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Baroness O'Cathain: My Lords, that is good news. It indicates that joined-up government—or joined-up agencies—is beginning to work. I thank the noble Lord.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 45 [General functions of the Council]:

Lord Whitty moved Amendment No. 33:



"DUTY TO CONSULT COUNCIL
(1) It shall be the duty of the Authority to consult the Council in relation to the exercise of each of its functions, except where—
(a) the Council has indicated to the Authority (whether specifically or generally) that it does not wish to be consulted; or
(b) the Authority considers that it would be clearly inappropriate to consult the Council.
(2) That duty is in addition to any duty on the Authority to consult the Council which is provided for elsewhere."

On Question, amendment agreed to.

Clause 46 [Provision of information to the Council]:

Lord Whitty moved Amendment No. 34:


    Page 53, leave out lines 26 and 27.

On Question, amendment agreed to.

Clause 51 [Enforcement of certain provisions]:

[Amendment No. 35 not moved.]

Lord Whitty moved Amendment No. 36:


    After Clause 53, insert the following new clause—


"COOPERATION BETWEEN WATER REGULATORS
(1) This section imposes duties on each of the following—
(a) the Secretary of State,
(b) the Assembly,
(c) the Environment Agency, and
(d) the Water Services Regulation Authority.
(2) It is the duty of each of those mentioned in subsection (1) to make arrangements with each of the others with a view to promoting, in the case of each pair of them—
(a) co-operation and the exchange of information between them, and
(b) consistency of treatment of matters which affect both of them.
(3) That duty relates only—
(a) in the case of the Water Services Regulation Authority, to its functions under the WIA relating to the regulation of water and sewerage undertakers and licensed water suppliers,
(b) in the case of the Secretary of State and the Assembly, to their functions of the description referred to in paragraph (a), and to their functions under the WIA relating to the quality of water supplied by water undertakers and licensed water suppliers,

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(c) in the case of the Environment Agency, to its functions concerning water resources and water pollution so far as they relate to water and sewerage undertakers and licensed water suppliers.
(4) As soon as practicable after agreement is reached on any arrangements required by this section, the parties must prepare a memorandum setting them out.
(5) The parties to any such arrangements must keep them under review.
(6) As soon as practicable after agreement is reached on any changes to arrangements under this section, the parties must revise their memorandum.
(7) Parties to arrangements required by this section must send a copy of their memorandum (and any revised memorandum) to each person mentioned in subsection (1) who is not a party to the arrangements set out in it.
(8) The Secretary of State must lay before each House of Parliament a copy of every memorandum (and revised memorandum) under this section."

On Question, amendment agreed to.

Clause 55 [Determination references under section 12 of the WIA]:

Lord Whitty moved Amendment No. 37:


    Page 68, line 4, at end insert—


"( ) For the purposes of subsection (3) above, where—
(a) the question or matter referred to the Commission concerns the review of a price control imposed on the company holding the appointment; and
(b) the Commission is to decide to what extent it is reasonable to take into account in its determination costs incurred or borne by the company in connection with the reference,
the Commission shall also have regard to the extent to which, in its view, its determination is likely to support the company's (rather than the Authority's) claims in relation to the question or matter referred to it."

On Question, amendment agreed to.

Baroness O'Cathain moved Amendment No. 38:


    After Clause 59, insert the following new clause—


"RESTRICTION ON UNDERTAKERS' POWER TO REQUIRE FIXING OF CHARGES BY REFERENCE TO VOLUME
In section 144B of the WIA (restriction on undertakers' power to require fixing of charges by reference to volume), in subsection (1)(c), after "prescribed" there is inserted—
"by—
(i) the Secretary of State;
(ii) the Secretary of State on application by a water undertaker; or
(iii) the Secretary of State on application by the Environment Agency"."

The noble Baroness said: My Lords, the amendment would enable the Secretary of State to designate an area as an area of water scarcity. It would also enable the Environment Agency, as well as water companies, to apply to the Secretary of State for an area to be so designated.

As I said on Report, the Environment Agency accepts that real water savings from metering will come only when there is sufficient metering penetration to introduce innovative tariffs that

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dissuade high domestic use. The agency also recognises that large areas of the South East have unsustainable abstraction regimes. Therefore, we propose to give the agency a formal status in the process of making scarcity designations.

The Government support metering without using the word—I suspect that it is supposed to be an ugly word. In the Defra report, Directing the flow: Priorities for future water policy, published in November 2002, the Government identify the,


    "prudent use of water resources and keeping its use within the limits of its 'replenishment' as a priority for water policy".

However, the Government will permit the growth of metering only on a voluntary basis. Under current legislation—the Water Industry Act 1999—those occupying their home on an unmetered basis may choose whether to be metered and water companies may, but not must, install meters in new buildings.

The current situation in which free meter options are offered is ineffective as a demand management tool. Compulsory metering is much more economical than optional or selective metering, as I have explained many times. Water companies can carry out compulsory metering only when the area concerned is designated an "area of water scarcity". On Report at 24th June, I tabled an amendment to empower the Environment Agency, as well as the water companies, to make an application to the Secretary of State to have an area designated as an area of water scarcity. In reply the Minister argued that the amendment precluded the Secretary of State making the decision herself that there is an area of water scarcity. He said:


    "One could conceive of a situation where it would be necessary for the Government to take the initiative, which the amendment would not allow the Secretary of State to do".—[Official Report, 24/6/03; col. 249.]

The new amendment seeks to address these points by enabling the Secretary of State to take the initiative. It also addresses the other points made by the Minister in relation to previous amendments by giving the agency and the water companies equal status as applicants. I beg to move.

11.30 p.m.

Baroness Miller of Chilthorne Domer: My Lords, there is much merit to this amendment. At this stage, in this House, we are unlikely to go much further unless the noble Baroness presses her amendment. I hope that the Government in another place will give Members a chance to fully discuss the issue and, should charging by volume be agreed, the associated issue of what safety net there will be for people who are on low incomes, who have medical needs or who have large families. They will need some form of adequate safety net. There should be full discussion of those issues.

Lord Whitty: My Lords, we have some sympathy with what the noble Baroness says she is intending, but we have no confidence that this amendment achieves it. There may be a basic misunderstanding. If the purpose of the amendment is to change the process for designating the areas of water scarcity in order to

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introduce metering and other measures it is not appropriate to relate it to the previous Act. The provision for designation of areas of water scarcity is not actually in the primary legislation. The noble Baroness may argue that it should be—I am sure that the noble Baroness, Lady Byford, would argue that it should be—but it is not. It was in the prescribed conditions regulations. This amendment would not therefore change the process.

If the amendment has a more restricted intention it is not clear. The amendment could be read in two possible ways. It could mean that the Secretary of State should be bound by what the undertaker or the Environment Agency asks for. I do not think that that is the intention because we had that debate last time. But if it is for the Secretary of State simply to decide on the content of the regulations having due regard to the views of the Environment Agency or the undertakers, that is not very different from what exists at present. There may be some marginal advantage that the noble Baroness may see in making it explicit, but it is already the case that due regard must be taken of the views of those involved, including the undertakers, the Environment Agency, Ofwat, and others. So I do not think the amendment improves the situation.

The real problem with the amendment is that the noble Baroness seeks to make it easier to designate areas of scarcity, which is not really provided for in the existing legislation; it appears only under the regulations. No doubt, however, if the noble Baroness wishes to pursue the real intention of the amendment, she will inform her colleagues elsewhere. But this amendment will not achieve that.


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