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Baroness Miller of Chilthorne Domer: Perhaps the reason for not attaching our names to this amendment is that we were frightened by its length. In all seriousness, we have tabled a much more amateurish proposal, which nevertheless aims to achieve a similar point in spirit; namely, that each regulatory body should pay attention to the duties of the others. Perhaps our proposal was too short and the amendment before the Committee is somewhat lengthy and complicated; but the Bill needs to include somewhere a provision that each regulatory body shall pay attention to the duties and obligations of the others.

That is not only because a good example has been set in Scotland. The unfortunate tensions that can sometimes exist between regulators are unlikely to be solved if they are required only to pursue their particular duties in parallel. We should like them to be empowered to work together and seek an amendment to that effect. Perhaps the Minister will be able to accept this amendment; if not, I expect that we shall want to return to the matter on Report.

5.15 p.m.

Lord Borrie: Since privatisation took place 13 or 14 years ago, the water companies have often been pulled

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in different directions by the different regulatory agencies. Although they all have their separate objectives—no doubt justifiably—I am sure that the idea that there should be co-ordination between them would be most helpful to companies and to their customers. In other words, co-ordination is a consummation much to be desired. It would be in the public interest. Surely the UK Parliament is not so grand that it will not take note of useful precedents that may come over the Border from Scotland. If there is a precedent in Scotland that is useful, let us follow it.

My only quibble relates to the mention in paragraph (a) of the amendment, on page 6 of the Marshalled List, where mention is made of the "Consumer Council for Wales". I believe that that body has been included in error. Those on the council are not regulators; they are advisers. I do not think that the council is meant to be included; it is there by accident. Apart from that, I commend the ideas behind the amendment to the Minister.

Lord Whitty: I do not think anyone will object to more co-ordination—my objection is not to the length of the amendment—although there is already a great deal of co-ordination. I know that there were complaints about the previous first round of the periodic review, but I think that the various bodies have worked together well as regards the latest periodic review. My objection is to the fact that the amendment effectively gives powers to the Secretary of State to override the independent economic regulation. Subsection (7) of the proposed new clause effectively says that the Secretary of State shall issue directions for everything covered by Clause 4—the totality of the duties of the economic regulator.

The Scottish example is simply a call for co-operation. The problem with this amendment is that it effectively blurs the jurisdiction between the regulator and the Government. It refers to the Government taking a lead in consultations on the periodic review, and then issuing directions, including on how policies should be funded. That would take the Government right into the domain of the independent economic regulator.

I do not believe that that is the noble Baroness's intention. It is certainly not an appropriate role from the Government's point of view. Indeed, the Government were criticised by the Environmental Audit Committee and by the Better Regulation Task Force for what was seen as too excessive an intervention in the last price review. The amendment would provide a statutory basis for a much more substantial intervention. I do not believe that that is a particularly healthy move.

Baroness Byford: I thank Members of the Committee who have taken part in this debate. As ever, I am glad to have the noble Lord, Lord Borrie, on side. His knowledge and experience of these matters is hugely important to our debate.

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I accept that in paragraph (a) on page 6 we have perhaps put the Consumer Council for Wales in the wrong place. I shall look into the matter.

Lord Whitty: It should be the consumer council for water.

Baroness Byford: Now I understand: it is a mis-type. I apologise. I thank the Minister. I accept that there is an error.

As to subsection (7), it was not our intention to override the present position in the way the Minister suggested. I shall look again at that issue.

On the other hand, the amendment received support from other Members of the Committee. The Minister suggested that the amendment was too long. I accept that length does not always bring quality and we may need to look again at the amendment. Perhaps the Minister will indicate whether in principle—I am not pushing him on the wording—he will accept a revised amendment addressing the issue of co-ordinated regulation. If so, would he prefer me to draft it or would he prefer to put more suitable words together himself? It would save a lot of time in the long run if he did so because government amendments are usually accepted. Does the Minister wish to comment, or will he leave it for me to come back with this issue on Report?

Lord Whitty: Perhaps I may leave it to other noble Lords to bring forward a more appropriate amendment.

Baroness Byford: I am grateful to the Minister for that indication. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Byford moved Amendment No. 103:


    After Clause 39, insert the following new clause—


"NARROWING SCOPE OF REGULATORY APPEALS
In section 12 of the WIA, after subsection (4) there is inserted— "(4A) In determining any question or other matter under subsection (3) above, the Competition Commission may consider as determined any matter in respect of which the appointed company does not dispute the determination by the Authority.""

The noble Baroness said: In moving Amendment No. 103, I shall speak also to Amendment No. 104. Amendment No. 103 seeks to introduce a new clause in regard to the narrowing scope of regulatory appeals, and Amendment No. 104 seeks to introduce a new clause in regard to licence modifications.

The amendments seek to build in a provision for the Competition Commission to ignore any matter that the appointed company does not dispute. In other words, if a company recognises that there are problems which it is willing to address, and about which there is no dispute, they should not be discussed again and again. That would obviously save costs.

Am I correct in understanding that, at present, if a matter is referred to the Competition Commission it will have to consider all of the company's working

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functions and responsibilities—in other words, it cannot deal directly with specific problems? If so, surely an awful lot of time and money is wasted unnecessarily. Where a company and the commission agree, it would seem unnecessary to carry forward this expensive burden ad infinitum.

Amendment No. 104 concerns licence modifications. We believe that water companies should be able to go through the authority to the commission and to influence the content of a referral. That option is not open to them at the moment—they have to go to Ofwat—and we believe that a more direct route may be of benefit to all concerned. I beg to move.

Lord Whitty: I am not attracted to the amendment. Once a referral is made the Competition Commission has the right to examine the total package. The amendment would require it to investigate only those areas in which the undertaker disagrees with the authority.

The Better Regulation Task Force addressed this issue in 2001. It was concerned that any such restriction could lead to companies targeting only certain aspects of the price review—in other words, cherry picking those which they wanted turned over. The same reservation was expressed in the report Appeals Against Regulatory Decisions: Improving the Mechanisms, which was commissioned by Water UK, among others. The report recommended that the existing system of comprehensive price determination appeals to the Competition Commission should remain the central mechanism of appeal.

The alternative is that companies could decide those areas in which the commission intervenes. That is not particularly healthy. As consumers do not have a right of appeal in that sense, the effect would be to allow the companies to decide and restrict the Competition Commission's purview of their decisions. That would upset the balance not only between the regulators and the companies but between the regulators and the consumers. It would not be healthy to move down that road.

Baroness Byford: I thank the Minister for that response. I did not intend that water companies should be allowed to cherry pick. I was trying to establish whether one could save time and money—something we all agree is desirable. If the amendment suggests that companies should be allowed to cherry pick, I am obviously not too happy about it.

The amendment does not refer to "must" or "shall"; it refers to "may". I do not know whether the Minister considered the amendment in a different way. It does not seek to impose a duty that the commission "shall" consider. It would apply only in circumstances where it was decided that it would be wiser for the commission to consider only certain parts of a case

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rather than the whole case, in which instance this would be a sensible amendment. Perhaps the Minister has not read the amendment in the way it is intended.


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