional government. That is the way it ought to remain. Because of the monopoly positions brought about by various privatisations, the regulators have been set up through careful legislation under both Administrations, and they are answerable to Parliament on a broad and regular basis. Indeed, this House recently established an ad hoc Select Committee on regulators. Ofwat, Ofgem and some of the water and energy representatives have submitted evidence and appeared before that committee to inform its inquiry into economic regulation. We think that Ofgem and Ofwat’s parliamentary accountability is sufficient and that it would not serve any useful purpose to replicate that on a statutory basis. Amendment No. 120 would require the Mayor to report in his State of the Environment Report on the efficiency of the supplies of water and energy services in the Greater London area. At this point we are unclear about what value the new reporting requirement would add. The Mayor is already required to report on water quality, emissions into water, ground-water levels, energy consumption, emissions of greenhouse gases and any other matters related to Greater London which he considers appropriate. This requirement ensures that the Mayor will report on fundamental energy and water issues relating to London. It is a crucial factor because it gives him the opportunity to comment, for example, on the leakage record of Thames Water, a matter of ongoing concern over quite a period of time. The amendment would in effect duplicate the work carried out by the economic regulators for these sectors. Extensive reports on the efficiency of water companies and the operation of the energy wholesale and supply markets are already produced by Ofwat and Ofgem respectively. We believe that the interests of London water and energy consumers are already defended by Ofwat, the Consumer Council for Water, Ofgem and, pending the creation of a new consumer body to replace it, EnergyWatch. The Secretary of State has also directed the Consumer Council for Water to maintain a statutory regional committee in the Thames area. We believe that this amendment would simply create additional bureaucracy and waste public funds without bringing any clear benefit for water and energy customers in London. I do not want it to be thought that these amendments are being dismissed without proper consideration; these are important issues. I want to repeat that the cornerstone of utility regulation since privatisation has been the principle of independent economic regulation to provide the stability necessary to create investment. There have been huge investments in the utilities infrastructure since privatisation, running to billions of pounds. While input from the Mayor and the Assembly is useful as part of a wider debate, political interventions have to be kept to the absolute minimum. That is why Parliament is the right place to monitor the independent regulators and to scrutinise the policy of decisions relating to energy and water. I am sorry to arrive in the Committee and provide what will be a damp squib, but it is no good trying to sugar coat it.