Gavin Shuker (Luton South) (Lab/Co-op)
I am extremely grateful, Madam Deputy Speaker, for your generosity in allowing me to speak in this debate. I apologise for having missed the opening speech because of parliamentary business that I could not avoid.
It is a pleasure to follow the right hon. Member for Wokingham (Mr Redwood). I think that he and I will agree about one thing: the botched privatisation of the late 1980s and early ’90s has led us to a wholly undesirable situation. However, we are where we are. As someone who, in the past couple of years, has had responsibility on the Opposition Front Bench for the issue of water, I have watched the situation very closely. I was struck today by the news that this Government are now apparently taking water affordability incredibly seriously. There has been a damascene conversion—or perhaps a Dunfermline and West Fife conversion, as my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) has joined the Front-Bench team and is clearly getting far better results than I ever did in the role that he has the privilege of holding.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)
I welcome the hon. Gentleman to this debate and hate to interrupt his complimentary remarks about his hon. Friend. However, following what Government Members have said about the Water Bill and what we want to do on pricing, it is fair to say that we have been working on this issue for a very long time. I think he will find that any announcements in recent days that have come from sources on the Opposition side might be a little new to the debate.
Gavin Shuker
What a fantastic set-up for the speech I am about to give, which is about the Government’s record in the past few years. I freely accept that the hon. Gentleman was not a member of the Government at that time, but he obviously voted on many of the issues that I want to talk about.
It is crucial that we in this House have a proper understanding of the impact that the Bill that is being sold to us will have on the consumer bills that are being levied on many of our constituents right now. Let us be clear: no one was talking about water affordability or Government action to reform the water industry to deliver for customers and not just for shareholders until the Leader of the Opposition gave his living standards speech in Brighton back in September.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson)
This has been a fascinating debate. Contrary to what the hon. Member for Dunfermline and West Fife (Thomas Docherty) just said about my attitude, I welcome the debate. It is a foretaste of the discussions that we will have on Second Reading of the Water Bill and in Committee and subsequent stages.
Today’s debate has been a useful opportunity for hon. Members to raise a range of issues such as affordability and the practices of water companies, and also local issues such as flooding, development and the history of water supply going back to the locally owned water provision that the right hon. Member for Holborn and St Pancras (Frank Dobson) spoke about. I will come back to some of the comments of the hon. Member for Dunfermline and West Fife. It is a great shame that he finished off his speech as he did. He knows quite a bit about these issues and enjoyed dealing with them in the Select Committee. He should have written the speech himself, instead of giving a speech that was written for him. He could have done much better himself.
Dan Rogerson
The hon. Gentleman did not take interventions, so I shall follow his lead and try to respond to some of the issues raised in the debate. We will have plenty of opportunity to come back to his comments.
I congratulate the hon. Member for Dover (Charlie Elphicke) on leading the charge to secure the debate. He wanted to send a clear message to Ofwat and particularly to the water companies that consumers expect more now. They want a fairer deal to cope with the cost of living and to reflect the fact that the water companies have had some good years. They have had much lower borrowing costs in recent years than was predicted when those prices were set. The hon. Gentleman is looking for some flexibility during the current price review period for those issues to be taken on board.
Clearly, that is a matter for the regulator. Ofwat is being far more assertive in the message that it is sending to the water companies. It has the power to revisit the current price settlement, but in particular circumstances. Ofwat’s discussions with water companies are obviously focused on the coming price review period. It will want to see whether water companies come forward with any suggestions. As my right hon. Friend the Secretary of State pointed out in his letter to the water companies, they are in far better circumstances than were predicted at the beginning of the current period. As a Government, we are supporting Ofwat and providing political cover. If Ofwat is looking for a deal from water companies that more accurately reflects current circumstances, it has the political back-up to do that. I welcome the signs that Ofwat is indeed doing that.
The issues surrounding investment are crucial. The right hon. Member for Holborn and St Pancras spoke about the simple business of a couple of pipes in the ground catching the rain water and sending it on. That was the case once upon a time. There are also the issues of what happens—how can I put this delicately?—after the water has been consumed by the consumer. What used to happen is that a pipe would be installed, as I know all too well, representing a coastal constituency, and the waste would drift out into the Atlantic ocean. That is not acceptable now and we expect a far better standard of treatment for sewage and better solutions to deal with the problems. That is why we have much better bathing water quality than we used to have.
Dan Rogerson
I will not give way. I accept what the right hon. Gentleman says about what he considers simple problems. Yes, we want the water companies to do better on price, but we also want them to continue investing and improving. We have a responsibility to deliver better environmental quality. We have seen improvement in that but we want it to go much further, so we want the investment to continue. We will have the opportunity to consider some of these issues on Second Reading of the Bill, so perhaps we can come back to the more technical issues at that point. I know that hon. Members on both sides of the House will want to engage with me in the run-up to that and I look forward to some informal discussions, as well as the discussions on Second Reading.
I pay tribute to my ministerial predecessor, my hon. Friend the Member for Newbury (Richard Benyon)—he is not currently in his place—who did a huge amount of work to get us where we are. Some Opposition Members claimed that nothing has happened over the past three years, but nothing happened over the 13 years they were in office, other than reviews. Her Majesty’s Opposition seem to stake their reputation on a number of reviews, but they did nothing on the back of them. This Government will look at that work and the evidence provided and do something, such as dealing with the inequality in the south-west and the problems people there face, which Anna Walker looked at, and the issue raised by the Cave review, which looked at the water industry as a whole. This Government are taking action.
The Government are also looking at flood insurance, because the previous Government left the clock ticking on an agreement that was about to evaporate. We have negotiated something that will now be delivered in a Bill. I pay tribute to my hon. Friend the Member for Newbury for being at the forefront of delivering that settlement. We look forward to debating that as we take the Bill through the House.
The hon. Member for South Swindon (Mr Buckland) talked about leakages. He said that although water companies have improved, they could do much better and there is still a long way to go. I absolutely agree. The important point is that we still see companies investing in the infrastructure to put it right and get a better solution to the problems. That is why in all our discussions on price we must ensure that we get the balance right so that we can continue to see that investment.
We heard an interesting exchange between the hon. Member for South Swindon and the hon. Member for Dunfermline and West Fife on household disconnections. It was not clear to me whether the hon. Member for Dunfermline and West Fife was recommending that water companies should have that power. I hope that that was not the case, because it is certainly not something the Government want to reopen.
Dan Rogerson
I am pleased to see that is not something the hon. Gentleman wants, because we certainly do not.
We hope to see some benefits through retail competition, but we want to do that carefully. This is a huge area of reform and a big change. That might slightly disappoint the right hon. Member for Wokingham (Mr Redwood), who looks forward to a time when there will be an ample supply of water for everybody to enjoy in all sorts of ways and when we will not have such nasty things as metering and restrictions. There are other reasons for metering which relate to energy use and environmental concerns, because whatever we do to reform the retail side will not suddenly and hugely increase the amount of water. We will work on abstraction reform and encouraging new people into supply, but that does not necessarily mean we want to abandon our commitment to using the water we have efficiently and managing our resources effectively.
However, I accept what the right hon. Gentleman said about the challenges monopolies present, which is why we want first to move towards allowing businesses, charities and so on to have the benefit of competition. We also want them to look at how they can simplify, so that businesses with many sites across the country, for example, can have one unified bill. That would be a huge saving for them and would allow far more transparency, rather than having separate bills for every site.
A number of hon. Members mentioned the tax situation and financing. Some of those points are for the Treasury, rather than me, but they have had the chance to put them firmly on the record. Many of them have been campaigning on that outside this place, which I know they will continue. I know that Ofwat is listening to that carefully. One of the things it is keen to do with water companies is look at how it regulates to encourage transparency and overcome opaqueness, which relates to what Jonson Cox has said. The companies that take a more responsible attitude to engaging with consumers, feeding back their information and being open about what they do can be regulated in a way that reflects that, and those that refuse to engage with that progress will be the ones that Ofwat will want to investigate much more closely and have close conversations with in future. That is the sort of approach that I very much welcome. Having mentioned Ofwat a number of times, I should also pay tribute to the Consumer Council for Water for its work as the voice of the consumer, which has not been mentioned in the debate so far.
Several hon. Members raised the issue of bad debt, and I am pleased about that. We have been very clear that we want the companies that have done less well on that to look to the examples of those that have done much better in offering a better deal, and to try to build on that work.
The hon. Member for Elmet and Rothwell (Alec Shelbrooke) talked about development issues. Water companies have the opportunity to have an input into that process, but so does the Environment Agency in relation to flooding, and that is important. We want to see housing growth in the economy and investment in housing for people who are desperate to get on to the housing ladder or, indeed, to rent. We have to get the right balance in that process.
My right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) posed a number of challenges and raised detailed issues that I am happy to discuss with him as we move towards the Second Reading of the Water Bill and its progress into Committee.
The hon. Member for Brigg and Goole (Andrew Percy) raised issues about flooding and infrastructure investment. It is important that we encourage companies to continue to invest to overcome these problems at the same time as bearing down on price. The hon. Member for Skipton and Ripon (Julian Smith) talked about transparency and the tax framework. He also noted that some consumers feel that they have very little voice in what is being done with the money that they hand over to the water companies in their bills. Ofwat is taking a much tougher line on this, and I welcome that.
Our approach in the Water Bill is to look to update the structure of the industry to deal with some of the problems we have heard about, but not to try to step in and do what Ofwat is there to do. It is the regulator, and, as my hon. Friend the Member for Newbury said, it will regulate. We will therefore make sure that there are opportunities for it to make any proposals that it thinks will improve the Bill. If there are things we are not doing in primary legislation or it wishes to see change, it will be able to get involved in and develop those things without having to come back to this House or the other place.
The Government’s approach to this issue is a responsible one. Knee-jerk reactions that undermine the strengths of the regulatory system could be immensely damaging. A stable, independent regulatory system is vital in keeping bills affordable. Small changes to the industry’s financing costs can have a significant impact on customers’ bills. In that context, I reiterate my strong support for Ofwat’s drive to secure efficiencies and improvements through the price review and other measures that will allow us to keep customers’ bills as low as possible while ensuring that we can continue to attract significant, low-cost investment in the sector.
I thank hon. Members for bringing this issue to the attention of the House. The interest and passion expressed by Members displayed the importance that we all place on the matter, and I assure them that it continues to receive the highest level of attention from the Government. We will return to many of these important aspects of the industry as we move towards the Second Reading of the Water Bill in due course.