---

Water and Sewerage Services (Northern Ireland) Order 2006

My Lords, I think that part of the deal we did was that none of that goes back to the Treasury. However, I do not see any nods of approval there—which is very helpful. As for the water company’s self-financing and breaking even, we have to fund the capital charges. Some £1 billion of capital is being invested in the water industry by the general taxpayer—by people from England, Scotland and Wales as well as Northern Ireland. Massive amounts are going into the infrastructure well before any of these provisions come into effect. I have described chapter and verse the length of the new sewers and pipelines and the projects that are under way. Some £448 million of work is taking place now, while 26 projects have been completed in the past three years, over which time there has been some £629 million of investment. There is no secret plan for privatisation. I take the point made by the noble Lord, Lord Trimble. It istrue that the Secretary of State has agreed with the Chief Secretary to the Treasury, who conducted the negotiations on how the GoCo would be set up, its initial dowry, the size of its capital and the rate of return, all of which are key figures. The order before us is the result of that. The email to which the noble Lord, Lord Trimble, referred, commented on the 2008 review. It is wrong to suggest that any decision has been made. That is not to say that a decision could not be made in future. On the issue of the rate of return, although I cannot conduct negotiations at the Dispatch Box, there is a good case for having another look at that again within government. It is part of the package. I am not sure of all the details but part of that return affected the amount of capital provided, and therefore a balance will have to be struck in the charges that have to be put on the customers. I am happy to give a commitment that we will go back and look at that. The answers to specific questions raised on behalf of the consumer council have been put in front of me at the last minute. I was asked whether the strategic business plan would be available for public scrutiny.It will not be published as it will be an internal, commercially sensitive document, and noble Lords have accepted that. The Water Service will publish as full a summary as possible of the plan when it is finalised before April 2007. The maximum amount of information that does not affect commercial sensitivities will be put into the public domain before the new charges begin. I was also asked how much money would be collected from domestic customers. I have answered that. As for how much of total dividends will go back to the Treasury in each year from 2007 to 2010, there are constraints on local Ministers as a direct consequence of the UK public expenditure system being a reserved matter. The money to run Northern Ireland—the £5 billion transfer to fund it—comes from somewhere. The Treasury is responsible for fixing those figures. There is a budget of £9 billion for Northern Ireland. The Treasury is involved there and it is a reserved matter. It has policy responsibility. That is absolutely clear and I do not believe that anyone could sensibly argue with it. The system requires that holding assets or investments has a cost—that is what the water company will be doing. It should be transparent and reflected in the budgets. The Treasury has determined the cost of these investments in the GoCo, which should be at a rate of 5.8 per cent of the value of the investment, so the amount will be a charge on the public expenditure in Northern Ireland every year. That is the starting point from which Northern Ireland Ministers have virtually no discretion. That does not mean it cannot be discussed within government. As that cost arises, I presume, for water and sewage, it is reasonable that those who receive the service—both domestic and non-domestic—should pay it. I do not think anybody should mention non-domestic cases today, so I will not answer any questions on it, but they are equally involved in this. Any and all amounts paid by way of dividends are available for investment in the public service in Northern Ireland. The money will be retained in Northern Ireland—that is what the investment isall about. We are prepared to raise again within government the figure of 5.8 per cent compared with 5.1 per cent. There is probably a really good accountancy Treasury reason for that, but it is a reasonable question to be asked by the average person on the street in Northern Ireland, who is being asked to pay for something that they thought they already paid for but did not—it is an extra charge over which they pay now. It brings them somewhere near the charges in England, Scotland and Wales, because they are, massively, double the amount of household charges. Therefore, I think it behoves us to go back into government and at least raise the question again. The noble Lord, Lord Glentoran, asked about the regulator’s powers. Certainly the annexe—indeed, the whole letter that was issued to him on Friday, I hope, and, if not, at the weekend—will be put in the Library, because it sets out clearly the powers ofthe regulator and where the authority is. In respect of the question from, I think, the noble Lord, Lord Trimble, the regulator’s powers are enshrined in the legislation; they do not derive from the licence. Itis very important to note that. The details of the GoCo’s appointments are in the licence, but the powers are enshrined in legislation, so that cannot be mucked about with in the licence—not that we intend to do so. Another important point, because the regulator has work to do, is that the order makes provisions for the enforcement of the GoCo’s duties and obligations. The department will provide the authority with a general authorisation to exercise its full enforcement of the undertaker’s statutory duties from 1 April 2007, or as soon as practicable. I am not sure what day of the week 1 April is, but the regulator will start work straightaway, from day one or as soon as is practicable, with those powers. It is true that the draft licence was issued for consultation on 4 December. We believe that a lot of time has been spent on it—seven months, through an engagement with key stakeholders. We believe it builds on the best regulatory practice and provides the means by which the regulator can ensure that Northern Ireland Water is focused on efficiency and consumer service. It protects the interest of customers through robust regulatory scrutiny while setting the appropriate framework. Importantly, the draft licence would improve on the licences in place in England and Wales by, for example, requiring Northern Ireland Water to submit an estate management plan to ensure high visibility of any plans to sell surplus land. In an early part of my speech I described the rules for disposing of land or not. Some land may have been acquired by compulsory purchase. Land may be acquired in the future, and one has to look at the position, but certainly the regulators have got to have a key power in that. The regulator’s powers are important and can be dealt with only at some length, but are nevertheless dealt with in the annexe in the letter that I sent to the noble Lord, Lord Glentoran. In respect of enforcement, a wide range of powers go to the regulator, or by the authority on authorisation by the government department. But from 1 April, the department will issue a general authorisation to the regulator to carry out enforcement where there is a choice between it and the department. That annexe, which will be placed in the Library, sets out where the power is clearly for the authority, or where it is the department or the authority. We have said that, where there is a choice between the regulator and the department as to who does what, the regulator will exercise the powers. I cannot be clearer than that. We have protected the poorest people in Northern Ireland. I genuinely apologise that this measure is in the form of an Order in Council, because it has not been subject to the scrutiny that a proper Bill would receive in this or the other place. Although I do not want to upset the noble Lords sitting behind me to my right, I repeat that, if the Assembly had reconvened lastweek or the week before, the order would have been its responsibility. In fact, it is the Assembly’s responsibility—it should not be ours. We have repeatedly made it clear that, while the politicians of Northern Ireland, of whatever party and for whatever reason, refuse to take up their responsibilities, we will not stop the reform programme for the people of Northern Ireland, in whatever area—be it local government or rates reform. Local government in Northern Ireland benefits from this order as extra money can flow to the public services. If the measure is not carried, it puts at risk the £200 million a year borrowing power secured previously by the respected former First Minister. With the order, more money can flow into public services in Northern Ireland and, above all, Northern Ireland can get a water service which is at least equal to that in England and Wales. As I said, at the moment the quality and parameters of the service are like those in England and Wales 16 years ago. It is time to move on. The costs are not onerous either for the poorest or the wealthiest in Northern Ireland. I simply ask for support for the order.