Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of witnesses (Questions 100-119)

TUESDAY 30 JANUARY 2001

ALAN DAVIS, RODNEY ANDERSON AND RICHARD VINCENT

Mr Cummings

  100. Can you tell the Committee why you have a panel rather than an authority?
  (Mr Anderson) The Panel would—well, I think I would have to ask the question, what is an authority, as opposed to a panel, and why that would be different; a panel would comprise, as I have explained previously,—

  Chairman: Convince me that you know what you are doing with this bit of the Bill?

Mrs Dunwoody

  101. Convince us that you are going to get the balance right. It is all very well saying that at the moment it has lots of people who are partisan, nobody argues with that, and therefore you must broaden it, because what has been wrong with the water industry has been its total inability to see beyond its own, I was going to say navel, but that might be the wrong thing. Convince us that you are going to get (a) a broad sweep of people who actually know what the interest of the consumer is, as opposed to what the interests of the companies are; and (b) that this is going to be capable of coming up with a measured judgement, which will be of use to the people presumably it is advising?
  (Mr Anderson) I imagine that both considerations will be in Ministers' minds, when they make the appointments to the Panel.

  102. I know about Ministers, Mr Anderson, I have known a lot of them, over a long time; what I am asking you is, what is your Panel going to do, and how are you going to make sure you get the balance?
  (Mr Anderson) The balance will be a judgement for Ministers, but the Panel will comprise people who are able to advise the Director-General on his range of responsibilities. The Director-General has already established a regulatory panel, and draws on that panel to provide him with advice, which clearly he finds useful.

  Mrs Dunwoody: I think that is where we started ten minutes ago.

  Chairman: I think we had better leave this. John, perhaps you would like to go on to your next question.

Mr Cummings

  103. I think this is an extremely important issue, but I recognise the time factor, Chair. Perhaps we can have some form of paper, from the Department, explaining precisely what appears to be total confusion?
  (Mr Davis) Let us give you a paper on that.

  Chairman: Thank you very much.

Mr Cummings

  104. Following the Environmental Audit Committee's Report on Water Prices and the Environment, will you be considering giving Ofwat a specific duty to have regard to sustainable development?
  (Mr Davis) The idea of giving Ofwat, the Director-General of Water Services, such a duty was not a significant issue during consultations on utility regulation reform. I am not quite sure why, but it may be because the Director-General already has specific environmental responsibilities, under Section 3 of the Water Industry Act, alongside his economic and customer protection duties. I believe the Director-General's duties implicitly require him to have regard to sustainable development.

Chairman

  105. Mr Byatt did not really feel that, did he?
  (Mr Davis) I shall come on to Mr Byatt in a moment or two. The job involves striking a balance between economic factors, protecting customers and environmental factors, like conservation. I am not sure whether the Committee is going to take evidence from Mr Byatt. I am sure that he would argue that he did have regard to sustainable development, in carrying out his job; some environmental NGOs may feel that he gave insufficient weight to environmental factors, but that is about the judgements he struck, rather than whether he struck a judgement between the different factors. So I think Mr Byatt would argue that he did have regard to sustainable development. The Director-General of Water Services' duties are already very complex, Dr Helm has already referred to that in his evidence.

Mr Cummings

  106. But will you, as a Department, be giving specific duties to Ofwat, in relation to sustainable development?
  (Mr Davis) Ministers are considering the proposal for giving such a duty, in the light of the Environmental Audit Committee recommendation, and in the light of responses to consultation on the Bill. Clearly, if your Committee supports this proposal, Mr Chairman, that will be a significant factor in those considerations, but the Government is still consulting on the Bill, and therefore they have not reached decisions on this issue. It has been put to them in the consultation—

  107. But you are giving consideration to it?
  (Mr Davis) Yes.

  108. That is fine. How will the guidance on social and environmental matters relate to the advice given to the regulators in the course of the quadripartite process?
  (Mr Anderson) The Department is about to respond to the Environmental Audit Committee's Report on the Periodic Review, and I must be careful not to anticipate that reply.

Chairman

  109. When is that reply coming then?
  (Mr Anderson) Very shortly.

Mrs Dunwoody

  110. Soon?
  (Mr Anderson) Soon. A matter of days, I would think.

Chairman

  111. A matter of days. So we should be able to take it into account long before we see anyone else?
  (Mr Anderson) Certainly, Chairman.

  112. Thank you.
  (Mr Anderson) As I say, there will be this report. But it seems to me that the power for the Secretary to provide guidance and the process of the Periodic Review can be entirely complementary. If the Secretary of State chooses to issue guidance on social and environmental considerations, that guidance will be taken into account during the Periodic Review. Similarly, if, during the course of the Periodic Review, it became apparent that guidance would be helpful and it is quite possible then there would be an opportunity to issue that guidance.

Mr Cummings

  113. Yes, but you will still be working in close conjunction with the Environment Agency and the Drinking Water Inspectorate?
  (Mr Anderson) Absolutely.

Mr Olner

  114. You mentioned, Mr Davis, earlier, about water being a scarce resource; do you think there is a case for adding a duty to promote demand management in clause 53?
  (Mr Davis) There is an obligation on water companies already to promote the efficient use of water by their customers.

  115. I know, but this body, in 1996, says that that really was not good enough and there ought to be a serious programme of demand management?
  (Mr Davis) The Bill adds a duty on companies to be efficient in the way they use water themselves; so that is the second part of it. A great deal has been done on water conservation by the companies since 1996, particularly following the Water Summit the Deputy Prime Minister called just after the election. So the Government's view, so far, has been that the pressures that are on companies, and existing obligations on companies, are sufficient to ensure they promote conservation.

  116. Come on; it was an absolute scandal about the leakage, and something had to be done to tackle it, and quite rightly the water companies responded and did try to start to tackle that. But what about water reuse, and recycle systems; should we not really be pressing these?
  (Mr Davis) A number of the companies are experimenting with water reuse and recycling systems. I hesitate to mention the Dome, but the Dome had complete recycling of water on its site. There are some developments taking place with developers, where secondary systems are being put in as part of new development. The case for reuse of water within existing properties is much harder to make, because of the cost of putting in the separate system, and there are public health concerns associated with making sure that plumbers do not connect the wrong tap to the wrong system, if you have double systems in houses. So there are doubts about some of the grey water ideas and the reuse ideas, but there are experiments being carried out by water companies in this area.

  117. Is the Government, do you know, giving any consideration to a Water Saving Trust?
  (Mr Davis) The last Government considered it, in the light of the recommendation from the Select Committee on Environment, in 1996; the last Government rejected the idea. This Committee took evidence from Mr Meacher on water resource management in 1997, on the idea, and Mr Meacher pointed out various problems with the idea, and ended up being told by the Chairman that he was not sounding very enthusiastic. And, really, the Government's stance remains that, given all the other things that are going on, we do not see the case for a Water Saving Trust.

Chairman

  118. You think it is better to have the Deputy Prime Minister banging the table and telling people to do it than setting up a bureaucracy?
  (Mr Davis) The question really, in terms of a Water Saving Trust, is what would its functions be and how would it be financed; and if it is to be financed by a levy on water customers that will increase bills, or if it is to be financed by the Exchequer that may not be very popular with the Treasury.

Mr Olner

  119. But the Energy Saving Trust seems to be fairly successful; could it not be modelled on a similar line?
  (Mr Davis) Water is a very different commodity from energy, as the Committee has been told earlier; 80 per cent of people do not pay on the basis of how much they use, they pay on the basis of rateable value, so the pressures are very different from the pressures in the energy field. So the judgement for Government so far has been that the models used in the energy field are not replicable in the water field.


 
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