Water Bill

Baroness Kennedy of Cradley Excerpts

Monday 27th January 2014 Lords Chamber

[Baroness Kennedy of Cradley (Lab)]

My Lords, I am new to thinking about the issues surrounding the water industry. Therefore, like my noble friend Lord Whitty, I thank the noble Lord, Lord De Mauley, and his officials for all the briefings and materials they have provided to increase our understanding of this Bill.

I have learnt a lot but I am not completely reassured by that or by what I see before me in the Bill. The water industry is huge and complex, with impervious structures. It is made up of regional monopolies, which pay little or no corporation tax and whose focus is turned towards their shareholders rather than their customers. This all leads to the water industry having a negative public image. Therefore, I believe that we need a water industry that is better managed and better regulated.

We need to do more to modernise the industry, encourage innovation and change the culture. We need to develop a water industry that looks outwards towards the needs of its customers and deals adequately with water affordability. That is what I expected to see in a Water Bill put forward by the Government. After all, as has been mentioned, in the Government’s own White Paper, Water for Life, there was a whole chapter on developing a customer-focused water industry. Therefore, while there are measures to be welcomed in the Bill, it is disappointing that a focus on the customer is missing, especially as water bills have increased by almost 50% in real terms since privatisation. According to industry figures, 23% of households in England and Wales spend more than 3% of their income on water and sewerage bills, with 11% spending more than 5% of their income. To me, that illustrates that the current approach to keeping water affordable for all is failing.

First, there is a low take-up of the WaterSure scheme, which was introduced by Labour to help households that have a high level of water use due to an illness or because they have three or more children. According to the Consumer Council for Water, only a fraction of families that are eligible for help actually receive it. Why is that? It is because customers do not know that help is available to them. Although there has been an increase in take-up over the past six years, as Dame Yve Buckland from the Consumer Council for Water said, it is merely a “drop in the ocean”. Take-up has happened, and been shown to increase, only when water companies are proactive. Whether they are is, however, a matter for that company because it is voluntary. Therefore, the Bill should include measures that require water companies to promote the WaterSure scheme. Should we not have arrangements with the DWP so that people who are entitled, and consent, get the help they need?

Secondly, the voluntary nature of the establishment of social tariffs by water companies is inept. Water companies are able to design social tariffs to help customers most in need of support but only three have such schemes, helping just 25,000 households. As it is voluntary to have a social tariff scheme, many water companies have not bothered to set one up and some have no intention of doing so. Whether or not you get help with your bill therefore depends on where you live. That cannot be right or fair.

I repeat that the current approach to keeping water affordable for all is failing. As water is fundamental to life and public health, many families make sacrifices to pay their water bill. The Consumer Council for Water states:

“One in eight customers says they cannot afford their bill”.

It notes that customers,

“continue to pay their water bill even when it is unaffordable to do so”.

I was reading a discussion thread on Netmums about the impact of rising bills on families. I want to read a short extract from a Yorkshire Water customer. The subject line read:

“My water bill has quadrupled; I think I am going to have to stop eating to pay”.

The customer then wrote:

“I am literally shaking and in tears over this bill. There is no way I can cut costs any more. I work two jobs. I literally can’t work any more than I already do, but it still isn’t enough”.

There are many stories of struggle and hardship being faced by families in this country. Are we really saying that there are no more ways that legislation can help to ease their burden? Today and over the weekend, the media have reported that Ofwat plans to curb rising bills between 2015 and 2020. That is to be welcomed. But this Bill should strengthen Ofwat’s powers to deal with the impact and the problem of water affordability.

I agree with the noble Baroness, Lady Parminter, that the Bill should also seek to deal with bad debt, which adds an average of £15 to everyone’s water bill. It is not right for those who do pay to subsidise those who do not. As we have heard, the Flood and Water Management Act 2010 made provision for the Government to require landlords to give tenants’ details, but this has not been enforced. Why did the Government choose to take a voluntary approach? I understand that the new database for collecting tenants’ details will be ready next year. The Bill should require landlords to use it or be held liable for that debt. We also need to give Ofwat powers to act against water companies that fail to act on bad debt.

The Prime Minister stated that there would be action on rising water bills, but a two-page letter from the Secretary of State to chief executives of the water companies asking them to be “fully alive to concerns” is not action. As we have seen with social tariff schemes and the promotion of WaterSure, voluntary requests for action do not work. As we will see, the voluntary approach to collecting tenants’ details from landlords will not work. It is surely time for this Bill to make someone do something. It is time for real action. It is time to require the water companies to act on water affordability and bad debt.

I turn briefly to the issues of metering and new infrastructure projects. Voluntary switching to water meters is on the increase. Around one-third of properties have meters and this is set to rise to a half by 2015. The Bill therefore needs to make sure that we protect unmetered, low-income households from unaffordable bills that may arise in areas with high levels of metering. Billions of pounds-worth of infrastructure projects are already planned and the costs of these are expected to be passed on to customers. Do the Government know the overall impact that this planned infrastructure will have on customers’ bills? This Bill is a chance to ensure that we get to know the impact on future bills, that everyone is getting value for money, and that there is greater transparency in the process.

In addition to water affordability I want to raise one other issue of concern, which is borne out of my personal and local experience. As set out by the noble Lord, Lord De Mauley, one of the Bill’s main aims is to make it easier for new businesses and landowners to ensure that the water market is providing new upstream services. Inevitably, that will lead to new infrastructure, which is where my personal experience leads me to suggest that more provision for public consultation and public involvement is needed around any such future infrastructure.

Where I live in Deptford, significant controversy surrounds Thames Water’s proposed placement of the 46-meter shaft needed for the Thames tideway tunnel. The proposed site is vehemently opposed by local residents, and consultation on the site and where it is placed has been inadequate. Thames Water’s promotional material illustrates how the construction of the tunnel will be by the riverside, which it largely is until we get to Deptford. Initially, the preferred site promoted by Thames Water was by the river but, curiously, it changed its mind and the site was moved inland to Deptford Church Street and Crossfields Green. That is despite this being one of the only green spaces in that area, being next to a listed church and a residential estate, and being right next to a primary school. This has led to nearly 1,000 local residents signing a petition against the proposed site and some being involved in the campaign group, Don’t Dump on Deptford’s Heart. It is estimated that up to 32 heavy goods vehicles a day will be needed to service this site, causing road closures, traffic mayhem and road safety fears. Obviously, there will be an increase in the level of noise and air pollution.

What is most disappointing is that Thames Water has confirmed that it is perfectly possible not to use this site. Even more disappointing is that one of its justifications for choosing this site is that the local people already suffer from noise and pollution, so they will not be troubled by more. That is totally unacceptable, particularly when a perfectly viable alternative exists. I hope that the flaws in Thames Water’s plans will be recognised by the Planning Inspectorate. If not, I hope that the Government will review them.

As I look towards this Bill, my local experience leads me to ask whether we are encouraging the development of infrastructure through this Bill and, if so, how we can better hear the views of the public. In the Government’s desire to open up competition and to encourage new providers to the market, how can we ensure that proper consultation is not overlooked or cut short? Would a provision in the Bill in this area not help to reassure the public that any new construction projects will consider the views of the public and the environmental impact?

Finally, I want to reiterate my central point regarding water affordability. When dealing with rising energy bills, we may be able to heed the advice of other Ministers to wear more jumpers but for water we cannot take our buckets to the Thames. We all need water to live. We therefore need the charging system to be urgently brought up to date. We need a system that is affordable, fair and sustainable. I agree with my noble friend Lord Whitty that we need a review of how we all pay for water and how we use it. We need less voluntary measures and more requirements for action. We need to deal with bad debt, to increase the take-up of WaterSure, to insist on social tariffs and to develop a national affordability scheme. The chance to tackle the impact that rising water bills are having on family budgets has been overlooked by this Bill. That is a wasted opportunity. I look forward to discussing these issues further in Committee.