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"(4) In performing their duties under this Act, the Secretary of State, the Assembly and the Authority shall also have regard to the following—
(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed;
(b) the desirability of promoting and facilitating the development and use of effective forms of self-regulation;
(c) any other principles appearing to them to represent the best regulatory practice;
(d) the desirability of encouraging investment and innovation in the water industry; and
(e) the opinions of consumers and members of the public."

The noble Baroness said: In this amendment, we are considering the whole question of good regulation or better regulation. The Better Regulation Task Force, which was established back in September 1997, is, as noble Lords will know, an independent body that advises the Government on action to ensure that regulation and enforcement accord with the five principles of good regulation, which are set out in the relevant document.

We want to ensure that the five principles of good regulation are recognised in the Bill to ensure that all regulators follow those principles. The benefits that accrue with better regulation are proportionate, accountable, consistent, transparent and targeted. The amendment would strengthen the addition to the objectives of the regulation set out in the Bill. The

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Secretary of State or the authority shall consider those extra requirements. Paragraph (a) in the amendment refers to the need to be,


    Xtargeted only at cases in which action is needed";

in other words, that involves not considering other bits where no action is needed. We believe that that would save costs to the Government and the water companies in terms of management time and cost time. If we can save in relation to such costs, that would obviously help the consumer. All costs that are put on water companies eventually get passed on to the consumer. If we target only cases in which action is needed, it appears to us logical that the Government would agree to that.

We also believe, as indicated in paragraph (b) of the amendment, that,


    Xeffective forms of self-regulation",

should be encouraged in the first place. In paragraph (d), we support,


    Xthe desirability of encouraging investment and innovation in the water industry".

I beg to move.

Baroness Miller of Chilthorne Domer: I rise briefly to support the amendment, to which my name and that of my noble friend Lord Livsey are attached. It is very important. I expect that the Minister will again say that it is not necessary to include such provisions in the Bill. In a Bill that is very long on detail, it would be nice if some of the principles underpinning its entire regulatory nature were spelt out and reinforced. We have debated in previous sittings some of our concerns about proportionality and targeting. The amendment would strengthen the already good example that Ofwat has set in quoting the principles of good regulation in the periodic review for 2004.

Lord Borrie: My first reaction on reading the amendment was that it comes from the "motherhood and apple pie" school of legislative drafting. Extremely worthy principles are set out in it. It made me feel good inside just to read them, especially when I got to the end of the amendment, which states that,


    Xthe opinions of consumers and members of the public",

will be taken into account.

I do not want to make fun of the amendment, because it occurs to me that it has some very worthy principles. Those who drafted it ought to get a prize from the Better Regulation Task Force for doing so. I know that the same amendment features in the Communications Bill that the House is considering. However, I am conscious that although the principles might be very familiar to us as legislators, they are not so well embedded in our constitution and way of life that we can take them for granted. When one reads through them slowly, it seems that they are all pretty obvious. I have emphasised the parts that I think are most obvious. None the less, to have them in the Bill is worth while.

The Minister may feel that it is sufficient as an alternative if the regulators set everything out, not only when they start their working life, but perhaps

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regularly in their annual reports. So be it, but it may do good and will certainly do no harm to set the principles forth in the Bill. Despite my immediate reservations to seeing the words set out in cold print, I commend the amendment.

Baroness O'Cathain: I shall follow that ringing endorsement from the noble Lord. I thank him for his congratulations on the drafting of the amendment. In fact, it was sheer plagiarism, because it comes out of the Ofcom Bill. There is a virtue in that because, in the new regulatory system in which we are trying to have better regulation in all activities of the economy and our legislative life, the sooner people get used to the principles the better. We have had lots of principles for years and years that come as second nature to people, whether or not they are noble Lords or involved in legislation at all.

Following the establishment of the Better Regulation Task Force, the time has now come to take on board some of its work and conclusions. I am sure that we all think that its conclusions were superb. They were like a breath of fresh air going through the whole morass of regulation. The five principles listed in proposed new subsection (4)(a), which are,


    Xtransparent, accountable, proportionate, consistent and targeted only at cases in which action is needed"

—I call them the TAPCT principles—will become something of a mantra, but they are none the worse for that.

There is another message in the amendment beyond plagiarising the Ofcom Bill. In the periodic review in 1999, the Competition Commission was actually critical of Ofwat, primarily on the transparency route. It told them that the mistake should not happen again, and the amendment might help in that direction. As I say, we are definitely taking on the findings of the Better Regulation Task Force. There should be consistency of approach across the industry as a whole.

Do not forget that, when the Bill becomes an Act, Ofwat, the Drinking Water Inspectorate, the Environment Agency, English Nature, the Health and Safety Executive and, I am sure, many other such bodies will be involved. We want to ensure that people try with 100 per cent commitment to fulfil their obligations in regulation, as in everything else. We would like to know that there was consistency of approach in all the areas. I simply hope that the Government will buy into that, and therefore that the Secretary of State will underpin it. I thank all those who have supported what I originally suggested.

Lord Whitty: There is a straight plagiarism of the Communications Bill, which in other respects has not been the most popular piece of legislation in the House. Part of the amendment would not do any harm, but it does not really add anything. The water industry is not the same as the communications industry. The principles in proposed new paragraph (a) are already adopted by Ofwat, and making them statutory would not make a lot of difference.

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There is a difference on the reference to self-regulation. In a fully competitive market, or one approaching full competitiveness such as telecommunications, self-regulation can lead to benefits to consumers and companies, and minimise the problems of official regulation. The water industry is different, however. It is still virtually monopolistic in terms of supply. It is essential. It covers very sensitive issues, such as pricing, cold-water quality, and environmental standards. I do not think that the option of self-regulation—it might apply to communications, and certainly does in several other sectors—should be given the preference that the amendment would demand by implication.

The regulatory system already works to deliver investment and innovation by setting and policing challenging standards for improvements. Not having precisely the same commitments on regulations as the Communications Bill will not detract from the water regulator continuing to have that effect. Putting an apparent preference for self-regulation in this Bill could greatly reduce the pressure on the water companies to achieve the objective that we are all seeking.

Lord Livsey of Talgarth: I have not spoken, but I agree with a lot that has been said from this side of the Committee. The amendment is excellent. It is a catch-all, really, as it includes all the aspects that should be taken into account. Has the Minister considered the importance of reporting the performance of different companies in relation to proposed new paragraphs (b), (c) and (d)? Paragraph (b) is about,


    Xthe desirability of promoting and facilitating the development".

How much promoting and facilitating is being done? How much investment and innovation is taking place? How does one company compare with another in those terms and to improve matters so far as the delivery of services for customers is concerned?

There is a lot in the amendment. Although I agree with the Minister in one sense when he says that there is a monopoly, in another there is not, because there are variations in performance. I have seen Ofwat figures of comparison. The amendment sets out all the aspects that one would expect to find in a report.


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