Water Industry (Financial Assistance) Bill

Mel Stride Excerpts

Wednesday 14th March 2012 Commons Chamber

[Richard Benyon]

I am grateful to the hon. Member for Luton South (Gavin Shuker) and his colleagues for tabling the amendments, because that allows me to explain—and, I hope, to reassure the House—about the use and the powers of the clause.

First, I will address a couple of the points that the hon. Gentleman made. I assure him that I am happy to discuss the process with him and for him to meet my officials to see how it is progressing. He is a very honourable individual and he will respect the fact that because some aspects of what we are dealing with are extremely sensitive and are being watched closely by a number of organisations and, not least, the markets, we have to be extremely careful. I am pleased about how things are going. He also has the opportunity to meet representatives of Thames Water, Ofwat and others to express his concerns on this and related issues, and I know that he has already done so.

The hon. Gentleman asked which Ministers will make the final decision on such matters. The Secretaries of State for Environment, Food and Rural Affairs and for Communities and Local Government will jointly take decisions on water and waste water applications. The Secretary of State for Communities and Local Government will take the lead on considering the Planning Inspectorate’s recommendations. My officials are due to meet his officials shortly to agree the process, and I am happy to keep the hon. Gentleman informed as that develops.

I should like to outline the practical problems associated with accepting the amendments. Together with advisers, the Treasury, Infrastructure UK and Ofwat, we are engaged in discussions with Thames Water over the financing of the Thames tunnel project. Those discussions are focused on reaching the right balance between protecting bill payers and taxpayers and ensuring that the project can be financed and delivered by the private sector. By necessity, a project of such scale and complexity as the Thames tunnel involves a complicated and lengthy negotiating process. I can foresee a host of practical problems in stopping that process at the point at which we feel that a reasonable package has been reached, which balances the risks and enables the project to be delivered, publishing a report on apprenticeships and a further cost-benefit appraisal, and then translating the agreement reached into a statutory instrument for debate in both Houses. Even if we can find a way around addressing potentially commercially confidential material in a published draft order, that additional regulatory process would prolong the completion of the project and add cost that is ultimately paid for by the customer. It would also create an extra layer of risk, with likely implications for securing and retaining the interest of investors in the project.

[Mel Stride (Central Devon) (Con)]

Is it not also the case that, almost of necessity, Parliament will scrutinise very large infrastructure projects in one way or another anyway?

[Richard Benyon]

My hon. Friend is absolutely right. It is worth reminding ourselves of the kind of project that we are talking about. Subsection 1(a) refers to

“the construction of water or sewerage infrastructure”

and subsection 1(b) refers to

“existing water or sewerage infrastructure.”

We have therefore narrowed this down to a particular area of work. Subsection (2) refers to

“exceptionally large or complex works.”

Such an item of expenditure could not just sail under the radar of due parliamentary process. I appreciate the comments of my hon. Friend the Member for Penrith and The Border (Rory Stewart) who eloquently described the necessity for smooth operating in such circumstances, but we are talking about major projects that cannot avoid high levels of scrutiny, and I cannot see that adding an extra tier to that process would be effective.

In the event of the statutory instrument being rejected by Parliament, we would have to return to the negotiating table and reopen discussions. That might put in jeopardy the interest of investors that had previously been attracted to the project. That would add further costs, call into question the project’s viability and ultimately delay action to tackle the significant environmental problems that, in the case that is the driver for the Bill, are being caused by excessive sewage discharges into the Thames. That would, in turn, increase the risk of infraction fines against the UK for non-compliance with the urban waste water treatment directive.