Designation of the Consumer Council for Water for abolition

I beg to move amendment No. 56, in clause 31, page 18, line 15, at end add—

‘(5) No order under subsection (1) above is to be madebefore 2011.’.

This is quite an important clause, as it designates the Consumer Council for Water for abolition. The amendment would insert a new subsection, which says  that that should not take place before 2011. The CCW was created recently, at quite considerable expense. I understand that it cost in the region of £1 million. I question whether abolishing it before it has even reached the crawling stage, let alone infancy, is the wisest course of action. The council needs time to establish itself if it is to transfer its skills, ability and expertise, and it should not just be killed at birth.

My noble Friend, Baroness Miller of Chilthorne Domer, gave a very full explanation of why the Liberal Democrats believe that 2011 should be the earliest date. She referred to the time line of various framework water directives and pricing rounds, and to the draft river basin management plans, which are to be published for public consultation in December 2008. The process will run until 2009, after which the revised plans will be published and there will be a formal response. To interfere with that and with the work of the CCW before then would be unfortunate and disruptive.

The pricing round that my noble Friend mentioned relates to 2009. In January 2010, companies will decide whether they want to appeal to the Competition Commission on the price limits that will have been set for them in 2009. The pricing round will have almost but not quite finished. Until 2009, the CCW’s input into that round will be very important indeed.

The CCW has undertaken work on the problems that have been experienced by all of us recently in relation to the lack of water, hosepipe bans and the difficulty of ensuring that people are treated fairly with regard to water matters. That work indicates that it would be better to allow the CCW to get off the ground.

The Government still need to make a case for incorporating the CCW into the NCC. There will be a hiatus in the way matters progress. Important plans and important pricing considerations will come to fruition by 2011, with a hiatus before the following round, so we believe that 2011 is the right date for any amalgamation of the CCW into the NCC.

I suspect that the amendment will encourage us to drift beyond its terms into the substance of the clause. We discussed some of the issues on Second Reading, and the argument of the hon. Member for Solihull has considerable merit. As I believe most people would recognise, the CCW is in a slightly different situation from the bodies that deal with gas and electricity. It has been around only since 2005, whereas the other bodies have existed for five or so years. There are also differences in the markets in which they operate: water supply is perhaps more naturally the subject of a monopoly than postal services, as we have heard in debates.

Given the price review that is due in 2009, there will clearly be a problem with any merger that happens at that time. I seek a coherent plan either to bring forward the price review or to postpone the merger—we can do one or the other. The Minister indicated on Second Reading that the Government were willing to consider the form of the change. In fact, it might not have been the Minister himself; it may have been his colleague. I am not saying that they are interchangeable—they each have their own merits.

There is a pay grade difference, too.

Indeed, and I feel that acutely myself.

We want clarity about whether the Government can demonstrate that there is a clear path that makes sense and will be appropriate administratively and for consumers in the marketplace. I am not personally wedded to the date of 2011, and I got the impression that neither necessarily was the hon. Member for Solihull. It is important to get the issues sorted out, and I look forward to hearing what the Minister has to say.

I very much appreciate the hon. Gentleman’s giving way. I was present during the Second Reading debate and thought that I heard something rather different. I thought that we heard from the Secretary of State that he proposed to accelerate the merger, so that it would take place ahead of the price review and the implementation of the directive. I thought that I heard from Conservative Front Benchers some warm words suggesting that that might appeal to them as a strategy. That is rather different from accelerating the price review. It is obviously impossible to accelerate the EU directive timetable. I wonder whether my interpretation was right. If not, I am somewhat befuddled about the position of either of the other parties.

That was a fascinating intervention, not least given the Minister’s expression. He clearly does not recognise that interpretation of the debate that we all attended either.

Coherence is needed between the two events—the price review and the change in the role of the CCW. We are reasonably open to suggestions on how that should be done, but it is unclear in the Bill how the Government intend to square the circle. We need to hear that from the Minister.

I wish to ask the Minister for one point of clarification on subsection (4). As a former member of a devolved Parliament, I keep an eye on such matters from time to time, to the boredom of most people. The subsection states:

“An order under this section may only be made with the consent of the Welsh Ministers.”

I understand the relationship between the Welsh Assembly and this place, which is sovereign, but it is curious that the subsection says not that the Government must consult Welsh Ministers but that they must have their consent.

If the Welsh Assembly chooses different parties in the election at the end of the month but the Government decide to proceed with the abolition of the council, we could be almost held hostage. Welsh Ministers could say, “We don’t give you the consent. We just like it the way it is, thank you very much.” We might find ourselves in a long-winded process if we decided to go ahead with the abolition, which we could eventually achieve. I should like the Minister to clarify why we are tied into consent, rather than consultation or any other option.

May I say to the hon. Member for Hertford and Stortford that when I referred to pay grades, I was not making reference to remuneration and the loss of it on his side or the little of it on mine? It was said in the context of decision-making progress  way above my pay grade. That was why I did not recall making any such statement, as the hon. Member for Richmond Park suggested. I do not believe that I would have the authority to make a statement about such changes, but my right hon. Friends the Minister of State and the Secretary of State could certainly have done so.

On the timing of the consultation on the inclusion of the CCW, I am advised that my right hon. Friend Minister of State said that he was in contact with it about the potential for bringing forward the consultation on its inclusion from 2008 if that would be helpful. That is the essence of the issue of timing.

The effect of the amendment would be to prevent the Secretary of State from making an order to designate the CCW for abolition before 2011. The Bill provides that the Secretary of State must consult the CCW, the new council and other persons as appropriate before making an order designating the CCW for abolition and subsequently transferring its functions to the new council. Any order to include the water sector within the new arrangements will therefore be made only after public consultation. I hope that that gives the hon. Ladies some confidence about the proposal.

Assuming that the results of the consultation suggest that there are significant benefits to consumers from incorporating the water sector in the new arrangements, any delay by the Secretary of State in making the order merely delays extending those benefits to water consumers—the same consumers as those in the energy and postal services sectors. If the new arrangements are shown to benefit consumers in the water sector, we ask why we would wish to delay. Any delay would also prolong the period of uncertainty for existing staff and consumers and increase the likelihood of staff retention problems, because, as I said in respect of the other bodies, staff departures would probably increase.

Delaying the incorporation of the CCW will delay the benefits to consumers of having a stronger voice to represent them and delay the extension of redress schemes to the water sector to ensure that consumers benefit from complaint resolution rather than simply complaint handling. Only independent redress schemes, which can award redress such as an explanation, apology or compensation as appropriate and whose decisions are binding on regulated providers, can offer customers the certainty of resolution.

We recognise that there will always be significant events in any market sector, such as the price review in the water sector in 2009, or ongoing work on the water framework directive and the river basin management plans that require the consumer interest to be represented effectively, but that is exactly what the new council will be designed to do. It will be an even stronger voice for consumers across all sectors, with the critical mass to engage effectively with the Government, regulators and industry sectors, and with the benefit of being able to draw on experience and expertise from a number of sectors.

Price reviews are not peculiar to the water sector. Europe now has an influence over most sectors of our economy and the environment has never had a higher place on the agenda. These issues should not be considered in isolation, sector by sector. Experience and expertise can be taken from one sector and applied to others, resulting in a more beneficial outcome for consumers.

We accept the need to retain a degree of sector expertise, which is an integral part of our reforms. The new council will be in an ideal position to benefit from the sectoral expertise of the existing consumer bodies and from the lessons learned in each sector, and to apply best practice across the sectors.

The hon. Member for Lancaster and Wyre asked whether the Welsh Assembly Government could veto the proposals. That is not our assessment; we believe that, during consultation, we could identify and solve any problem that arises as a result of representations.

I am grateful to the Minister for his optimism, but the proposal is specific. Consent is needed; it is not about representation. It states that without consent the CCW cannot be abolished. If Welsh Ministers choose not to give their consent, it cannot be abolished.

It is our assessment that we do not anticipate an unreasonable reaction from the Welsh Assembly Government. It is accurate to say that it has to consent to the issue, but on the basis of the consultations that will take place next year on the problems that may be identified and the ability to resolve them, we do not think that the veto would apply to this issue.

My hon. Friend the Member for Lancaster and Wyre has made an excellent point and I offer an olive branch. If the Minister wishes to reflect on the issue and feels that he may need to make an adjustment, we would be willing to consider such a proposal sensibly, because it is important to strike a balance on the matter.

I share my hon. Friend’s concern that an error may have been made, although I appreciate that the Minister has to deal with it as he finds it. If he finds that the language so ably spotted by my hon. Friend would be a potential prohibition or restriction, we would be willing to consider an amendment to it. I hope that the Minister will bear that in mind.

I am grateful to the hon. Gentleman for his generosity in making that offer and I am happy to reassure him that I will return to it later in the passage of the Bill.

Just for clarity, could my hon. Friend define “Welsh Ministers”? I read that as meaning the Secretary of State for Wales, who would by and large tend to support the Government—well, usually anyway. Do the words in the Bill refer to Ministers of the Assembly in Cardiff or to the Secretary of State for Wales in this place?

My understanding is that the Bill refers to the Welsh Assembly Government, not the Secretary of State, in this regard. The offer from Opposition Members is generous. If I may, I shall take it up and return to the issue later in the passage of the Bill.

I am delighted that the Minister has such confidence in the consultation system and believes that all will be resolved in a way that ensures that this fledgling, which has hardly managed to get off the ground yet, will be able to deal with the turmoil of the price reviews and the other matters to which I have  referred. I am still quite concerned, but perhaps now is not the most appropriate time to press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 ordered to stand part of the Bill.