Water White Paper

Thursday 8th December 2011 Commons Chamber

11:31

[Mary Creagh (Wakefield) (Lab)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the water White Paper.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

Making sure that we have enough water for everyone will be one of the major challenges this country will have to deal with in the years ahead. Today’s publication of “Water for Life” recognises that water is essential for economic growth and that we must protect the environment for future generations.

The White Paper is a blueprint for action. It outlines plans to modernise the rules that govern how we take water from our rivers; it explains how we will improve the condition of our rivers by encouraging local organisations to improve water quality and ensure we are extracting water from our environment in the least harmful way; it announces plans to reform the water industry and deregulate water markets to drive economic growth; it enables business and public sector customers to negotiate better services from suppliers and to cut their costs; it removes barriers that have discouraged new entrants from competing in the water market; it asks water companies to consider where water trading and interconnecting pipelines could help to ensure secure water supplies at a price customers can afford; it enables water companies to introduce new social tariffs for people struggling to pay their bills and seeks to tackle bad debt that ordinary householders have to bear the cost of to the tune of £15 a year; and it tackles the historic unfairness of water infrastructure in the south-west.

The White Paper is the Government taking leadership on an issue of critical importance to our economy and our environment. It is a bold vision for the management and harnessing of an increasingly scarce but vital resource and I welcome this opportunity to discuss it with hon. Members today.

[Mary Creagh]

I start by thanking the Secretary of State for her note explaining why the market-sensitive parts of the White Paper were briefed to the stock exchange this morning and expressing my disappointment that she is not giving us her views on this.

We have just had the driest 12 months since records began 100 years ago. That has affected water quality, restricted boating activity and seen wildfires destroy valuable habitats. Last month, the Department for Environment, Food and Rural Affairs granted Anglian Water a drought permit, a highly unusual move for the autumn, when reservoirs are normally filling up. Last Thursday, the Environment Agency’s drought prospect report revealed that south-east England is at high risk of drought next year with some restrictions possible on customer supply. Ensuring a safe, affordable and continuous supply of water while protecting the environment and managing unpredictable rainfall is a major challenge. The White Paper is of intense interest to the public, who are worried about rising bills as real incomes fall and household budgets are squeezed. It builds on Labour’s Cave and Walker reviews, which we commissioned, and takes an evolutionary approach.

We welcome the proposals to introduce greater competition for business and public sector customers and to establish a cross-border market between England and Scotland for water and sewerage services. We also welcome the fact that water efficiency measures will be part of the green deal, as proposed by my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger) during the passage of the Energy Act 2011. However, the White Paper is silent on how the water sector will reduce its carbon footprint and encourage energy from waste, and the proposals on the removal of historical abstraction licences, which cause such damage to our environment, are given an end date of 2025, which is far too late.

Last week’s autumn statement announced £40 million a year to help 700,000 households in the south-west pay their water bills. Will the Minister tell the House when the £2 billion capital investment in the south-west that South West Water invested be paid off and how long the £40 million subsidy will continue for those customers? How will he ensure that those proposals for South West Water meet EU state aid rules? We know that bills in the south-west are, on average, £157 higher than those across the rest of the country, reflecting the botched Tory privatisation of 1989, which left 3% of the population paying for 30% of the country’s coastline and the £2 billion investment in new sewerage services. Does that money set a precedent for other areas of the country to receive help to offset capital investment costs? The cost of the Thames tideway tunnel is now estimated to be over £4 billion, so can Thames Water customers look forward to receiving similar help with their bills?

More than 2,250,000 pensioners, single adults and families spend more than 5% of their disposable income on water bills. The Government’s proposals to help people with rising bills elsewhere in England and Wales are weak and unclear. How does the Minister propose to force water companies to ensure that those eligible people receive help with their bills when that will come straight off the companie’s bottom line? What sanctions will there be for water companies that consistently fail to help people with their bills? Has he decided whether to fund Water Sure through public expenditure, as mentioned in the consultation in June, and, if so, what will the cost be per annum? Has he rejected the idea of match funding for company social tariffs in the south-west and modifying sewerage charges for non-household sectors?

Today’s water White Paper is more than six months late, and it is a curate’s egg—good in parts. We will work with the Government to ensure a fair deal for water customers, whatever part of the country they live in.

[Richard Benyon]

I am grateful to the hon. Lady for the welcome she has given to large elements of the White Paper. She is right that it builds on work that has been done over many years. I am grateful to Professor Cave, Anna Walker and to David Gray for his report on Ofwat, which informed the White Paper, as have the contributions of many stakeholders, other organisations and Members of the House.

The hon. Lady made a slightly predictable and lame remark about why I am dealing with the issue today, rather than the Secretary of State. We have a style of management in this Government that encourages people to take control of the issues. It is a highly motivational style that I recommend to her, because it encourages greater understanding of the issues. The Secretary of State and I have spent many hours preparing the White Paper and have immersed ourselves in the detail.

The hon. Lady is wrong to suggest that there is not enough in the White Paper on reform of the abstraction system. The abstraction rules go back to the early 1960s and do not take into account changes to our climate and weather patterns, and it is important that we have new and clear rules that take us into the future. We will consult in 2013 on our long-term approach to a transitional system of changing abstraction that will work and be sustainable in every sense.

There are urgent measures that we need to take forward, because in constituencies similar to mine, much-loved and much-valued rivers, which are vital to our eco-systems and to the general health of our environment and to the way in which we value it, are running dry. The White Paper sets out clearly how the Environment Agency will work to bring forward speedily measures that change how we abstract water, so that we return water as quickly as possible to river systems, and our catchment approach, which we announced in March, will soon start to benefit water quality and pollution. I urge the hon. Lady to support that measure, which involves many local people, is effective and tackles the urgent situation that we face, brought about by the current low rainfall and the impending drought, unless we have a proper, wet winter.

The hon. Lady mentioned South West Water. We believe that the announcement in the Budget, on which the Chancellor gave more detail in the autumn statement, sets out a way of righting a long-term wrong. It is to the credit of this Government that they have tackled it, because Members from all parts of the House have raised the issue for a great many years, and we are dealing with it. I am not going to pretend to her or to the House that the announcement will create the equivalence that people in the south-west might feel they deserve, but it is a considerable contribution and is separate from what we are doing to assist those on low incomes throughout the country to pay their bills.

We are consulting on the guidelines that we will produce for companies’ social tariffs, and I recommend to the hon. Lady the details in the White Paper on the excellent work that several water companies are doing to make it easier for people to pay their bills, and on the work that the companies are doing with organisations such as Citizens Advice and others.

The hon. Lady asks how long the payment announced by the Chancellor will continue. In an almost unique announcement, I can tell the House that it will continue beyond the end of the spending review and, in fact, until at least the end of the next spending review. Of course, it will be for Ministers then to decide what happens after that.

The hon. Lady talks about other high-cost items and their impact on people’s bills, and refers to the Thames tideway tunnel, which, as she rightly recognises, imposes a high cost on Thames Water customers. The cost of the project is of great concern to Ministers and to the Government, and we are looking at it very closely. We remain supportive of the scheme, however, and page 55 of the White Paper shows the Government’s clear support for it. The Thames is one of the most important rivers running through an iconic city, and we need to ensure that it is clean. We believe that this scheme offers the best solution.

The hon. Lady asks me about the guidance on tariffs. Water is a monopoly industry, and the monopoly industries are highly regulated by three regulators, so Ofwat will continue to set prices and to be an independent regulator. We will give clear guidance on where we think it should be going, but the relationship will remain the same and its responsibility will be to keep bills affordable.

[Several hon. Members]

rose—

[Mr Speaker]

Order. What are required now are short questions and short answers, because we must move on. That is the way it has to be done.

[Tony Baldry (Banbury) (Con)]

Birmingham has a greater length of canals than Venice, and the country as a whole has an extensive canal network, so what assessment has my hon. Friend made of its potential to link those parts of the country with above-average rainfall with those parts that need more water?

[Richard Benyon]

I have looked very carefully at that issue, and as my hon. Friend will know we are in the process of a very exciting change in how we manage our waterways, in transferring British Waterways to the charitable sector. There remains the opportunity to use our canals to move water around, but the sad truth is that water is an extremely heavy substance, and it is very carbon-intensive to move it very far. The economic assessments that I have seen state that to move water much more than 30 miles is uneconomic, but through a range of different measures we start to see that, with interconnectors, we can incentivise water companies to use a variety of means to move water from neighbouring areas to theirs. Then, we can start moving a trickle of water from areas of high rainfall to areas of low rainfall.

[Mr Ben Bradshaw (Exeter) (Lab)]

I welcome the fact that the Government are implementing the part of Anna Walker’s review that will bring relief at last to consumers in the south-west, although I note, of course, that our bills will still be more than £100 more than in any other part of the United Kingdom. Will the Minister say a little more about infrastructure? The thing that puzzles many members of the public is that we live in a wet, temperate climate with lots of rainfall, and yet we constantly talk about having droughts. What more can the Government do to increase the capacity of reservoirs and other infrastructure to avoid that happening?

[Richard Benyon]

I thank the right hon. Gentleman for his words. Of course, he is right. We want to encourage water companies to continue to invest. A key element of the White Paper is to send a very clear message to the investor community that we value the nearly £100 billion of investment in our infrastructure over the past 22 years and want to see more of it in future. There have been two intentions in that direction: first, not to spook investors by giving the wrong indications about how we want to proceed on competition; and secondly, to say to the investor community, “This is a place of safety and security where you can invest for the long term.” We will still require greater infrastructure and elements of construction that will make our economy and our environment more resilient to the kinds of weather changes that are happening.

[Andrew George (St Ives) (LD)]

Like the right hon. Member for Exeter (Mr Bradshaw), I welcome the Government’s approach to South West Water customers and to the social tariff proposal. However, does my hon. Friend acknowledge that the ability across companies to respond to the advantage that is given to them as regards social tariffs will vary from company area to company area, and will he keep that under review? After all, this is a White Paper, not a Bill.

[Richard Benyon]

The hon. Gentleman is absolutely right. We hope to legislate in the near future on a number of these matters, not least that of South West Water, which does require primary legislation. The guidance that we are consulting on will be made available when the results of the consultation are known in January—in the new year, to be precise. We will very much take his concerns into account. We want company social tariff schemes that really work and get to those who are in water poverty.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I welcome the publication of the White Paper, although I am disappointed that in some respects it is not more ambitious, particularly as some of the measures that we need could be very simply achieved. To give one specific example, are there plans to include a mandatory requirement to have rainwater harvesting in all new homes, and if not, why not, given that it is a very simple measure that could nevertheless have a significant impact?

[Richard Benyon]

There are great incentives to be given in the construction of new homes. In terms of the wider debate on development, sustainable development will put the onus on developers to show that the construction of these dwellings will have as minimal an impact as possible on the environment. This will be a real driver towards using water-conserving measures such as greywater schemes, sustainable drainage systems and a whole host of others that we will be bringing forward as this process goes further.

[Mr James Gray (North Wiltshire) (Con)]

One reason for over-abstraction from rivers such as the source of the Thames and the Malmesbury, the Avon and the Kennet in my constituency is that the law prevents planners from considering water and sewerage availability when agreeing unwanted out-of-town developments and large-scale developments such as those around Swindon. Will the Minister have discussions with his colleagues at the Department for Communities and Local Government to consider whether planning law could be changed to avoid over-abstraction from rivers such as mine?

[Richard Benyon]

That is a matter of great concern to me. The River Kennet flows through my constituency, and when I stood in it in Marlborough the other day, it was as dry as the carpet on which I am standing. It is a very real problem, and the projections for population growth across this country in the years to come indicate that we have to address it now. We are setting out in the White Paper a vision that will precisely encompass the concerns so accurately voiced by my hon. Friend. We need to ensure that there is an adequate water supply so that our rivers and taps can continue to flow, and we are trying to link up those two very important requirements.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

The Minister will be aware that it took David Walliams’s sponsored swim down the Thames to remind our constituents how filthy some of our rivers are. Tens of thousands of tonnes of sewage are still pumped into the Thames. Protection for the quality of our rivers comes from the Environment Agency, but everyone is saying that the Environment Agency is being run down and that it does not have the capacity to be vigilant and ensure that our environment is safe.

[Richard Benyon]

I have the highest respect for the Environment Agency. The people who work there are true professionals and are absolutely committed. I have had no indication from them that they are unable to deal with water quality issues, as described by the hon. Gentleman. I agree with him that the main river flowing through our capital city is in a disgraceful state. Not only should it be our ambition to see it cleaner, but we have to comply with international treaties. It behoves us to take the tough decision to restore its quality. However, that will not happen with the exclusion of other rivers that are also suffering quality problems.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Lincolnshire, where my constituency sits, is one of the driest counties in the country, somewhat counter-intuitively. Water is therefore of great importance to my constituents and in particular to those who farm. Will the Minister assure the House that there are no proposals in the White Paper that will adversely affect the farming industry?

[Richard Benyon]

One of the core principles that motivates us in DEFRA is food security. We are deeply indebted to the farming community for the innovation that it has shown and for its ability to cope with changing weather patterns, while continuing to produce quality food. During the drought last year, we engaged with abstractors, many of them from the farming community. We found that the Government have many tools at hand to deal with the problems now. There was some very innovative work by the Environment Agency, the National Farmers Union and other organisations on that. The White Paper addresses the urgent and available methods, but also considers a new, changeable abstraction scheme for the long term that encourages farmers to continue to produce food.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I think that there will be concern at the failure to separate the retail arm of competition for non-domestic customers. May I press the Minister to set out the timetable for the introduction of a zero-threshold market for all non-domestic customers?

[Richard Benyon]

That is a clear priority. We hope to have a water Bill to take those methods forward. We looked closely at the recommendations of the Cave report and those from a number of other quarters about retail separation. We are making substantial changes on competition, but we were not persuaded of the need for wholesale reorganisation and separation. We want to ensure that the water sector remains open to increased investment. We hope to make changes with a water Bill in the next Session of Parliament.

[Roger Williams (Brecon and Radnorshire) (LD)]

I welcome the commitment in the White Paper to tackle water quality on a water catchment area basis. I notice that the Teme, Wye and Severn catchment areas straddle the England-Wales border. I ask the Minister to work closely with Ministers in the Welsh Assembly and other agencies to ensure that water quality is improved as quickly as possible.

[Richard Benyon]

I have visited that catchment area and know that there are serious issues to be tackled. We work closely not only with ministerial colleagues in Wales, but with the Environment Agency and the new Countryside Council for Wales. I assure my hon. Friend that cross-border issues will be dealt with to reflect the needs of catchments. We will work with all concerned to ensure that that is successful.

[Paul Flynn (Newport West) (Lab)]

If the Government are abiding by their promised timetable, 8 December is part of early summer. Is it not true that this White Paper is not only late, but lame and limited? It appears to disregard altogether the immense potential of water resources to generate clean, sustainable energy.

[Richard Benyon]

I am saddened that the hon. Gentleman is not as welcoming of the White Paper as others have been. We originally planned to introduce it in July and I recognise that it is a few months late. However, I am sure that he would have preferred for us to take a bit longer and get it right rather than rush it. We produced a natural environment White Paper in June, which informed the issues that we are taking forward in this White Paper. We have consulted closely with people across the water sector and in the wider DEFRA family. I think that it was better to take a few months longer and get it right.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I welcome the White Paper. Will the Minister confirm that the reason it was released to the City first was that it contains market-sensitive information? There is genuine anxiety in Stratford-on-Avon and throughout the country about over-abstraction. What can he say to my constituents to allay their fears?

[Richard Benyon]

My hon. Friend is right: we released only the parts of the White Paper that were market sensitive to the stock exchange, after informing Mr Speaker. I gather that there is precedent for such a move and I am grateful for the general support for it. My hon. Friend’s constituents, like mine, are right to be concerned about the impact that over-abstraction is having on their environment. That is why we are making a reasoned change to the abstraction system in the long term and tackling urgently the problems of over-abstraction in certain areas where rivers are dangerously low or even running dry.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The Minister has confirmed his commitment to the Thames tideway tunnel investment of £4 billion. Will he also confirm the other major investment in the Thames Water area at Deephams in my constituency? How will the Government continue to protect the consumer from the increased bills that will be occasioned by that major investment?

[Richard Benyon]

Deephams is vital to the infrastructure that we need. The hon. Gentleman is right to suggest that it will have an impact on people’s bills. It is the job of the Government, working with Thames Water and Ofwat, to ensure that that cost is as low as possible. There is a large contingency in the Thames tideway project, which every experience of large-scale environmental projects shows is necessary. I hope that we can work with Thames Water to ensure that these infrastructure projects are produced at as reasonable a cost as possible and with as little impact on charge payers as we can achieve.

[George Eustice (Camborne and Redruth) (Con)]

I, too, welcome the measures outlined in the White Paper to deal with the affordability of water bills in the south-west. As the Minister said, this issue has been discussed for more than a decade and nothing has been done. It is good finally to see action. In respect of the concerns about whether this sets a precedent for the Thames tideway project, does he agree that a major difference is that the population of the Thames Water area is far greater than that of the South West Water area, so the overall impact of the infrastructure improvements on bills will be far lower?

[Richard Benyon]

It is no comfort to my constituents or the constituents of other hon. Members in the Thames Water area to say that their bills are likely to go up. However, when they do go up, our projection is that they will be at about the national average. My hon. Friend’s constituents will continue to pay bills of about £100 over the national average. We have made a considerable investment to try to right the wrong that they have lived with for a long time. It is never easy, but I assure him that I will continue to work with Ofwat and others. I am grateful for his contribution and that of other hon. Members from the south-west in this difficult process. I hope that it is appreciated that we are getting somewhere.

[Chris Bryant (Rhondda) (Lab)]

With all this talk of dryness, I feel as though the Rhondda is living in a different world—perhaps not for the first time—because the issue that affects us most is still flooding, in particular where there is dry ground and water comes straight down off the mountains. One thing that has helped enormously is that Dwr Cymru, Welsh Water, has, with its unique structure, been able to work more co-operatively with the Welsh Assembly and others. Will the Minister ensure that nothing compromises that unique structure?

[Richard Benyon]

I commend that company. I was with its chairman just the other day discussing this issue. We have to learn how water companies cope with large quantities of water in high rainfall areas, but also how we can work with them to achieve greater connectivity with other water companies. If we see water flowing from area to area, it will benefit the hon. Gentleman’s constituents through the bills that they pay and encourage water to go to the stressed areas of the south-east.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

The microclimate in Suffolk Coastal is quite similar to that of north Africa, and farmers are used to using irrigation in producing crops. There are also big abstractors of both river and ground water. I welcome large parts of the White Paper, but I am a little worried by recommendations 3.39 and 3.43, which I am concerned will put farmers in my constituency out of food production.

[Richard Benyon]

I am very happy to discuss the details of that with my hon. Friend and with farmers from her constituency, because that outcome is not our intention. We want farmers’ businesses to be secure for the future. If the Government had not taken responsibility for this issue by taking forward a clear vision of an abstraction regime that is fit for the future—it has been a problem for a long time that there has not been such a coalescing of ideas—farmers in her constituency would have been in a much worse condition.

[Stephen Mosley (City of Chester) (Con)]

The Minister has just mentioned Welsh Water. Will he remember that it also serves customers on the English side of the border, for instance in Chester? In areas where there are disputes between DEFRA and the Welsh Assembly Government—for example, on the Consumer Council for Water—will he ensure that customers on the English side of the border are not forgotten?

[Richard Benyon]

I will of course ensure that they are not forgotten. I am looking forward to going up to the north-west to see the new interconnector, which will provide water from places such as north Wales to an area that was water-stressed last year. We have to recognise that drought is not exclusive to the south and east but is now a feature in other parts of the country, including my hon. Friend’s constituency.