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Water and Sewerage Services (Northern Ireland) Order 2006

My Lords, as I explained, the order sets out other areas where the regulator will have work. The regulator is regulating more than price—for example, I have just dealt with land disposal and other matters where the regulator will be involved. Having dealt with land regulation, I shall say a few words about general regulation. We believe that the policy set out in the document is consistent with the overall approach of ensuring independent regulation. We have already said that, where there is a choice between the department and the regulator as regards who does what, the regulator will exercise all enforcement powers from day one. However, there is no choice for the regulator with regard to price because the Government are subsidising it for three years—otherwise, it would make no sense for the Government to propose what they are doing. The only significant departure from the position in England and Wales concerns price controls during those three years. Otherwise the regulator will have all the powers that the water regulators have here. We will be subsidising consumer bills in that period and, by and large, the average bill of £100, rather than £300 because of this constraint, will be well worth having. The Government will subsidise for three years rather than have a free-for-all and let the regulator regulate, which would mean higher prices. We are committed to independent price regulation after the subsidised phasing-in period. After that, the regulator will take over. We shall not make the same mistake as we believe that the previous Government made with the Northern Ireland electricity industry. We have clearly tried to learn from that. I am not apportioning blame on a party matter. We have just learnt from the experience of electricity regulation in Northern Ireland. We will not set up the same sort of long-term contracts which have had the effect of locking down tariffs in a way in which the regulator cannot touch. The regulator will be free to operate once the charging powers go to him. The draft order introduces new rights for water consumers in Northern Ireland, guaranteeing standards on vital issues such as pressure and constancy. It also allows schemes to be made to compensate consumers where standards are not met. As in other areas, the regulator will take the lead there. On environmental matters, it has been broadly acknowledge that the draft order will improve the environmental compliance of water and sewerage services. Environmental groups have some specific concern about enforcement. Any measure to protect the company while it finds its feet will be limited in scope and duration. There is no comparison with the current situation in which Crown immunity limits effective action. It is important to ensure that the ongoing capital investment programme in new or improved treatment works and systems is delivered on the ground as soon and as effectively as possible. I fully accept that water reform is controversial. As noble Lords will know, it has been the subject of judicial review. I shall not read out the judgment, although others may wish to, as that would take quite a long time. Sixteen counts were taken before the judge, who declared that the applicant for judicial review failed on 15 of the 16 counts on which the Government were challenged. I can give a brief summary of each of the 15 if required to do so. There were grounds for success on the 16th ground, slender though it may be. But in relation to the discussion that took place after the judicial review about what would happen as regards how it would be dealt with by the courts—in other words the remedy—the judge simply agreed a declaration, which has been placed before your Lordships' House, setting out three of the points he wanted to raise. He also made a key point in the final paragraph that the court had issued the declaration to draw the narrow matters—I think I am entitled to say that—to the attention of Parliament so that Parliament may determine, as it sees fit, the appropriate action to take in relation to processing the draft order. The declaration confirms that the court has not invalidated anything which occurred up to and including the laying of the draft order on 9 October. However, I fully accept that it is controversial. I have not come here to say that this is a cheap and easy answer. If the order is not carried, that will put a hole in the budget for next year—2007-08—of £85 million to £90 million, which would be serious. These issues have remained unresolved for too long and we need the sustained capital investment in the infrastructure without drawing funding from other priority public services, such as health, education and transport. Those are the areas from which the money would come. Furthermore, if the order were not passed, it is likely—I put it no higher than that—that Northern Ireland would lose the right to the borrowing power won by the First and Deputy First Ministers in 2002, which currently provides up to £200 million of investment every year for Northern Ireland’s public services. That is not to be sniffed at. I beg to move. Moved, That the draft order laid before the House on 9 October be approved.—(Lord Rooker.)