I thank my hon. Friend for his helpful intervention. He has somewhat pre-empted the remarks I was about to make, but I am happy that we speak as one on this issue.
Licensing of water suppliers is also not devolved. I recognise the deep, historical reverberations in Wales—we heard about them in the heartfelt speech by the hon. Member for Arfon—about the management of water, which is an essential natural resource. Much of the responsibility for water is, I am pleased to say, now devolved. However, further changes to the current devolution arrangements would have implications for customers and household bills on both sides of the border. They would also affect the companies, their assets and their operating rules, and possibly the people who work for them. Therefore, changes should not be undertaken without very serious consideration of all the implications.
The UK Government position is that we will not make changes to the devolution settlement in advance of the review and report by the Commission on Devolution in Wales—the Silk commission—which, as hon. Members will know, is led by Mr Paul Silk. The commission is currently working on part II of its remit and is expected to report in the spring. It is reviewing the powers of the National Assembly for Wales in the light of experience. The commission’s terms of reference make it clear that any changes it proposes must enable the UK Parliament and the National Assembly better to serve the people of Wales.
6 pm
New clause 2 would provide the Secretary of State with the power to make regulations allowing incumbent water companies to transfer their non-household customers to a water supply licensee with a retail authorisation, subject to the approval of the Secretary of State. That would allow such companies partially to exit the water supply retail market or, alternatively, it might enable the introduction of regulations to mandate the separation of retail and wholesale functions into two legally separate companies, both of which would be within the incumbent’s control. Amendment 12 would commence the provision on Royal Assent, which means that it might be possible to transfer customers before the retail market opens in April 2017, if the Secretary of State produced the regulations before that date.
We heard a range of arguments for retail exit during the debate in Committee. Although some of them undoubtedly have merit—I again emphasise that we do not rule out coming back to the issue in future—other arguments are less convincing. The intention of new clause 2 is to allow retail exit only from the non-household market, leaving household customers with incumbent companies. That does not address our concern that enabling water companies to walk away from the non-household retail market risks being a bad outcome for household customers.