Managing Flood Risk

Baroness McIntosh of Pickering Excerpts

Monday 3rd March 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I welcome this opportunity to open this estimates day debate on managing flood risk. To put today in context, this is the day of the memorial service in honour of Nelson Mandela; it is a week after the visit by the German Chancellor, Angela Merkel, to address both Houses of Parliament; and it is a day on which the future of Crimea and the rest of Ukraine remains very uncertain. In its own way, though, what we meet to discuss today is equally international and portentous in its nature, as we have seen some of the most damaging storms, most likely emanating, we are told, from the Atlantic on the jet steam and causing immense damage in 2013-14.

I am delighted to welcome the Minister to his place. We were most fortunate to enjoy his company on the Select Committee on Environment, Food and Rural Affairs, and indeed that of the shadow Minister, when we adopted this report in July 2013. How prescient that report appears with hindsight. We have had record rainfall over the past two years, which has led to the most extensive flooding, cost the economy millions of pounds, and caused disruption and distress to householders and communities across the UK.

Additional capital funding for flood defences is welcome, since we are told that every £1 spent on flood defences to protect communities spurs growth and delivers economic benefits worth £8. However, we concluded that spending on flood defences has simply not kept pace with increasing risks from more frequent severe weather. The Chancellor of the Exchequer must ensure that investment increases by some £20 million year on year. We need that money over the next 25 years to protect homes and businesses better. Maintenance of these defences and the effective dredging of watercourses must be a priority.

[Sir Tony Baldry (Banbury) (Con)]

Will my hon. Friend give way?

--- Later in debate ---

[Miss McIntosh]

I should like initially to set out our overview before I take interventions.

The Committee welcomes proposals for a new Flood Re insurance scheme, to ensure that everyone is able to get affordable insurance. We are told that the scheme will be funded by a small levy of about £10.50 a year on all household insurance customers. The Committee insisted, during the passage of the Water Bill, that safeguards be introduced to keep the costs down. It would be interesting if the Minister confirmed whether the Prime Minister has asked for the band H and certain other exclusions to be brought into the review of Flood Re, as was reported over the weekend.

The Government is an insurer of last resort. We were told in evidence that, if there were a one-in-250-year event, such as the one that we have just seen, in the first two or three years of Flood Re coming into effect, the Government would take over as insurer of last resort. We were also told that, for the first two or three years of the Flood Re scheme, there simply would not be enough money in the pot to fund such claims against it. The House needs to understand the implications of that eventuality.

Delay by the Government and the insurance industry in agreeing the provision of affordable flood insurance has caused householders unnecessary uncertainty. The opaque cross-subsidy in the current statement of principles must be translated into a more transparent scheme with clear and robust governance arrangements. This debate provides a useful opportunity for the Minister to update the House on progress towards state aid approval in Brussels, because the last we heard was that had not been embarked upon, which seems to be leaving it late in the day. It raises other exclusions in addition to band H, such as why the cut-off year of 2009 was chosen, and why small businesses such as farms remain excluded.

With spending on the maintenance of defences and watercourses apparently at its lowest for many years, short-sighted reductions in revenue funding appear to threaten and undermine the benefits of capital investment in flood defences, but I firmly believe, as the Committee does, that we should not rely completely on Government sources, but should look at partnership approaches such as the Pickering “Slowing the flow” scheme in my constituency as well as measures by insurance companies.

[Sir Tony Baldry]

That is exactly the point that I wanted to make. We cannot necessarily expect the Environment Agency to fund the totality of flood defences. In Banbury, recently completed flood defences cost £17 million: £9 million came from the Environment Agency, but £8 million came from others, including the district council, Network Rail, Thames Water and local landowners. Many people have a role to play in contributing to making sure that flood defences work, not just the Environment Agency.

[Miss McIntosh]

My right hon. Friend makes a powerful point. I do not wish to detain the House too long, but I shall come on to look at that. The Government and the Minister have an opportunity to elaborate on this, but the House must be persuaded of the contribution that private bodies can make. The Select Committee has not been persuaded of that. Personally, I think that there are huge opportunities for water companies, but we need to amend the 2014 pricing review to allow that, so it would be useful to have an update. In addition, I should like to know whether the Minister believes that insurance companies will step up to the plate regarding infrastructure spending.

[Mr David Davis (Haltemprice and Howden) (Con)]

Although I understand entirely the argument about multiple sources of funding for many flood defences, some major defences—most obviously, in my case, and in the case of my hon. Friends the Members for Brigg and Goole (Andrew Percy) and for Beverley and Holderness (Mr Stuart), the Humber defences—are strategic and, by definition, have to be carried out by a major strategic authority. Under those circumstances, the 1:8 rule and the requirement for other funding do not work. Does my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) accept that strategic intervention should take place on a different scale?

[Miss McIntosh]

My right hon. Friend brings me to the core of my opening remarks.

We could argue the whole afternoon about how much each side has paid in capital funding over the past two strategic reviews. That argument over capital expenditure is worth having, to the extent that that expenditure has increased, but the Committee on Climate Change—I am sure that the shadow Minister, the hon. Member for Brent North (Barry Gardiner) will rehearse this—concluded that we have to spend some £20 million a year extra. The kernel of the argument is how we define revenue and how we define maintenance expenditure. We do not completely understand where the money is being spent.

[Several hon. Members]

rose—

[Miss McIntosh]

If I could make a little progress first, I will then take interventions.

There are a number of maintenance activities which the Environment Agency groups into four main areas. The first is operations: inspecting assets, providing utilities, and operating flood barriers and pumping stations. Some of those have passed from internal drainage boards to the Environment Agency, and have not been maintained since 2004-05. It is important to put that on the record.

The second maintenance activity is conveyance. The Committee was shocked to learn that only £30 million is spent each year in the whole of England and Wales on controlling aquatic weed, dredging, clearing screens and removing obstructions from rivers. We will never know whether regular maintenance and dredging on the Somerset levels by the IDBs or the Environment Agency would have prevented the traumatic flooding we have seen since last autumn and right through the winter.

The third activity is maintaining flood defences and structures, including carrying out inspections and minor repairs, managing grass, trees and bushes and controlling the populations of burrowing animals on flood embankments. My argument is that under the previous Government much of the regular maintenance work was simply not done by the Environment Agency because its political masters, the Government, said not to do it because of birds nesting. I argue that IDBs work with nature and dredge only at the right times of year.

The fourth activity is mechanical, electrical, instrumentation, control and automation—MEICA—meaning carrying out minor repairs to, and replacement of, pumps and tidal barriers.

[Mr John Redwood (Wokingham) (Con)]

Does my hon. Friend agree that many places, including Wokingham, experienced flooding because essential maintenance work on ditches, culverts, drains and small rivers, which are relatively low-budget items, had not been undertaken by the Environment Agency? In the previous year the Environment Agency spent £1.2 billion overall and massively increased its staff, but it did not have a penny to protect the people of Wokingham from the floods that have now hit them. Is it not a question of how we spend the Environment Agency’s budget?

[Miss McIntosh]

My right hon. Friend makes my case for me.

[Mr Jim Cunningham (Coventry South) (Lab)]

First, is the hon. Lady or her Committee satisfied with the responses of the various agencies in dealing with flooding? Secondly, is she happy with the level of staff employed by the Environment Agency?

[Miss McIntosh]

I think there is a coherent view across the House this afternoon that when IDBs, district councils and the flood levy from the regional flood committee contribute to the Environment Agency, it is not always clear what work is done. That is something we are here to debate this afternoon.

[Mr David Heath (Somerton and Frome) (LD)]

The hon. Lady said that we will never know what the result of dredging in Somerset would have been. I suspect that we would still have had flooding, but it would have started later, could have been removed quicker and would have been far less extensive. Does she agree that the initial ask we are making of the Environment Agency and the Government—the 8 km of dredging, which is the most crucial dredge—now needs to be under way? The maintenance dredging every year by local authorities and IDBs should not be confined to that area, but should look at other potential problem areas, such as the Great Bow bridge in Langport, and connecting Monks Leaze Clyse through to the River Sowy and the King’s Sedgemoor drain.

[Miss McIntosh]

I do not have my hon. Friend’s depth of knowledge, so I shall simply refer to Lord Smith’s evidence to our Committee. Page 16 states:

“Lord Smith stated that asset management spend would equate to £169 million in 2012-13, reducing to £146 million in 2013-14 and £136 million in 2014-15. He noted that there were some ‘pinch points’ in specific places such as on the Parrett and Tone rivers. He further noted that no additional revenue or operating funding was being provided to match the new £120 million capital funding announced in the Autumn Statement.”

I refer to the Committee’s conclusion, which my hon. Friend will be aware of, that there should have been some regular maintenance of the Parrett and the Tone well in advance of the floods last autumn.

[Chris Bryant (Rhondda) (Lab)]

I cannot speak to the situation in Somerset, but I hope that the hon. Lady would not advocate dredging in every situation. In the early 1990s and early 2000s, the local authority in my constituency sped up water flows higher up the valley, which led to a significant problem further down the valley. Surely we need a whole-valley answer.

[Miss McIntosh]

The hon. Gentleman will have listened carefully to the four headings that I set out—the different types of maintenance, of which dredging is a small part.

I turn to the flood defence maintenance funding for the coming financial years. It is with some sorrow that I see the reduction in the headline figures for flood defence maintenance, from £172 million in the financial year 2010-11 to £147 million for 2013-14. I hope that in discussing the supplementary budget, the debate will achieve one thing: an increase in maintenance from revenue funding and a more general grasp of the importance of maintenance in all its forms to preventing flooding in future. The Environment Agency’s £147 million maintenance funding for 2013-14 is allocated as follows, in accordance with the four maintenance categories that I rehearsed earlier. I repeat that there is only £30 million this year for clearing watercourses, normally referred to as dredging, which the hon. Member for Rhondda (Chris Bryant) mentioned. For operation there is £44 million, for structures there is £52 million and for mechanical electrical instrumentation control and automation there is £21 million.

The role of the Department for Environment, Food and Rural Affairs in climate change is narrow; it is about adaptation and seeking to increase resilience. However, it would help to allow the conveyance of water, to slow the flow with land management schemes upstream—dredging, desilting and other means—and to stop fast-growing willow coppice from blocking watercourses in order to allow the water to flow away in Somerset, Yorkshire and other areas across the country, to prevent flooding.

My Committee and I absolutely accept that there is no one-stop option that will prevent all forms of flooding; maintenance, as well as land management upstream schemes, has to be considered.

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

Does the hon. Lady recognise that there is incoherence at the heart of the Government’s policy on climate change and flooding? The Prime Minister said that money was no object when it came to the relief effort to clear up after floods, but less than two weeks later he was handing huge new subsidies to the fossil fuel industry; when those fossil fuels are burned, extreme weather events, including flooding, are made more likely. Does she agree with the commentator who said today that that is like promising to rebuild Dresden while ordering more bombers to flatten it again?

[Miss McIntosh]

I am grateful to the hon. Lady for giving me the opportunity to say that I believe that there is an incoherence in policy. We import woodchip at huge expense from the United States and other parts of the country to co-fire coal at Drax power station in Selby; I should be encouraging farmers in north Yorkshire and all around the country to grow fast-growing willow coppice trees to co-fire that power station. There are inconsistencies and incoherence in our renewals policy and we should visit those as part of our flood prevention scheme.

We have seen just about every type of flooding possible since autumn last year—coastal flooding, tidal surges, river flooding and overtopping, surface water flooding and, most recently, groundwater flooding. We know that all this has been the worst flooding incident in this country in 250 years, since 1766. This debate is the opportunity for the Department to share how the Government seek to adapt to more extreme weather events and how we are becoming more resilient and building more appropriately. Given what was asked at Communities and Local Government questions earlier, I am not sure that the House is entirely convinced that we are yet building in the most appropriate places—that is, not in areas that have something to do with flooding in their name or that act as functional floodplains.

[Richard Benyon (Newbury) (Con)]

In 2007, 55,000 houses were flooded in this country. My understanding is that this winter about 7,000 houses were flooded. That is a personal tragedy for every single one of those 7,000, but I am not sure how my hon. Friend can claim that last winter’s flooding was the worst for 250 years. We had the worst rainfall for 250 years, but in the context of 2007, the flooding was nowhere near that scale.

[Miss McIntosh]

It was the worst weather event that we have had. My hon. Friend’s intervention raises the very interesting question of why the Bellwin formula was not raised for the roads, bridges and houses that were damaged in 2012-13. He is right about the number of houses flooded. I think that more houses were flooded in the whole of the Yorkshire region in 2012-13 than were flooded in total this year. I supported the bid by North Yorkshire county council to increase the Bellwin limit and I will come on to that in a moment.

My hon. Friend also raises the very interesting question—this supports my argument—of where the funding will come from. I absolutely agree that most of the flood defences held and that many more houses would have flooded than was the case. The House should celebrate that, but where will the money come from to repair those flood defences that held this time but that will have been damaged by the sustained bashing from the storm?

[Mr Henry Bellingham (North West Norfolk) (Con)]

My hon. Friend will be aware that in Norfolk the vicious tidal surge of 5 and 6 December reached record levels along parts of the coast and in King’s Lynn in particular. Is she aware that the tidal defences held up remarkably well? There have been some breaches, which the Environment Agency repaired very quickly. Does my hon. Friend agree that managed retreat anywhere along the Norfolk coast would not be an acceptable policy under any circumstances?

[Miss McIntosh]

I will come on to the role that farmers can play. Ever since I was the MEP for the whole of the Essex coast for five years, I have not been a big fan of managed retreat and have never been persuaded that it is a good thing.

We should recognise the money that the Government have very generously provided. I believe it is £2 million for tourism and £10 million for farms, but it would seem that we need an extra £20 million year-on-year increase in flood management capital funding over the next 25 years to keep pace with the increasing flood threat. I look forward to hearing my hon. Friend the Minister’s response as to the Government’s view on why that might not happen.

Another great development would be more flexibility to transfer money between capital maintenance expenditure and activities. I also urge my hon. Friend the Minister to grab this opportunity to review either the Treasury Green Book or the Environment Agency’s point-scoring system. We heard evidence that the cost-benefit ratio for household protection schemes is 5:1, but that for all other assets it is 18:1. This is, therefore, a good opportunity to address that. During Prime Minister’s questions some two or three weeks ago, the Prime Minister said from the Dispatch Box that all flood funding was up for review. Did he mean a review of the scoring system, which is long overdue? Although it was visited in a modest way in 2010, I believe it should be reviewed from top to bottom.

We concluded that the current model for allocating flood defence funding to protecting property is biased towards urban rather than rural areas. In fact, our report argues that the Department for Environment, Food and Rural Affairs has failed to protect rural areas and that there is a risk to food security as more land becomes at risk of flooding.

I attended the National Farmers Union farming conference last week. The NFU states that 58% of the most productive land—that is, grade 1, farmed English land—is within a floodplain. Our report states that 14% of agricultural land in England and Wales is at risk of flooding from rivers and the sea. A drop in our food self-sufficiency raises a long-term question over ongoing food security.

[Mr Heath]

I am very pleased that the hon. Lady is making a point about the difference between rural and urban areas. There is a further complication when it comes to Somerset, in that people assume that it is a traditional floodplain, but it is not: it is reclaimed, inland sea. It is the great mere of Somerset. Therefore, all of the equations that would work elsewhere do not work when every single drop of water has to be pumped up and over to a river that is higher than the surrounding land.

[Miss McIntosh]

My hon. Friend makes his local case very powerfully, and I commend him for doing so.

How points are scored needs to be revisited. It is important to give a higher value for the benefits of agricultural land and of the protection of land to secure future food production. The big question is about ensuring that reduced regulation on farmers and landowners can allow them to remove vegetation from river banks. Now that we have had six months of the seven pilot schemes for the vegetation removal process, I would go so far as to urge the Minister to end the pilots and to roll out the process across the country, so allowing farmers to remove vegetation from their river banks.

I want to say a word about the role of internal drainage boards.

[Mr Speaker]

Order. Just before the hon. Lady moves on to the subject of drainage boards, may I gently say—I am listening to her speech with close attention, as I invariably do—that I am cautiously optimistic that she is approaching her concluding remarks? I say that not because of any lack of attention or interest on my part, but because several other Members wish to contribute to the debate, and I know that she will be as eager as I am to hear their contributions.

[Miss McIntosh]

Indeed. That is the purpose of the debate, Mr Speaker.

I am vice-president of the Association of Drainage Authorities. The Select Committee concluded that drainage boards are best placed to remove the vegetation and to carry out the maintenance that has been mentioned. Indeed, we are grateful that the Government have looked favourably on this opportunity to allow IDBs to use their local knowledge and resources, and to undertake more of the investment. We believe that there is a lost opportunity in relation to funding from private bodies that DEFRA—

[Andrew Percy (Brigg and Goole) (Con)]

Will my hon. Friend give way?

[Miss McIntosh]

I will stick to Mr Speaker’s strictures about reaching my conclusion sooner rather than later.

There is an opportunity to lever in more than 15% of contributions from other sources. Will the Minister tell us how the Government intend to do that? Do they intend to use common agricultural policy funds to encourage farmers to undertake flood prevention measures by rewarding them through EU agri-environment schemes or by paying proper compensation for flood storage, flood alleviation and other such schemes? Innovative funding should stretch to allowing water companies to invest through the price review, as I have said. I am a big fan of SUDS, and I believe that sustainable drains should be introduced by the autumn at the absolute latest. Most of Sir Michael Pitt’s recommendations have been adopted, but not, I note, those on ending the automatic right to connect and about sustainable drains.

I want to place on the record our commendation of the volunteers, flood wardens, police, fire, ambulance and Environment Agency staff and all those who responded to the floods.

There is scope for the Bellwin formula to be overhauled and reviewed radically. I have mentioned how the Yorkshire and the Humber region, particularly North Yorkshire, has not benefited from the formula. We recommend that the Bellwin scheme be amended to enable local authorities to secure central Government assistance to repair and reinstate roads and other infrastructure damaged by flooding. We also recommend a review of local authorities having to incur costs of at least 0.2% of its annual revenue budget to qualify for Bellwin funding to make it fairer by measuring the impact on the local community. I add that there should be a review of the cap on spending, which I understand hampers the ability of district and county councils to raise any further contributions towards a local levy.

Finally, we were told by the Association of British Insurers that this was a one-in-250-years event. It said that the cost to date has been £426 million, of which £14 million has already been spent. We welcome Flood Re, but there are too many unknowns. We need to know more about the cross-subsidy, what the final figure will be and—I repeat—from which budget the funds will come and what progress has been made on state aid should the Government act as an insurer of last resort for a similar one-in-250-years weather event. It is obviously extremely important that the military played a role in the recovery stage during the recent floods. However, the Government are silent over which budget is covering that military activity. It would be extremely helpful for the House to know that.

--- Later in debate ---

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

May I apologise to the House for my lateness? Unfortunately, I got stuck on a train from Newcastle for reasons I do not need to detain the House with. I will take as little time as I can so as not to abuse the position that I have been given in this debate.

I thank the Minister and the whole team for all their work—I am talking about the Prime Minister all the way down through the various ministries. I also want to thank Opposition Members too. The Leader of the Opposition visited my constituency. He was extremely magnanimous with his time and he did not, dare I say it, make a spectacle of himself. Unlike many Members, I welcome ministerial visits and Ministers seeing what is happening in the area. This Minister has been to the region more than most to chair a number of meetings.

We are putting together a report that will be given to the Prime Minister and the House later in the week. As the Minister knows, we must change the whole way that we deal with this problem. Members have expressed the hope that we never experience the same thing again, but as sure as night follows day, we will and we must be aware of that. It is as certain as death and taxes. It may not be the Somerset levels that are affected, but it will be somewhere. There must be fundamental change that crosses the political divide and that is agreed on by both sides of the House.

The one hurdle that we all have to overcome is the Treasury. It will try to stop us spending the money that is required to put in defences and the works that are needed to ensure that the flooding does not happen in the future. Members from across the House must make it clear to the Chancellor that we have to be given the money that we need. We are the sixth-largest economy in the world, yet here we are, unable to raise money to defend our own people from the most basic problem faced by man—certainly in my constituency—since prehistoric times, which is water. We manage it well. When my hon. Friend the Member for Newbury (Richard Benyon) was Minister he put in place a lot of changes to try to make the system work. Although I occasionally berated him in the local press, I respect him for his hard work. [Interruption.] I tried to do that without a smile and failed dismally. It is crucial that we take responsibility for the problem and say that each area will have to be defended properly.

[Miss McIntosh]

May I welcome my hon. Friend to the Chamber? I have a question that is vexing the House and other colleagues in Somerset. If we look at the whole management system of the Somerset levels, to what extent could the damage have been prevented if we had had both upstream flood management storage as well as regular maintenance and drainage downstream?

[Mr Liddell-Grainger]

My hon. Friend has hit the nail on the head. She is most astute. One of the problems is that we do not have the capacity to pump into the river below a certain level. I am talking about the area on the border between my constituency and the constituency of my hon. Friend the Member for Somerton and Frome (Mr Heath). What happened was that the river backed up. We could not get the water around. We have two points into the sea; one is through the River Parrett and the other is through the King’s Sedgemoor drain. Both are not able to take what we need to pump into them. Nearly 60 square miles of land are underwater, which really focuses our minds on the problems faced by our constituents. Although we have not lost many properties, it has devastated the tourism industry and many other things in the local area. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) knows from his long experience of farming nearby how dangerous these areas can be.

The Minister has made it quite clear that local input is needed. The internal drainage boards and the local Environment Agency—I am not suggesting asking Lord Smith for one second, nor would I—have an enormous input to make, but that must be done in conjunction with local people. That is why the meetings that we have been holding in Sedgemoor or Somerton and Frome have been so important; we have been able to use that local input. I was rather worried when the EA sent John Varley, whom I have met a few times. I find him the most impossible man, although I am sure that my hon. Friend the Member for Newbury would disagree with me. It is obvious that a lot of people have others’ best interests at heart.

We must do three things. First, we must look at the Bridgwater barrage. That will cost an enormous amount of money, but it is vital. Secondly, we must look at the pump system.

--- Later in debate ---

[Richard Benyon]

I applaud the residents of Purley, because I have seen that approach work not only in my constituency but right across the country. The National Flood Forum has a cut-and-paste organisation for local communities to pick up and run with. It is a superb organisation with real knowledge and expertise. I know that the Department and the Environment Agency will also assist local communities in setting up a flood forum. The difficulty is that communities that have never been flooded will be flooded. I entirely agree with my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) that there will be new flooding, as we all know, and it is in those communities that we want lead local flood authorities to start getting voluntary action going, with flood wardens, parish councils getting involved and local communities setting up those sorts of organisations.

I am guilty of not responding to the second point my hon. Friend the Member for Beverley and Holderness (Mr Stuart) made, on whether we should introduce a statutory activity. I blow hot and cold about Pitt’s recommendation to create a duty on fire and rescue services to prepare and be equipped to deal with flooding. In my constituency over the past few weeks, we have seen Tyne and Wear fire and rescue service, Cheshire fire and rescue service, East Yorkshire fire and rescue service and many others, all coming through the centrally controlled asset management register, which brings precisely these sorts of assets to our constituencies when we need them, and they are still there today doing wonderful work. Something is happening, and perhaps more can be done.

[Miss McIntosh]

I pay tribute to my hon. Friend for the work he did as Minister. Is it a matter of regret to him that we still do not have sustainable drainage systems in place? Does he accept that one of Pitt’s core recommendations was to end the automatic right to connect and make IDBs, water companies and others statutory consultees on future planning applications?

[Richard Benyon]

I am sorry, Mr Deputy Speaker, but I was not aware that there was a time limit and will race through my final remarks.

--- Later in debate ---

[Barry Gardiner]

I have to say to the hon. Gentleman that the figures belie that. In 2011-12, there was a budget of £573 million; in 2012-13, £576 million; and in 2013-14, £577 million. The budget for 2014-15 is £615 million. Over the four-year spending period, the Government have allocated just £2.34 billion to flood defences, compared with £2.37 billion over the previous spending period. Those figures are not the ones that the Prime Minister used two weeks ago at Prime Minister’s questions, but they are the ones set out clearly by the independent Committee on Climate Change in its policy note on 21 January, used by the House of Commons Library in its briefing on flood defence spending and set out by the UK Statistics Authority just six days ago. They can even be corroborated on the website of the Department for Environment, Food and Rural Affairs in the correction it had to put out after the Secretary of State and the Prime Minister both “mis-spoke”. As the UK Statistics Authority reported last week, the flood defence budget has seen a real-terms cut of £247 million in this spending period. The Committee was absolutely clear about the risk from the reduction of flood defence funds. Last October, in their official response to the report, the Government said:

“In the context of the wider need to pay down the deficit, we believe this is an excellent outcome and demonstrates the priority this Government attaches to managing flood risk.”

Well, yes, it certainly does.

[Miss McIntosh]

Is the hon. Gentleman not falling into the trap that I referred to earlier? Successive Governments have been too focused on physical structures that may well fail and need to be repaired. We need to have a better balance between capital expenditure and the revenue maintenance expenditure and to look to sources of funding other than local or national Government.

[Barry Gardiner]

The hon. Lady will recall my own contributions to the report. I was very keen that we put far more reliance on green infrastructure, and I will come on to that a little later. She will know that the Committee’s report was absolutely clear about the importance of partnership funding. Of course she will recognise—I think she did remark on it in the House a few days ago—that the £148 million that the Government had originally included in their spending figures when Ministers mis-spoke on this issue has not in fact been produced. It was actually £67 million of partnership funding that has been produced, not the £148 million that they counted for the period.

--- Later in debate ---

[Dan Rogerson]

I can indeed clarify, as others have at the Dispatch Box, that the business support scheme, which is aimed at small and medium-sized enterprises in areas affected by the floods, will look at businesses that have been affected by the extreme weather, not just those that have been inundated directly. There is a fund for farmers who have suffered waterlogged fields to help restore those fields to farmable land as quickly as possible, along with £30 million for local authorities for road maintenance, which should help affected areas to recover.

We have to remember that, outside current events, flooding is disruptive to people’s lives in the long term, and planning and defending against flooding remain a long-term priority for DEFRA and for the Government as a whole. We are spending £2.4 billion over the four-year period between 2010 and 2014, compared with £2.2 billion in the previous four-year period. That means that we have investment plans to improve protection to at least 465,000 households by the end of the decade. Looking forward, we have made an unprecedented long-term six-year commitment to record levels of capital investment to improve defences: £370 million in 2015-16, and the same in real terms each year, rising to over £400 million in 2020-21.

[Miss McIntosh]

My hon. Friend is addressing the very point that the hon. Member for Brent North (Barry Gardiner) and I made, which goes to the heart of the argument. There have been delays from the Department, particularly in implementing sustainable drainage systems—that is not necessarily its fault—and the review of partnership funding has not yet reported. Will the Department look favourably at allowing more transfer from capital expenditure to revenue and maintenance expenditure, as the hon. Member for Brent North suggested? In the long term, there are opportunities for water companies and others such as insurance companies to contribute to both funding streams.

[Dan Rogerson]

The figures that I am setting out into the future are for capital spending, and we expect revenue amounts to be settled as budgets are introduced for each year. However, the points that the Chair of the Select Committee makes about seeking contributions from all those involved in water management are entirely valid. In her speech she spoke about water company investment in water management that goes beyond the “hardware” side of things and looks more at the softer side of managing water through land management solutions. Ofwat is considering what it does with totex—total expenditure. It is looking at expenditure across the piece, rather than just at capital—the sort of things that appear on balance sheets that, in the past, would have been the focus. I accept that many people want to change that, so the fact that Ofwat has allowed water companies to do more of that will be beneficial.

The right hon. Member for Exeter (Mr Bradshaw), who is not in the Chamber today, but who took part in the Westminster Hall debate, pointed out the involvement of South West Water, along with my Department, landowners and managers, in an initiative looking at how water can be retained on Exmoor, which has made a difference to the moor’s catchments. That is a good example of the sort of work that can take place. The Chair of the Select Committee often speaks about what is happening in her constituency with the “Slowing the Flow” project, which is working on land management solutions. She is absolutely right that we need to emphasise the economic importance of investment in flood defences and, indeed, in water management. If we can prevent flooding and take that blight away from land that could be developed successfully, that would make a big contribution. If we can avoid the impacts that hon. Members have discussed, we can make a huge difference to local economies.

Oral Answers to Questions

Baroness McIntosh of Pickering Excerpts

Thursday 13th February 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Whatever the cause, we are seeing extreme weather events and we need to do more between floods. Will the Department consider restoring the balance between building new flood defences, repairing and making good the existing ones and maintaining watercourses? May I ask, in the presence of the Leader of the House of Commons, whether it would be a good idea to have a national statement on adaptation and on climate change generally for this purpose?

[Dan Rogerson]

I pay tribute to my hon. Friend and her Committee for all the work they have done on flood defences—

--- Later in debate ---

[Dan Rogerson]

The clear commitment that the Prime Minister has made is on ensuring that we have the facilities ready to respond to the incidents we are covering at the moment, no matter where they are in the country.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

T4. Our thoughts have to be with the flood victims at this time. Will the Minister update the House on the audit of existing sustainable drainage systems with a view to establishing what role they play in flood alleviation; and what help is being given to fishermen who are unable to fish at sea during the time of this flood event?

[Dan Rogerson]

My hon. Friend puts together two questions that cover areas for which both my hon. Friend the Under-Secretary and I are responsible. As she knows, I will table the regulations on introducing sustainable urban drainage later this year. I am happy to write to her about auditing existing provisions. My hon. Friend the Under-Secretary is visiting Newlyn soon to discuss with fishermen the problems they are facing.

--- Later in debate ---

[Sir Tony Baldry]

I much enjoyed my visit to my hon. Friend’s constituency. She is absolutely right. The church of St Peter’s in Broadstairs is an excellent example of a church that is a hub of the community, hosting local clubs and services to the elderly, as well as toddlers groups and young people’s clubs, and, as my hon. Friend says, organising popular tours of the village for visitors to Broadstairs. May I also draw the House’s attention to Holy Trinity Margate, which is another fantastic example of a church delivering almost 24/7 social action?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

2. If the Church Commissioners will consider creating a Church of England relief fund for flood victims to which the public could contribute.

[Sir Tony Baldry]

Last Friday the Bishop of Taunton wrote to all parishes in the Bath and Wells diocese, giving details of how parishioners could both provide and access much-needed financial and practical support. On the wider question of a relief fund for flood victims, I think my hon. Friend was present on Monday when my right hon. Friend the Secretary of State for Communities and Local Government told me that a number of charities were offering help for flood victims and promised that the Government would do more to signpost those voluntary organisations to help people in distress.

[Mr Speaker]

I think we have time for the questions; it is hoped that we have time for the answers.

[Miss McIntosh]

When we had severe flooding in 2000, the then Archbishop of York, Lord Hope, created a Church of England relief fund, through which we were very humbled to receive not just national donations, but donations from Mozambique, which is a very poor country, but it wished to show solidarity. I hope my right hon. Friend will use his good offices to create such a fund through the Church of England, to which both national and international donors will be able to contribute, if they wish to do so.

[Sir Tony Baldry]

Every parish in flood-affected areas is, where possible and practical, giving help to those affected by the floods, including making churches available for people who have been evacuated, providing drop-in centres, visiting housebound people and delivering food parcels. On the question of an overall fund, there is a feeling that there are already a number of national funds available to help flood victims and that the Church setting up a further fund may confuse rather than help.

Flooding (Somerset)

Baroness McIntosh of Pickering Excerpts

Monday 3rd February 2014 Commons Chamber

[Mr Paterson]

I thank the hon. Lady for her questions. Cobra has met regularly since the Christmas period, and obviously the floods and levels were regularly mentioned. The first specific request was at last Wednesday’s Cobra, which was acted on immediately by Government agencies responding to Cobra.

The hon. Lady mentioned the six weeks. I described briefly the fact that I went down to Somerset the Sunday before last, had meetings on Sunday evening, meetings on Monday, and agreed, quite clearly, a plan, which had to be worked up in detail with the Environment Agency and with the internal drainage boards. That is a marked contrast with the previous Government, who sat on the Parrett catchment flood management plan way back in 2008 and did absolutely nothing about it.

We began dredging on key points. The hon. Lady goes on and on about DEFRA’s priorities. I boil DEFRA down to two simple priorities across a kaleidoscopic variety of activities: to grow the rural economy and to improve the environment. I cannot think of any activity that involves spending central Government money that better delivers those two key priorities than what we are doing on flood spending. That is why this Government will be spending £2.4 billion in the first four years of this Parliament compared with £2.2 billion in the last four years of the previous Parliament. The hon. Lady has to nod just once—just give one little nod—to confirm that Labour Members will back this Government’s growing spending plans on flood spending. For us, it is a priority; for them it is not. She has missed her chance, but there is still a chance. Will she please agree to match our increased spending plans for this Parliament?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

These are sad days for the people of Somerset, but local heroes have emerged. We must not use the Environment Agency as a political football. We need to revisit the balance of spending between urban and rural areas. Will my right hon. Friend allow the internal drainage boards to retain their moneys to themselves before the maintenance of these watercourses and look for a scheme similar to that in my own constituency to store the water upstream if appropriate?

[Mr Paterson]

I thank the Chairman of the Select Committee for her question. She is absolutely right that there is a balance to be struck. The lesson in Somerset is that it is an extraordinary environment. It is completely artificial. It was first dredged by the Dutch before the time of Charles I, way back in the 17th century. Our criteria are not applicable in an environment where the rivers are, in effect, canals. We need to treat it as a unique environment and therefore bring in local knowledge. At the meetings I had last Sunday and Monday, it was very clear that this had to be a combined effort of the Environment Agency doing the dredging, and then, for future years, allowing locals to take over and come to their own arrangements. There will be close involvement of local councils and colleagues from the Department for Communities and Local Government to work out how that will be funded and organised.

Oral Answers to Questions

Baroness McIntosh of Pickering Excerpts

Thursday 9th January 2014 Commons Chamber

[Mr Paterson]

I am very grateful to the hon. Gentleman for his question, because it gives me the chance to tell the House, yet again, that the Government are spending more in this spending round than was spent by the previous Government and that we plan to increase the amount to a record £2.3 billion up to 2021. Thanks to the fact that we have galvanised local councils through the partnership funding scheme, there will be all sorts of opportunities for his constituents to work with him and his local council to access more funds for flood schemes.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

It is remarkable that the flood defences have held to the extent that they have during the battering that the country has taken. Will my right hon. Friend give a commitment to the House that he will review the budget for repairs to existing flood defences and look favourably on schemes such as the maintenance by drainage boards of the regular watercourses that protect farmland and other properties?

[Mr Paterson]

I thank the Chair of the Environment, Food and Rural Affairs Committee for her question. What she says about maintenance is absolutely correct. In November, it was found that 97% of the defences were in a good condition and would remain so within our existing budgets. I repeat again that we have made a clear commitment up to 2021. I would love to see the shadow Secretary of State stand up and say that the Labour party will back that commitment.

Rural Communities

Baroness McIntosh of Pickering Excerpts

Thursday 9th January 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I beg to move,

That this House has considered rural communities.

I am delighted to have secured this debate, and I should like to thank the Backbench Business Committee for giving us this opportunity to debate rural communities. I am honoured to represent what must be one of the most beautiful rural parts of the kingdom, so I feel particularly well placed to speak in the debate today. I should like to take this opportunity to thank all members of the Select Committee, past and present, and its staff for their help in preparing the report. When we started the inquiry, we were joined on the Committee by the hon. Members for Dunfermline and West Fife (Thomas Docherty) and for Brent North (Barry Gardiner), who have now been called to do greater things on the Opposition Front Bench. More recently, the Committee lost my hon. Friend the Member for North Cornwall (Dan Rogerson), who is now the Under-Secretary of State for Environment, Food and Rural Affairs. I am delighted to see him in his place today. We also lost my hon. Friend the Member for Camborne and Redruth (George Eustice) when he became the Under-Secretary of State for Environment, Food and Rural Affairs.

It is true that many in rural communities live in relative comfort and prosperity, particularly in my area, but there are also enormous challenges. There are pockets of rural poverty and isolation, as well as poor public services. Public services cost more to deliver in sparsely populated rural areas, where there is also a high concentration of the elderly population. All those factors represent a challenge to the delivery of public services. The extra cost of providing these services to rural communities is evident across the public sector, yet in 2012-13 rural local authorities received less than half of the per head funding that urban authorities received. If we look at areas such as education, we find that the Government are reducing local authorities’ flexibility to allocate extra funding to small rural schools with higher running costs. We urge the Government to recognise that the current system of calculating local government finance is deeply unfair to rural areas in comparison with their urban counterparts. I congratulate my hon. Friend the Member for North Cornwall, who is now a Minister in the Department and was one of the co-chairs of the Rural Fair Share campaign, whose work I would wish to recognise. The Committee concluded:

“The Government needs to recognise that the current system of calculating the local government finance settlement is unfair to rural areas”

in comparison with urban areas.

I wish to take the opportunity to highlight some areas where that is the case and go on to discuss them in more detail. The cost of heating homes and filling car fuel tanks in rural areas is very high, yet rural public transport is infrequent and, as we know, the bus subsidy is under threat. Off-grid households are currently prevented from accessing the same incentives and finance to improve their properties as are available to on-grid households. I am delighted to see that the Treasury is extending the ability of rural areas such as Thirsk, Malton and Filey to apply for rural fuel duty discount, and obviously we will look to make sure that the EU funding under the state aid rules criteria will apply equally across the board to such rural and sparsely populated areas as mine.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate the hon. Lady on securing this debate and the Backbench Business Committee on allowing it. She is making an important point, because her community, like mine, has to make an application, which is not straightforward to do, and the criteria are not clear. I welcome the steps the Government have taken in other areas, but surely they should examine this issue, do this detailed work themselves and set the criteria so that rural communities across the United Kingdom can benefit from the rebate on fuel.

[Miss McIntosh]

Indeed. Obviously, the purpose of today’s debate, as the hon. Gentleman is highlighting, is the “Rural Communities” report and the Government response to it. We published our report in July and they responded in October. It is a source of disappointment that the Government are leaving it to rural communities to make their own arrangements; some will be better placed than others to do so.

Let me go back to the report’s highlights. We believe that school funds should revert back to varied lump sum payments going to rural schools according to their need. We also looked at the rolling-out of superfast broadband to rural areas, finding that it should be prioritised to those with the slowest speed. We urge the Department to impress upon BT that it must refocus its priorities. It is pointless giving those who have a fast speed an even faster speed; we believe that we should improve access for communities that have no, or extremely slow, broadband. We also urge BT to indicate which areas will be covered by 2015 under the rural broadband programme, thus allowing the areas that will not be covered to make alternative arrangements.

The Department is proceeding to “digital by default” when the next round of the common agricultural policy comes into effect, but we urge the Department to ensure that all rural areas will have fast broadband. We must ensure that the Department is able to provide the outlying farms that are too far from the cabinet and do not have fast broadband with paper copies of things in the interim. Incredibly, when I try to use my mobile phone at home in a rural area, I find that I do not have mobile phone coverage; voice not spots should also urgently be addressed.

[Mr David Heath (Somerton and Frome) (LD)]

My hon. Friend makes a crucial point about the so-called last 10% in rural areas, such as Devon and Somerset, where roll-out has taken place. Unless we achieve 100% accessibility for high-speed broadband, we will do an immense disservice to people in very rural areas. Does she agree that when those areas or properties are identified, the Government should make funds available to ensure such accessibility? We want not a bidding system or matched funding, which is not available in rural areas, but the Government to finish the job.

--- Later in debate ---

[Miss McIntosh]

I welcome my hon. Friend’s intervention, and I will come back and say more on that point.

The Department for Environment, Food and Rural Affairs must address the matter of higher than average house prices and the lack of affordable housing in rural areas. Allowing the rural economy to grow, overcoming barriers to growth and improving rural businesses’ access to finance should be among its top priorities. We ask local enterprise partnerships to address the needs of rural businesses, and we urge the Government to ensure that financial support is offered to the business sector. The business bank, the single local growth fund and other such funds are available to rural businesses. We recognise the needs of rural communities. Currently, deprivation, affordability and provision of public services need to be addressed.

Let me explain why we called for this report. In 2010, the Government abolished the rural watchdog, the Commission for Rural Communities, and replaced it with a beefed-up rural communities policy unit in DEFRA that operates as a centre of rural expertise, supporting and co-ordinating activity within and beyond the Department. It champions rural issues across the Government. We were told that the unit would play an important role in helping all Government Departments ensure that their policies are effectively rural-proofed before decisions are made.

Earlier this year, we commenced an inquiry into rural communities to assess how successful DEFRA and the new unit have been at championing rural issues across Government to achieve their target of fair, practical and affordable outcomes for rural residents, businesses and communities. Our findings led us to conclude that the rural communities policy unit faces a difficult task if it is to meet that ambition. Too often, Government policy has failed to take account of the challenges that exist in providing services to a rural population that is often sparsely distributed and lacks access to basic infrastructure.

I have mentioned the local government settlement and how rural communities pay higher council tax bills per dwelling yet receive less Government grant and have access to fewer public services than their urban counterparts. I will not go over all our conclusions in that regard, but the Government have, in part, recognised their misjudgment by announcing an extra £8.5 million efficiency support payment for one year only for the most rural councils. Some payments are as small as £650. As welcome as any extra funding is, that is clearly not the long-term solution to the problem of rural councils not getting their fair share. Regrettably, the Government rejected our call for the gap in funding between rural and urban councils to be reduced. We must and we will continue to press the case.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I congratulate my hon. Friend on this debate. In Cornwall, the reality is that we have higher than average council tax, lower than average earnings and less money spent per head in the rural areas than in the urban areas. Closing that gap by just 10% a year for the next five years would mean an additional £16 million of income for people in Cornwall. Does she not agree that the Government should push ahead with this idea of getting a fair share for rural areas?

--- Later in debate ---

[Miss McIntosh]

Indeed, and I, as an individual, am part of the rural fair share campaign. The reason for calling this debate is to lend support to that campaign, which goes to the heart of delivering public services in rural areas. I am grateful to my hon. Friend for allowing me to make that point.

Let me turn now to housing, another key part of the report. Parts of rural England are among the most unaffordable places to live in the country. Ryedale, in my area, stands out as the people working there earn less on average than those working in urban areas or in other parts of Thirsk, Malton and Filey. Rural homes are more expensive than urban ones. The average house price in the countryside is equivalent to 6.3 times gross annual average earnings, compared with 4.9 in urban areas. Potential first-time buyers are particularly hard hit by high property prices and are increasingly frozen out of rural areas. If we do not address those problems, the consequences for rural communities will be grave. If young people are priced out of rural areas, we lose the pool of labour for the local economy and the service sector, and demand for services, schools, shops and pubs will also decrease, making their existence less viable. Rather than addressing the problems on the demand side, we urge the Government to do much more to increase the supply of housing in rural areas.

We recommended that small rural communities should be exempt from the bedroom tax. In my area, there is a chronic shortage of one and two-bedroom homes. Until such time as we can rehouse those who wish to downsize, allowing larger families to move into larger properties, housing will remain a problem. Sadly, the Government rejected that recommendation. In their response, they suggested that those affected by the bedroom tax should simply work more hours to make up the shortfall or should move into the private sector. When I visited the food bank in my area, run by the local church, volunteers and the Trussell Trust, I found the story of one lady who volunteers there very affecting: she wants to work more hours for her employer, but the work is simply not there.

Regrettably, there are also planning issues—the elephant in the room that no one wants to mention. Whenever a planning authority in a nice area makes a proposal for social housing or smaller units, people always write to their MP—I do not think I am an exception in this regard—to say, “I know just the place for that development: at the other end of the village from where I live.” Until we can get over that barrier, we will have a smaller stock of social homes. The bedroom tax means that tenants are expected to move greater distances, away from friends, family and schools. We must have a policy that allows key workers to live in the areas where they perform a vital role. When the Minister sums up, will he explain what input his Department had into that policy from a different Department, and why he believes that it is suitable for rural communities that lack the variety and volume of social housing stock on which the policy depends?

Let me turn in more detail to rural broadband. It is crucial to rural businesses, allowing economic growth in rural areas and allowing rural businesses to compete with their urban counterparts. I have mentioned digital by default, and we must ensure that any new computer system the Government bring into effect is fit for purpose before it is introduced and that it reaches every farm on which the Department is relying to fill in a digital form. Rural communities and their businesses, schools and households have fallen behind their urban counterparts on broadband access. The roll-out of superfast broadband to 90% of rural areas will, I am sorry to say, be delivered late and it is unclear when the target to which we all aspire of universal access to basic broadband will be achieved.

It seems that some communities, including some in Thirsk, Malton and Filey—the Minister is living very dangerously there—might have to wait up to three years before they see any benefit. That is unacceptable, particularly as the Government are making ever more services digital by default, as I have mentioned. A recent and notable example is the new CAP deal, which will come into force in January 2015.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the hon. Lady agree that even in areas where it is claimed that there is decent broadband coverage, the reality on the ground is that there are so many not spots that many individual houses and farms still cannot get access?

[Miss McIntosh]

I am grateful to the hon. Gentleman, whose experience reinforces the point I am trying to make. We must ensure that universal access is prioritised over increasing speeds for those who already have an adequate service. Will the Minister therefore tell us the date by which all rural homes will have access to 2 megabit basic broadband?

The roll-out of broadband is being funded largely from the public purse, yet many constituents cannot find out whether they will benefit from improved broadband. The Committee insists that communities are told whether they will be covered by rural broadband so that they can seek alternative means if they are not. Some local authorities are now publishing projected coverage maps, but many are not.

The Government have committed to spending £300 million that they are receiving from the BBC on rural broadband. Some rural communities might be hoping that even if they are not included in the initial roll-out, they might benefit from additional funding. We need clarity, which is sadly lacking. Will the Minister therefore tell us how rural communities can find out whether they will benefit from extra funding?

With regard to rural communities going it alone, one source of funding might have been the rural community broadband fund, but last week disturbing reports suggested that it will be wound down in March and that much of the available funding will be returned to Brussels. It aimed to deliver £20 million in funding and to connect 70,000 homes, but so far—I hope that the Minister can correct me—only three projects have been approved, claiming less than £1 million in total, and they will connect just 2,500 homes. A member of the public behind a proposed broadband scheme in Dorset said last week that although funding existed, officials had made it impossible to spend and that therefore the rural community broadband fund was dead. Another member of the public said:

“The officials running it got so tied up in their own process it was impossible to deliver. This has happened because of the incompetence and ineptitude in central government.”

The need exists and the funding exists, so how has DEFRA managed to make such a mess of administering the rural community broadband fund that much-needed financial support might be returned to the European Union unspent? I hope that my hon. Friend the Minister will tell me that that is not the case, because that would be serious and regrettable.

I will briefly mention schools. There are concerns about school transport, the extent to which the pupil premium reaches rural areas and falling school rolls, which is partly the result of the lack of affordable housing, which I mentioned earlier. The problem with rural funding is not limited to the finance settlement. The Government are reducing local authorities’ flexibility to allocate extra funding to schools with higher running costs, a move that will affect smaller rural schools in particular. The Government are demanding that all primary schools receive the same level of lump sum funding, regardless of size, location or other circumstances. That also applies to middle and secondary schools. The recent Ofsted report on the achievement of the poorest children in education states:

“The areas where the most disadvantaged children are being let down by the education system in 2013 are no longer deprived inner city areas, instead the focus has shifted to deprived coastal towns and rural, less populous regions of the country”.

I hope that the Minister will use his good offices to liaise with his opposite number in the Department for Education to correct that situation. Will he today explain the benefits that will be gained by removing local authorities’ ability to target funding where it is most needed, and whether his Department was consulted on that?

I commend all the conclusions that I have not been able to cover, particularly those that look more closely at housing, the rural economy, community rights and transport; I briefly mentioned the bus subsidy. I commend the entire report and our recommendations to the House and to the Minister. Again, I thank the Backbench Business Committee for the opportunity for this debate.

I look forward to my hon. Friend the Minister summing up what steps his Department is taking to ensure that pockets of rural deprivation that might otherwise be overlooked in the official statistics are recognised across Government. I urge him to state what is being done to redress the balance between rural and urban spending and to ensure that we eliminate these pockets of rural deprivation. We look forward to receiving the review that the Government have ordered to be conducted by the noble Lord Cameron of Dillington. We are told in the Government’s response that the findings will be included in DEFRA’s annual report and accounts.

I leave the Minister with this question: is not the whole subject of rural communities worthy of an annual statement or update in its own right, giving the Department the opportunity to report to this place on exactly how rural policy is being co-ordinated through the rural communities policy unit?

--- Later in debate ---

[Miss McIntosh]

I thank everybody who has participated for their positive and constructive contributions to this excellent debate, which has demonstrated that this matter is not just to do with DEFRA but relates to all the tentacles of Government—it is multi-agency and multi-departmental.

I very much enjoyed the beauty contest as to who has the best constituency, but no one has yet come close to Thirsk and Malton. I fell into a trap at one point, so to save any grief in any quarters, let me say that of course I meant to refer to the spare room subsidy in the context of the importance of affordable housing.

I welcomed the contributions on the sheer cost of living and the fact that rural communities are under-represented and underfunded. The examples given show that we look to rural communities to give the sort of help we need, but we expect the Government to remove some of the barriers. I referred briefly to the fact that off-grid energy households have to be able to access the same incentives and finance to improve their properties and reduce their heating bills as those on-grid.

No one can doubt after today’s debate the importance of rural growth, and in particular broadband, to farming and other rural businesses. We would have liked the Government to keep to 9% modulation—I will just throw that into the mix—but 12% is still less than 15%.

We now have a better understanding of what it is like for those of us who live in and represent rural communities and a better idea of how best to meet the challenges. I hope we can persuade the Government and the Backbench Business Committee to hold an annual debate to give the Department the say each year as to how we are bringing rural communities to the heart of Government, and that policy formation, whichever Department is responsible for a particular policy, will reflect the needs of rural communities.

Question put and agreed to.

Resolved,

That this House has considered rural communities.

Flooding

Baroness McIntosh of Pickering Excerpts

Monday 6th January 2014 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

May I add my congratulations to the Environment Agency and the emergency services, including the lifeboat crews and coastguards who rescued those who put themselves at risk? It is noteworthy that the flood defences held firm and protected the properties that the Secretary of State has highlighted. Will he commit to reviewing his Department’s maintenance budget to ensure that the flood defences that held will have proper maintenance? Will he allow drainage boards to use their own engineers to ensure that the main water courses are kept clear in the future, as the Select Committee on Environment, Food and Rural Affairs has recommended? Will he give the House some examples of imaginative partnership approaches, such as the Pickering pilot project, which is building a reservoir, starting tomorrow, to keep Pickering safe from future floods?

[Mr Paterson]

I am grateful to the Chairman of the Environment, Food and Rural Affairs Committee for her supportive comments. Emphatically yes, we want spending on maintenance to continue. That is why I added a further £5 million to that budget for 2015-16. For further information, although there was a 1% reduction in budgets across DEFRA, I have not passed that on to the flood budget. Again, that shows our absolute determination to protect flood schemes. My hon. Friend is absolutely right to praise partnership schemes. I have been around the country to look at tremendous projects, and only today I was on the Thames where there are prospects of extending the Jubilee river scheme that would require partnership spending by six local councils.

Water Bill

Baroness McIntosh of Pickering Excerpts

Monday 6th January 2014 Commons Chamber

[Hywel Williams]

Alas, I am not surprised at all by the complete lack of Labour MPs from Wales in the Chamber. They might still be celebrating, who knows?

In conclusion, if the coalition Government are unwise and refuse to accept the new clause and we are forced to press it to a Division, I expect the main Opposition party, which is also the Government party in Wales, to join us in the Lobby. After all, this is not just a Welsh test for the coalition Government. It is also a test for the Opposition in this place and for their friends in Wales of their consistency and commitment to the people of Wales. Are they serious about devolving power to Cardiff, or is this to be a case of echoing St Augustine: “Make me pure, but not yet”?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

It is a pleasure to follow the hon. Member for Arfon (Hywel Williams), who moved his amendment so eloquently.

I want to speak in support of two little amendments that have been grouped under the heading “Regime of the water industry”. New clause 2 and amendment 12 have been tabled in my name and those of a number of colleagues on the Select Committee on Environment, Food and Rural Affairs. We followed the proceedings in the Public Bill Committee with great interest, but chose to bide our time until the remaining stages before we entered into the legislative process, having done what I thought was a welcome piece of work in the pre-legislative scrutiny of the draft Bill.

New clause 2 specifically considers the possibility of allowing a retail exit. It would empower the Secretary of State to make provision by regulation for the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company. Regulations would be made in the normal way by statutory instrument and would make provision for any transfer to be subject to the approval of the Secretary of State and such safeguards as may be specified in the regulations. Amendment 12 would amend clause 80 by inserting the relevant section on retail exit.

We considered retail exit during the pre-legislative scrutiny. Inevitably, a number of companies may not necessarily fail but will regrettably have insufficient customers to allow them to stay in the market. New clause 2 and amendment 12 would simply recognise that impact and allow companies to function in what would be considered a normal competitive market. An exit clause such as we propose would facilitate new entrants, particularly larger ones, into the water and sewerage retail markets.

We recommended in our report during the pre-legislative scrutiny that the Bill should include such provisions to enable incumbent companies to exit the retail market voluntarily. It would be helpful to hear from the Minister whether he is minded to accept new clause 2 and amendment 12. During our inquiry, both regulators—Ofwat, which covers England and Wales, and the Water Industry Commission for Scotland—said that incumbent companies and, indeed, new entrants were united in calling for the Bill to include an exit route.

During the Public Bill Committee, Opposition Members proposed a new clause to allow incumbent companies to choose whether to provide to the retail or wholesale market only, subject to approval by the Secretary of State. Regrettably, the Opposition’s new clause was defeated in a vote. New clause 2 would have a different effect from the new clause proposed by the Opposition in Committee, as it would specifically enable companies to exit the retail market by transferring their retail contracts and liabilities—that is, their retail business—to a third party where they chose to do so. That would open up the market to new entrants who hold a retail authorisation, by allowing them to acquire whole retail businesses, rather than acquiring one contract at a time. That would allow economies of scale.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

The hon. Lady is without doubt an expert in these matters, given her role on the Select Committee as well as the all-party group. On the basis of the work done by her Committee, will she give the House a sense of the amount of interest in entering the market and the number of people involved?

[Miss McIntosh]

I am grateful to the hon. Lady for her good services to the all-party group, where we serve as fellow officers. We hear of many entrants, but obviously, until the law is in place, it is difficult to put a number on that. I am sure that my hon. Friend the Minister will have heard and can perhaps comment, as he is closer to the issue.

We suggest that if existing companies are unable to compete with new entrants who want to come in for very good reasons and lose customers as a result, it makes sense to allow an exit strategy. I personally feel that we heard no compelling evidence during the pre-legislative scrutiny of the draft Bill and during our consideration of the water White Paper to suggest that the reform should not include a retail exit strategy. That is why we feel honour bound to come forward for the sake of the Bill’s completeness.

New clause 2 would give all undertakers the power but not the obligation to transfer their non-household retail business to a different company. It would give the Secretary of State the power to make any such transfer subject to approval and any necessary safeguards to ensure an orderly exit from the market. I hope that the House will be able to support the proposals because much of the Bill is silent on these matters and we want to use the new clause and amendment to give it more teeth.

There are several arguments in favour of allowing such a retail exit. For example, an exit clause is needed to allow the market to function normally and competitively. Additionally, a company should be able to organise its business in the way it considers best in the interests of its customers and shareholders. An exit clause would facilitate new entrants, especially larger ones, into the water and sewerage retail market because they would not need to win one contract at a time. Without new clause 2, I understand that economies of scale would work against new entrants and either prevent them from entering the market or, at the very least, reduce the benefits that they could provide to new customers due to higher costs of entry. I hope that my hon. Friend the Minister agrees that the proposal is helpful and that he will be minded to accept it. It would not be in the interest of companies or their customers to force companies to stay in a market in which they have few or no customers.

The general thrust of the new clause goes to the heart of this group of amendments dealing with the regime of the water industry. We should learn from what has happened in Scotland. I understand that DEFRA has stated that it intends to create a market in which access is regulated—in other words, with the rules of entry clearly set out and adhered to by all market participants. The reverse side of the coin is that if the rules of entry are to be set out, the House would, I am sure, want rules of orderly exit to be set out. I am not saying that exit would happen in many cases, but it is important that such rules are on the statute book.

Following our pre-legislative scrutiny, we said that as much detail as possible should be set out in the Bill so that the House could consider it. It is wrong—I part company from my hon. Friend the Minister in this respect —to leave too much to regulations, given that many of us with a great interest in this subject will not be selected to serve on the Delegated Legislation Committees that consider them. As the Bill does not provide for retail exit, the strategy is too open. It could be argued that the Government’s approach is based on the premise that parties in the retail market should be left to negotiate among themselves about matters such as service and price, but that could be set out in the Bill.

Considerations of price, service levels and the ability to respond to difficulties go to the heart of why it is important to have a competitive market in England, as has been achieved in Scotland. There must be a way of policing a situation in which incumbents are simply slow in responding to requests for information or services from new entrants. It is important not only to facilitate the path for new entrants, but to allow for an exit strategy and to bring about a competitive market. The Bill is completing its remaining stages in the House today, but little is known about upstream competition. The Government are asking that we take an awful lot on trust, but it would be better if the Bill provided for a definite exit strategy, which is why I commend new clause 2 and amendment 12 to the House.

[John McDonnell (Hayes and Harlington) (Lab)]

I am pleased to follow the hon. Member for Thirsk and Malton (Miss McIntosh). I see in the national press that she has had a little local difficulty. I hope that she can resolve the matter, because she would be a loss to the House if she were not returned at the next election—unless of course she were replaced by a Labour Member.

I want to speak to new clause 14, which is in my name. It suggests to the House that before we move forward with further legislation, we stand back and look objectively at the performance of the water supply industry since 1989 when it was privatised. I am not part of this common agreement among some parties in the House that privatisation and competition have been a success and are the way forward. In fact, I deeply regret what has happened since privatisation.

--- Later in debate ---

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

May I take this opportunity, Madam Deputy Speaker, to wish you and all hon. Members a happy new year? I hope that all hon. Members have had a peaceful and enjoyable break and have returned refreshed and looking forward to this busy year.

Unfortunately, the festive period was not a happy experience for many households up and down the country. Many hon. Members spent a great deal of their recess dealing with the impacts of the recent weather events on their constituents. It is therefore appropriate that later we will discuss a series of amendments on the clauses that will help to provide support to many of those affected households. I look forward to having that debate in more detail, but for the moment I want to focus on the new clauses in the first group of amendments.

Last year, in his now infamous letter to water companies, the Secretary of State trumpeted water privatisation as

“one of the greatest success stories of privatisation.”

If one measures success by the payouts made to investors, it is without doubt a great success story. Let me echo the thoughtful remarks by my hon. Friend the Member for Hayes and Harlington (John McDonnell) and pick out a few examples of the dividends paid out since 1989. Severn Trent Water has paid out £6.2 billion in dividends, Thames Water has paid out £6.3 billion, the north-west’s United Utilities has paid out £7.3 billion, and Anglian Water investors have recouped some £6 billion. Overall, a staggering £40 billion has flowed into the pockets of investors. It is fair to say that many customers would not share the Secretary of State’s appreciation for his wonderful friends the chaps running the water companies.

Indeed, their view is shared by many of the coalition’s own MPs. I am disappointed that the hon. Member for Skipton and Ripon (Julian Smith) is not present. In last year’s excellent debate on the water industry he said that

“Yorkshire Water…is exploiting my constituents and people across Yorkshire.”—[Official Report, 5 November 2013; Vol. 570, c. 213.]

I do not know whether the Chair of the Environment, Food and Rural Affairs Committee shares that view of Yorkshire Water.

[Miss McIntosh]

Any company that is prepared to invest £1 million in improving the provision of water to Filey has to be congratulated, so I congratulate Yorkshire Water on that. Does the hon. Gentleman agree that this Government’s arrangements leave Yorkshire Water and other companies free to raise money on the markets in a way that otherwise would not be possible?

[Thomas Docherty]

I do not want to get sidetracked by a debate about the merits of privatisation—I think you would pull me back in line if I did so, Madam Deputy Speaker—but I will just point out to the hon. Lady that Scottish Water, which is owned by the state, has invested more per connected property, I think, than any of the English water companies, with the exception of South West Water, so I am not entirely convinced by her argument.

To go back to the comments made by the hon. Member for Skipton and Ripon, despite paying out hundreds of millions of pounds to investors, Yorkshire Water has paid next to nothing in corporation tax over the past few years. I am not singling out Yorkshire Water in particular—it is clear that its behaviour is no better or worse than that of any of its competitors. The problem lies with the culture of water companies themselves. They have behaved in an unacceptable manner towards their customers for too many years. It is clear that they have come to regard customers as nothing more than cash cows, and many have paid little or no attention to customer complaints. That is why we believe it is in the interests of hard-pressed customers that the industry be subjected to greater scrutiny.

New clause 11 in particular shines a light on the opaque world of the companies’ financial and business practices. This is not an unreasonable or overly bureaucratic requirement. For many years, water companies voluntarily produced reports such as those that the new clause would require of them; yet, strangely, in recent years they seem to have got out of the habit of providing that information to customers, the regulator and the Department.

It is also worth noting, before the Minister replies, that Ofwat’s Scottish counterpart, the Water Industry Commission for Scotland, requires Scottish Water to produce the relevant information on an annual basis. Therefore, we believe that this is not an onerous or bureaucratic requirement.

New clause 12 would require Ofwat to pay far more attention to the problem of affordability of bills. I am conscious that we will have a wider debate about affordability when we discuss the second group of amendments, but Ofwat’s current interpretation of its role as an economic regulator is far too narrow. Both household and business customers feel that they are an afterthought, and the new clause makes it clear that Ofwat must have due regard to the cost of bills when setting the prices in future review periods. Labour believes that during a time of unprecedented squeezes on household budgets, much more must be done to help hard-pressed customers. Our two new clauses are important measures that would ensure that water companies served their customers’ interests, not the other way around.

We will, unsurprisingly, support the Select Committee’s new clause 2 on retail exit if it is pressed to a vote. We welcome the fact that the hon. Member for Brecon and Radnorshire (Roger Williams) appears to have had a change of heart over the festive break. During the Bill’s Committee stage he did not vote in favour of Labour’s proposal, but we very much welcome his change of heart. If we do not get an opportunity to discuss the proposal today, we hope that the other place will note that even members of the Bill Committee have signalled that they believe, on reflection, that it is a sensible and worthwhile measure. I will not repeat the discussion we had in Committee, but I think it is fair to say that, based on the signatories to the new clause, the proposal has cross-party support, which we welcome.

We will also support the Government’s amendments. I am slightly surprised that they felt the need to table a series of amendments, but not as surprised, I suspect, as the Minister when he was informed by his civil servants. The Minister has told us many times that he is lucky enough to be half Welsh, so one would have thought that he would have noticed the impact on Wales of the new clauses tabled by the Government in Committee. I hope he will explain how that slightly embarrassing oversight occurred.

We hope we will have an opportunity later this evening to press our new clauses to a Division. We welcome the spirit in which this first part of the debate has been conducted and I do not wish to detain the House any further at this point.

--- Later in debate ---

Brought up, and read the First time.

[Miss Anne McIntosh]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 7—National affordability scheme—

‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.

(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—

(a) the Water Services Regulation Authority; and

(b) the Consumer Council for Water.

(3) An order under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.

New clause 8—Billing information: affordability—

‘Any company providing water services to a residential household must include on its bills—

(a) details of any tariffs provided by that company;

(b) a recommendation of the lowest possible tariff for each residential household; and

(c) information regarding eligibility criteria and how to make an application for assistance under Water Sure.’.

New clause 9—Provision of information to water companies: landlords—

‘(1) The Water Industry Act 1991 is amended as follows.

(2) After section 207 (Provision of false information) there is inserted—

“Provision of information to water companies: landlords

Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.’.

New clause 10—Water companies: recovery of losses—

‘(1) The Secretary of State, or the Authority, may prohibit losses to a water company due to non-payment of bills from being recovered through charges on customers.

(2) This section comes into force on the day after the Secretary of State has laid before Parliament a report setting out how water companies have failed to take action on these matters,’,

Amendment 9, in clause 80, page 124, line 1, at end insert—

‘(e) section [Provision of benefits information].’.

[Miss McIntosh]

I wish to consider new clause 3 and amendment 9, which seek to address legislation already on the statute books in the Flood and Water Management Act 2010. I remind the House that the cost of bad debt to each household in England is approximately £15 per annum, and in times of great hardship and a period of austerity, which the Government are dealing with through the actions we continue to take, it is incumbent on the Government to consider every opportunity to defray the costs to each household in that regard.

New clause 3 seeks to provide benefits information by allowing the Secretary of State to regulate to

“make provision about the disclosure of benefits information about occupiers”

to water and sewerage companies in connection with the revised part of the Water Industry Act 1991. It goes on to state that

“‘benefits information’ means information which is held for benefit entitlement purposes by the Department for Work and Pensions.”

Amendment 9 would make the consequential change to the current clause 80, to allow the provision of benefits information. I sat where the hon. Member for Dunfermline and West Fife (Thomas Docherty) is currently sitting and followed the passage of the Flood and Water Management Bill as closely as he is following the passage of this Bill. I have been very taken with the idea of trying to reduce bad debt in this way. Recently, I was most fortunate to receive a written answer from the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Hemel Hempstead (Mike Penning), who helpfully told me that at present the legislation does not permit the transfer and provision of benefits information by the Department for Work and Pensions in the way I wish. He did not say it could not be done; he said only that the current law does not permit it. We are where we are.

[Mr John Redwood (Wokingham) (Con)]

To help the House, will my hon. Friend explain what kind of information she would like to see transferred and how it would help?

[Miss McIntosh]

I hope that my right hon. Friend will bear with me as I take the House through it.

In the Environment, Food and Rural Affairs Committee report on the draft Bill, we reiterated our previous recommendations that the Department should implement without delay the existing provisions of the Flood and Water Management Act 2010 on bad debt, to which I have referred. In our view, it is unacceptable for honest customers to be forced to subsidise those who can pay but refuse to pay their water bills. To answer my right hon. Friend’s question, the specific provision is section 45 of the 2010 Act, which introduces new section 144C to the Water Industry Act 1991. That is what we propose in new clause 3, which would require landlords to arrange for information on their tenants to be provided to water companies.

Instead of implementing the existing bad debt provisions, the Government currently rely on a voluntary approach, whereby landlords share information on tenants on an online database set up by the water companies. Before I go further on the voluntary approach, it might be helpful to ask my hon. Friend the Minister this question: what is to prevent a customer who happens to be a tenant from marking on their electricity bill the fact that they have no problem with it being made known to the electricity company and the Department for Work and Pensions, whichever works best, that they are in receipt of benefits? The Environment, Food and Rural Affairs Committee was fortunate to enjoy the company of the hon. Member for Dunfermline and West Fife for a time. I am sure he remembers our exchange, but the Committee has great difficulty in understanding what the problem is for the Government—either the Department for Work and Pensions or the Department for Environment, Food and Rural Affairs—in permitting that flow of information.

The House will recall the tragic case of an elderly couple who sadly passed away because they could not afford to pay their utility bills for heating. No one had informed the electricity company of that fact. I believe that what is good for electricity companies—in law, such information can be provided to those utility companies —should be equally good for the water companies, which are also utility companies. They should have access to the same information.

A close reading of proceedings in Committee shows that Water UK acknowledged the new database for landlords and tenants, but claimed that

“experience has shown that a voluntary approach simply does not work.”––[Official Report, Water Public Bill Committee, 3 December 2013; c. 15, Q19.]

It gave the example of Northumbrian Water. It has had an easy-to-use website for landlords to provide information for two and a half years, yet only 7% of all rented properties have been registered. That is a problem and this is a matter of some urgency. The Government need to press ahead—the House would support that.

In Committee, the Opposition tabled a new clause that would have meant landlords providing contact details of their tenants to the water companies, but it was voted down. The Environment, Food and Rural Affairs Committee produced a report on the water White Paper—we have worked hard on the issue and I hope we have made a positive contribution. My hon. Friend the Minister nods because he, too, was a member of the Committee when we adopted the report. I find myself in good company this evening. The report recommended that DEFRA work with the Department for Work and Pensions to ensure that all means-tested benefits claimants are given the option to consent to the sharing of their data with their water company for the purposes of help with affordability issues.

I and hon. Members who have put their names to new clause 3—a number are members of the Environment, Food and Rural Affairs Committee—believe that there is a difference between electricity and gas bills and water bills. If people do not pay their heating bill, their supply can be cut off, whereas if people do not pay their water bill, the water company is simply not permitted to turn off the supply of clean water going in or prevent waste water—sewage—going out, for reasons of hygiene and good health.

--- Later in debate ---

[Dan Rogerson]

I thank my hon. Friend for his intervention. He is absolutely right to point out that what is proposed is a new bold national scheme built on profits that might or might not go up or down in accordance with the markets and through the price review process. Although I accept that the intention of the hon. Member for Dunfermline and West Fife is, as always, to be helpful, I feel that his scheme could use a little work and I therefore urge my hon. Friends to resist it should he seek to press it to a vote.

Let me move next to new clause 8, also tabled by the hon. Gentleman. It would place a legal requirement on water companies to include information in their bills about the WaterSure scheme, but, as I have said—I provided information to this effect to the Committee—all water companies already do so voluntarily. He made a point based on anecdotal evidence. I would be happy to see that evidence and I am sure that he will want to share it with us, but I think we should base our policy making on the evidence provided to us, and the Consumer Council for Water has been quite clear that companies provide such information to customers.

In addition, new clause 8 would place requirements on water companies to provide information about tariff structures and the lowest available tariff, a point picked up on by my hon. Friend the Member for Sherwood (Mr Spencer). The proposals simply fail to reflect the realities of the water sector as opposed, for example, to the energy sector. Water companies do not have complex tariff structures. The sole choice for the majority of household customers is whether to pay according to the amount of water they use through a metered tariff, which is particularly prevalent in areas such as my own, or according to the rateable value of their home through an unmetered tariff. The cheapest option for each household will therefore depend on the location of the property and the amount of water used by the household.

Many smaller households with low water use can benefit from a meter. Water companies are required to fit a water meter free of charge on request and they also advise customers on whether they might benefit financially from the installation of a water meter. A further point to bear in mind about the operation of WaterSure is that it caps the bills of eligible customers at the average of the metered and unmetered bill for the area. That could, in effect, put the bills of some eligible customers up and it is therefore not surprising that they have chosen not to apply for WaterSure.

There is no evidence, in my view, that further regulation is required in this area. As I have noted, all companies already include details of WaterSure in their household bills and they also all provide details of the support available to any customer struggling to pay their bill. Legislation to require the companies to do something that they are already doing voluntarily would be redundant.

The Consumer Council for Water works closely with the companies on the format of their bills. Its expert advice, as we discussed in Committee, is that one of the biggest risks in using water bills as a means of communication with customers is information overload. I do not, therefore, consider the new clause to be necessary.

Let me turn next to new clause 9, also tabled by the hon. Gentleman. We discussed an identical clause that he tabled in Committee. Section 45 of the Flood and Water Management Act 2010 already enables Ministers to introduce secondary legislation that would require landlords to provide water companies with personal details about their tenants or become liable for paying the bill. That was a point that the Chairman of the Environment, Food and Rural Affairs Committee was keen to emphasise, given her involvement with the passage of that Act.

Following extensive consultation with the industry and with landlords’ organisations the Government took the decision that a voluntary approach would be more suitable. During consultation, landlords argued that the additional regulatory burden would be disproportionate as they are not the source of the problem we are trying to tackle. At the same time, the evidence provided by the water sector to support the case for additional regulation was not sufficient to make the case for additional regulation of millions of small and micro-businesses.

The Government simply do not believe that more regulation is always the answer. As we discussed in Committee, good practice in tackling bad debt is not applied consistently across the water sector. The hon. Gentleman quite rightly took great pains to point that out. The significant variation in performance between companies tells us that the focus should be on driving better standards across the sector rather than regulating landlords.

One reason we do not propose to bring forward the bad debt regulations on landlords is that we do not wish to endorse the argument that performance on bad debt is not within the control of water companies. We think there is more that the companies can do to collect their debts and we want them to focus on that rather than look to the Government to solve the problem for them.

Of course, the real drivers of company performance are the incentives and penalties set by the regulator so I am pleased to be able to report that Ofwat has changed its approach to bad debt in the methodology it is using for the 2014 price review. The new approach will enable it more effectively to bear down on the costs of bad debt. It is doing so by insisting that the companies demonstrate that any increase in bad debt is genuinely beyond their control and that they have taken all available steps to control it. Unless they can prove that that is the case they will not be allowed to include it in customer charges. We are already seeing our focus on the industry’s taking responsibility for tackling bad debt bear fruit. As I mentioned in Committee, the industry is working with landlords’ organisations to establish a new voluntary scheme that will enable landlords to provide information about their tenants direct to water companies swiftly and easily.

[Miss McIntosh]

I am most grateful to my hon. Friend for giving way, but before he concludes his remarks he must say what the Government object to as regards the 2010 Act. I do not personally subscribe to the data protection argument if someone is genuinely in need.

[Dan Rogerson]

The Chair of the Select Committee is quite right that I have yet to respond to that aspect of her argument and I will seek to do so, I hope to her satisfaction, once I have made my closing remarks on new clause 9.

The industry is working with landlords’ organisations to establish the new voluntary scheme that will enable landlords to provide information about their tenants direct to water companies swiftly and easily and that approach has the support of Water UK and the main landlords’ organisations. The new database will launch in March next year and I believe that it should be given time to work. For those reasons, I believe that new clause 9 is not necessary.

--- Later in debate ---

[Dan Rogerson]

I am seeking to point out that there are a range of benefits and a range of circumstances for people. The hon. Gentleman highlights one benefit. Of course council tax benefit no longer exists in this country in the format that it does in Scotland, as we have now moved over to local council tax forms of support, so there is a different system, which would not necessarily translate across. The hon. Gentleman is keen always to learn the lessons of Scotland, but some of these things do not apply simply, given the different frameworks following the devolution settlement.

We place emphasis on locally designed social tariffs developed in close consultation with the customers who will ultimately foot the bill, as opposed to crude, centrally imposed eligibility criteria. Although I very much thank hon. Members for their new clauses and understand their aspirations in tabling them, I would urge my hon. Friends to resist them.

[Miss McIntosh]

We have had a fruitful debate, but I express my disappointment that my hon. Friend the Minister has not seen fit to take a simple measure that already exists on the statute book and is not intended to be regulatory. He will, of course, have opportunities in the future to appear before the Select Committee that I chair and that will give him plenty of opportunity to explain at greater length why he is unable to support these new clauses. It is my fervent wish that such new clauses might perhaps find their way on to the notice paper in another place. However, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 4

Sustainable drainage and automatic right to connect

‘The Secretary of State shall by order made by statutory instrument implement the provisions of section 32 and Schedule 3 of the Flood and Water Management Act 2010, and any other provisions as the Secretary of State considers appropriate in connection with the coming into force of those provisions, no later than the end of the period of one month beginning with the date on which this Act is passed.’.—(Miss McIntosh.)

Brought up, and read the First time.

[Miss McIntosh]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following: new clause 5 —Abstraction reform—

‘(1) The Secretary of State shall by regulations make provision to introduce a reformed abstraction regime.

(2) An abstraction regime under subsection (1) must—

(a) be resilient to the challenges of climate change;

(b) be resilient to the challenges of population growth; and

(c) better protect the environment.

(3) An abstraction regime must be introduced no later than the end of the period of seven years beginning with the date on which this Act is passed.

(4) Regulations under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft of the instrument has been laid before and approved by a resolution of both Houses of Parliament.’.

New clause 6—Onshore oil or gas activities—effect on water environment—

‘In Part 1 of Schedule 5 of the Environmental Permitting (England and Wales) Regulations 2010 there shall be inserted after paragraph 13 the following—

“Onshore oil or gas activities—effect on water environment

13A (1) Without prejudice to the operation of Regulation 35(2) and paragraph 5(1)(d) of Schedule 10 and of Regulation 35(2) and paragraph 7(j) of Schedule 20, the regulator shall refuse an application for the grant or variation of an environmental permit or for the transfer in whole or in part of an environmental permit if—

(a) the regulated facility to which the application for or transfer of the environmental permit relates is to be carried on as part of an onshore oil or gas activity; and

(b) the regulator is not satisfied that the applicant or the proposed transferee has made or will make adequate financial provision for preventing or mitigating pollution of the water environment, by ensuring all of the following—

(i) operation of the regulated facility in accordance with the environmental permit;

(ii) compliance with any enforcement notice or suspension notice or prohibition notice or mining waste facility closure notice or landfill closure notice which may be served on the applicant or transferee by the regulator under these Regulations;

(iii) compliance with any order of the High Court which may be obtained against the applicant or transferee under Regulation 42 for the purpose of securing compliance with any of the notices listed in sub-paragraph (ii).

(iv) compliance with any order of any court issued under Regulation 44 against the applicant or transferee; and

(v) recovery by the regulator of its costs upon any exercise of its power against the applicant or transferee under Regulation 57;

(c) for the purpose of this paragraph ‘onshore oil or gas activity’ means any activity for the purpose of exploration for or extraction of onshore oil and gas;

(d) for the purpose of this paragraph ‘adequate provision by way of financial security’ means financial provision which is sufficient in value, secure and available when required.”.’.

New clause 13—Unlawful communications—

‘(1) Section 109 of the Water Industry Act 1991 (sewerage: unlawful communication with public sewer) is amended as follows.

(2) Omit subsection (1)(b).

(3) In subsection (2)(a) after “close”, insert “or redirect”.

(4) In subsection (2)(b) omit “from the offender”.

(5) At the end add—

“(4) The expenses are recoverable from—

(a) the offender; or

(b) the owner of the drain or sewer.

(5) A person who obstructs a sewerage undertaker in exercising a power under subsection (2)(a)—

(a) commits an offence; and

(b) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.”.’.

Amendment 2, in clause 21, page 62, line 19, after ‘undertakers’, insert ‘and highway authorities’.

Amendment 3, page 62, line 22, after ‘undertaker’, insert ‘or a highway authority’.

Amendment 1, page 62, line 23, at end insert—

‘(2A) Highways authorities must include in schemes for the construction of new roads, drainage systems with a specification designed to decrease the risk of flooding of public sewerage systems.’.

Government amendments 55 to 57.

Amendment 5, clause 51, page 107, line 5, after ‘premises’, insert ‘and small businesses’.

Amendment 6, page 107, line 7, after ‘premises’, insert ‘and small businesses’.

Amendment 8, clause 53, page 107, line 37, after ‘made’, insert

‘which shall include the occurrence of a 1 in 200 year loss scenario’.

Government amendment 58.

Amendment 7, clause 69, page 119, line 37, at end insert ‘“small businesses”.’.

Amendment 10, clause 80, page 124, line 1, at end insert—

‘(f) section [Sustainable drainage and automatic right to connect].’.

Amendment 11, page 124, line 1, at end insert—

‘(g) section [Abstraction reform].’.

[Miss McIntosh]

I shall try to keep my remarks brief, but this is the first occasion that I can remember when there has not been a parliamentary week between the completion of the business of the Public Bill Committee and consideration on Report and Third Reading. I should therefore like to pass on my thanks not only to the Committee staff who have accommodated our being able to table amendments in a timely fashion, but to all those involved in the House service who have enabled us to have amendments before us to debate this evening.

I shall go through the new clauses and amendments first and then give the reasons for them. I, along with a number of members of the EFRA Committee, have thought it fit to assist the Government yet again, and I hope that we have more success with this round. Anyone who knows me even remotely will know that I am becoming a compulsive obsessive on sustainable draining systems and that I will never pass over an opportunity to discuss SUDS. So, under new clause 4, we seek to introduce the sustainable draining system, which is woefully late. It was already given statutory powers under the Flood and Water Management Act 2010, and in new clause 4 I link that to the end of the automatic right to connect.

I should like to pay tribute to a great Yorkshireman, Sir Michael Pitt, who after the surface water flooding of 2007 attempted to get on to the statute book under the 2010 Act—the then Government’s legislation—the end of the automatic right to connect. I would go further with substantial developments than I have had the opportunity to do here. I should personally like Yorkshire Water and other water companies, as well as drainage boards, to be given the right to be statutory consultees on major new developments on the same basis as that enjoyed by the Environment Agency following the 2010 Act.

[Thomas Docherty]

It is worth pointing out that local authorities in Scotland place great emphasis on the opinion of Scottish Water, which is, indeed, treated as a major statutory consultee when local authorities are making decisions about developments.

[Miss McIntosh]

As a non-practising Scottish advocate, I would always say that the Scottish legal system has a great deal to commend it, but Scotland needs to remain part of the United Kingdom to allow us to benefit from that.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

That is for another day.

[Miss McIntosh]

Indeed, that is a different argument.

I shall give our reasons for new clause 4 in a moment. Abstraction reform forms the basis of new clause 5, in which we would return to what was in the White Paper, where the Government waxed lyrical on abstraction regimes. We particularly call for the abstraction regime to be introduced no later than the end of the period of seven years beginning on the date on which the Bill is passed and comes into legal effect.

Amendments 2 and 3 would insert into clause 21 the relevant language of “undertakers” and “highways authorities”. I am attracted to amendment 1, tabled by my hon. Friend the Member for Sherwood (Mr Spencer), and look forward to his speaking to it in due course. Amendments 5, 6, 7 and 8 would include small businesses in the flood reinsurance scheme, for reasons that I shall give in a moment.

[Sheryll Murray (South East Cornwall) (Con)]

Does my hon. Friend agree that the Flood Re clauses will help the people whom the Minister and I met in Looe last Saturday who were unable to get insurance because of repeated flooding? Flood Re will give them the opportunity to obtain realistically priced insurance.

[Miss McIntosh]

Our thoughts are obviously with my hon. Friend’s constituents who were sadly inundated during the recent flooding. I look forward to hearing further from her during the debate, as well as the Minister’s response.

Amendments 10 and 11 are consequential amendments to clause 80 arising from new clauses 4 and 5.

Before I explain why the amendments and new clauses are important, I should point out that we have seen three types of flooding in the past three or four months. The most recent examples have been of coastal flooding, but the Yorkshire and East Anglia coasts suffered tidal surges before Christmas to devastating effect; more than 80 houses were evacuated at Filey in my constituency and a number more in Whitby. However, we have become more accustomed to surface water and river flooding, and surface water flooding has been on the increase, and has become more of a problem, since 2007.

I want to hear from the Minister why SUDS have been delayed. The latest we heard was that there was an implementation date of April 2014. People have been trying to convince me that Brawby in my constituency suffered in 2013 not from flooding but due to surface water running off from fields and roads into the combined sewerage pipe, which then spilled water from the sewerage system back on to the road. In that case, the water did not go into anyone’s house, but at Castlegate in Malton when exactly the same thing happened—water ran off the road into the combined sewers—water then entered a house.

The missing link is an audit of existing SUDS and an examination of future SUDS when major developments and roads are built. However, from my experience, and given what we heard during the statement on the floods, there is a further problem to deal with. If water runs off a highway, it is the responsibility of the county council, the unitary council or the Highways Agency itself. However, if that water then runs into the combined pipes, it suddenly becomes the water company’s problem, although what has happened is not its fault. I hope that that unacceptable situation can be addressed through the measures that I and other members of the EFRA Committee have tabled, or through amendment 1, which was tabled by my hon. Friend the Member for Sherwood. If fields are saturated, as is the case at present—it was the situation in my constituency between September 2012 and March 2013—highways authorities must take responsibility and create a SUD to take the excess water. I accept that such a process would involve cost, but I applaud the Government’s approach on partnership funding, so we could look to public sector partners, or be more imaginative by looking for private sector partners, such as local businesses that might be interested in investing. However, we cannot allow a situation to continue in which surface water running off a road becomes the responsibility of a water company and thus forces it to take preventive measures, given that the highways authority—whichever one it might be—should accept responsibility for it.

The EFRA Committee’s report following our pre-legislative scrutiny of the draft Bill highlighted concern about the delayed implementation of the provisions on sustainable drainage systems in the Flood and Water Management Act 2010—it is now four years since that Act was passed. The Committee also criticised a lack of urgency on improving the management of surface water in its report on the water White Paper, so I hope that my hon. Friend the Minister will be able to clarify what has been happening and why the process seems to be so complicated. As the Committee has not been convinced that the Department’s work to improve the management of surface water has involved the urgency that constituents throughout the country would expect, new clause 4 would require the Government to implement the relevant provisions of the 2010 Act within a month of the Bill being passed.

--- Later in debate ---

[Thomas Docherty]

Hear, hear!

[Miss McIntosh]

It is always a delight to be supported by the hon. Gentleman.

The current system for managing abstraction of water from rivers and aquifers was introduced in the 1960s, and does not effectively address the severity of pressures on water resources caused by increasing demand from a growing population and an increasingly varied climate. The current system does not help abstractors to trade water effectively or provide an incentive for them to manage water efficiently. The current weaknesses in the system mean that it could start to constrain economic growth, reduce the resilience of the water supply and lead to environmental damage.

I note that the reasons and need for abstraction reform are acknowledged and discussed in the Government consultation “Making the most of every drop”, which was published last December. When my hon. Friend the Minister replies, will he address the issue of why there was so much emphasis on abstraction and resilience in the water White Paper, and why we lost that emphasis in the draft Water Bill and, to a certain extent, in the Bill before us this evening?

The detail of a new abstraction regime will need to be developed following the end of the Government consultation, which was launched on 17 December. Following the conclusion of that consultation, which will not be until March, DEFRA will have to produce legislative proposals and secure space in the highly charged legislative programme before a new regime can be introduced. Once again, these amendments are intended to be entirely helpful and constructive.

During the Committee stage, the Opposition tabled a new clause to provide that upstream reform may not be implemented until new primary legislation on the licensing of abstraction has been passed, and five years has expired to allow for its implementation. Sadly, that proposal was voted down.

New clause 5 would require the Secretary of State to introduce a reformed abstraction regime within seven years of the Act being passed—by 2021. That was on the basis of the evidence that we received, and we believe that that is the most accurate and cost-effective timetable for all the parties involved.

The abstraction reform must be resilient to the challenges of climate change, or extreme weather conditions, and population growth and better protect the environment. Those high-level requirements are entirely in line with the key commitments regarding abstraction reform in the water White Paper.

Let me turn now to upstream and abstraction reform. In our pre-legislative scrutiny report on the draft Water Bill, the Select Committee called on the Government to make clear in the Bill the key principles that underpin the introduction of upstream reforms. Further work needs to be undertaken to establish how upstream reforms can be introduced in a way that will preserve investor confidence, ensure that customers do not face increased bills and maintain resilience in the sector. I was extremely pleased to see the emphasis on resilience in the water White Paper.

Upstream reform aims to encourage upstream competition. I am talking about the input of raw or treated water into a water company’s network or the removal of waste water or sewage for treatment. Clause 1 unbundles all the existing licensing structures so that new entrants can sell raw or treated water into an incumbent’s network. It also looks at the wholesale authorisation to input water into a part of the system. The Environment Agency’s statistics show that on average, between 2002 and 2011, only 45% of the annual total of water licensed for abstraction in England and Wales was actually abstracted. Therefore, if all of this unused but already licensed water was abstracted, there could be a significant deterioration of the environment. We hope that when the Government look at abstraction and upstream reform, they will bear these thoughts in mind.

One other aspect of upstream reform and abstraction that the Government should consider is, very topically, the role of water companies and other private sector companies in flood prevention and in protecting homes and businesses from floods. The Minister will be familiar with the work of his Department in the Natural Environment White Paper, which looked at a project known as ScaMP—Sustainable Catchment Management Programme—involving United Utilities in Cumbria. Surely there must be much more scope for the type of partnership approaches we have seen in Pickering where the first soil of the reservoir will be dug tomorrow.

I will conclude my remarks by looking at flood insurance. Amendments 5, 6, 7 and 8 seek to amend clauses 51 and 53. The Select Committee took a lot of evidence in relation to Flood Re and the potential for reinsurance companies. Given how deeply wedded the Government are to Flood Re, I hope that they have not closed the door completely on reinsurance. In summing up this debate, perhaps the Minister will inform us how the state aid application to the EU Commission in Brussels is going to enable Flood Re to come into effect according to the Government’s timetable.

Clause 51 and the amendments we propose to it would have the effect of bringing small businesses within the ambit of Flood Re. There is considerable doubt and anxiety that small businesses will not be covered under the new Flood Re proposals. The impact that flooding can have on small businesses is clear. In 2001 and 2005, a dental practice in my constituency was flooded twice and the dental chair and all the computer equipment had to be replaced each time.

[Roger Williams]

I am sure that many Members will have a deal of sympathy for my hon. Friend and her concern for small businesses. I guess that the difficulty in getting this into legislation will be how to define a small business. Perhaps she has some ideas on that.

[Miss McIntosh]

Like my hon. Friend, I merely shadow DEFRA so I do not have the definition to hand, but I am sure that the Federation of Small Businesses will have a definition. I think it is generally deemed to be a business that has fewer than 50 employees, though many small businesses employ five or fewer or are often a single employee. The example I cited was that of a small dental practice with two or three dentists. The knock-on effect on an independently run, stand-alone dental practice of fitting, for the second time, a new dental chair and computer equipment goes beyond what would normally be expected. The knock-on effect on the insurance premium and excess for that dental practice was considerable and, possibly, unaffordable.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Is it the hon. Lady’s understanding that not only would small businesses and micro-businesses in commercial premises not be covered by Flood Re, but people who run businesses from their own homes would find it almost impossible to get insurance under the arrangements as they stand?

[Miss McIntosh]

I welcome the hon. Gentleman’s intervention, but I believe that homes generally are covered. Our Government have persisted with his Government’s arbitrary choice of 2009 as the relevant year, although this is a new Bill and we have a still relatively new coalition Government. I was very taken by what the hon. Member for Stoke-on-Trent North (Joan Walley) said in a previous debate about 2009 having been plucked from the air as an arbitrary date, and many people will not realise that homes built after 2009 on a floodplain are simply not covered by insurance. One of the purposes of tonight’s debate is to entice the Government to seek a different year—it could be 2013 or 2015, but let us be imaginative.

[Sheryll Murray]

Will my hon. Friend clarify the difference between an insurance policy that covers a business premises and one that covers a private home? Insurers, and the Association of British Insurers, would probably find it difficult to distinguish if we were to include small businesses, but because her amendment is well intentioned, I am sure that she will be able to clarify her differentiation.

[Miss McIntosh]

I am sure that the Minister will be well aware of the point that my hon. Friend is trying to make. There is great concern among the farming community that farms may be excluded whereas the farm house may be included. I commend my hon. Friend’s knowledge, because she worked in the insurance industry for a time. We need to know whether farms and people working from their own homes are going to be included, and what the position will be for small businesses, because this could put them out of business in some of the areas that we have seen flooded over the past two years in repeat flooding incidents. It has also been brought to my attention, although, unfortunately, too late to have tabled an amendment, that there is concern that blocks of flats—leasehold flats—may be excluded from this arrangement. That may be news to the Minister as well, but before Third Reading he might like to ponder whether such blocks will be excluded.

Our amendments to clause 51 address concerns relating to the exclusion of small companies such as charities and, as I have mentioned, farms under the new Flood Re proposals in the Bill. Any business based in a property that is primarily a residential one, and on which the occupier therefore pays council tax, would fall within the Flood Re scheme. Any business based in premises used primarily for business will not be covered. It is extremely important that we understand these issues. For the first time that I can remember, under the Flood Re scheme, once it is up and running, the Government will be added as an insurer of last resort if in the three years before the fund has built up we suffer an exceptional one-in-a-thousand-year incident.

In the Public Bill Committee, the ABI stated that Flood Re is not the solution for small businesses and that there is not a sufficient evidence basis for providing insurance cover for small businesses. The Federation of Small Businesses is concerned that small businesses that have affordability problems will not be covered, other than in respect of the insurance premiums or excess that they might seek to defray. Although they do not pay council tax, they do pay business rates and therefore could be rated in a similar way to household customers under Flood Re. There remain a lot of known unknowns with Flood Re as to why a council band rate has been chosen and which particular band rate has been opted for, but that is a separate debate. If there is a lack of evidence, further investigations and monitoring should be conducted with regard to small businesses and how they might cope with sourcing flood insurance in the free market.

Our amendments to clause 53 would have the effect of ensuring that insurance companies cover for any liability in excess of a one-in-200-year loss. Our amendments seek greater clarification of the Government’s role in this scenario of a one-in-200-year loss, and, in particular, how the taxpayer would be protected. As I have mentioned, the Government will, for the first time, be the insurer of last resort. In later years, after the fund has built up, I do not believe that that will be a problem, but we are seeking the Minister’s reassurance about what the implications will be in respect of the first three years. In Committee, the Minister confirmed that there is no Government liability for Flood Re and that the Government have made it clear that Flood Re is not guaranteed above the one-in-200-year level, so he might just like to revisit that and clarify the point.

Our amendment 8 would put the Government’s commitment in the Bill and create certainty for all concerned as to who will assume the additional liability. A one-in-200-year loss scenario would be the total value of claims from households reinsured through Flood Re that, during the course of a year, actuaries would not expect to be exceeded in 99.5% of years. Expressed in a different way, that would mean that the actuaries would be 99.5% confident that the limit would not be exceeded in any one year. It is important to note that that is not the same as a one-in-200-year flood event; the ABI has estimated that this would mean flooding six times worse than that experienced in 2007. Obviously, neither the Minister nor the insurance industry will yet be able to say what the cost of the recent floods has been, but I hope that he will see fit to lend his support to our amendments, and I commend them to the House.

[Joan Walley]

I am fortunate to follow the hon. Member for Thirsk and Malton (Miss McIntosh), who speaks with the greatest authority on these subjects, as I am sure everyone in the Chamber would agree. I particularly share her concern about drainage and surface water, and I agree with the points she made earlier about the need to ensure that highways authorities also have statutory duties, so that we can deal with this issue in a joined-up way. The debate on this group of provisions is important because we have had pre-legislative scrutiny by the Environment, Food and Rural Affairs Committee of the draft Water Bill and subsequent debate in that Committee. When the Minister addresses the various comments that have been made, we will see the extent to which the Government are listening to what Parliament is saying about the amendments. There may not necessarily be agreement on all of them; I am talking about the amendments that seek genuinely to try to improve matters on the whole issue of water. We have an opportunity to put in place legislation that is fit for purpose, so I hope that improvements will be made.

--- Later in debate ---

[Dan Rogerson]

In the time available I shall seek to respond to as many points as I can. The Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), has been a strong advocate of and campaigner for sustainable drainage over many years, and the Government are pressing ahead and implementing the requirement to secure approval for sustainable drainage systems for new developments under schedule 3 to the Flood and Water Management Act 2010. Regrettably, it is looking increasingly unlikely that we will be in a position to ensure that the scheme comes into force this April, which was our preferred date for implementation as stated previously. I accept that that will be a great disappointment for the hon. Lady and other hon. Members, but I remain committed to introducing the legislation at the earliest opportunity. I plan to lay the relevant affirmative regulations by April, to underline the Government’s commitment to addressing flood risk.

I share the hon. Lady’s frustration that the process has been so protracted, but we are working with developers and local government to develop the processes, standards and guidance that are an integral part of a new SUDS approvals and adoption regime, rather than just imposing them. That takes time, but it is time well spent if the end result is an approach that is fair to all parties and successful from the outset because local government and developers are fully prepared to take on their respective new responsibilities.

Amendments 1, 2 and 3 address flooding on highways or that caused by the run-off from highways. The causes of flooding can be complex and it is difficult to make a general statement about them. There are already legislative powers to ensure that highway surface water drainage does not pollute or flood, and section 100 of the Highways Act 1980 enables the local highway authority to take action related to the drainage of highways—for example, it can construct drains or erect barriers on the highway or adjoining land to divert surface water into an existing drain.

The majority of new road drainage systems are not connected to the public sewerage system. Typically, they discharge under designated conditions, either to a watercourse or a storage pond with controlled exits to a watercourse, or alternatively soak into the ground in a designed manner. A decision to connect new highway surface water to a combined or foul public sewer can be made only subject to an agreement with the receiving water authority. There is no automatic right to connect new highway drainage to the public sewerage system. We recognise, however, that in some cases local flooding may be exacerbated by drainage from existing highways, and as I have said, the 2010 Act places a duty on lead local flood authorities to develop a local flood risk management strategy for their area. I hope hon. Members will be reassured by that.

Let me seek to address the points raised by the Chair of the Environment, Food and Rural Affairs Committee about flood insurance, and amendments 5, 6 and 7, which relate to small businesses. Flood Re has been specifically designed to recreate the current cross-subsidy in the domestic home insurance market. There is little evidence that the same type of cross-subsidy applies in the commercial insurance market, and the majority of business insurance policies are already priced to risk. A recent English business survey of more than 9,000 businesses in England found that fewer than 1% of businesses had experienced difficulty getting property insurance in the last year due to the risk of flooding, and that no businesses had been refused insurance cover due to such a risk.

As outlined by the Association of British Insurers in its evidence session, businesses tend not to face the systematic issues that householders experience. We must also remember that Flood Re is funded through a levy on all household insurance policies. We have deliberately set that at £10.50, which the ABI estimates is the same as the current cross-subsidy. Widening Flood Re to include small businesses would significantly increase costs. We do not want someone living in a council tax band A property, for example, to subsidise the cost of insuring a private company that potentially earns up to £1 million a year. I am also mindful of the need to comply with state aid rules. Government intervention to support business would be carefully scrutinised and at greater risk of rejection—I know the hon. Lady is familiar with that issue.

On flood insurance and amendment 8, which was tabled by the same group of hon. Members, we are clear that we are talking about a one-in-200-year annual loss, not a one-in-200-year flood event. If Flood Re is legally responsible for claims above a one-in-200-year level, the cost of the liability could be prohibitive. Likewise, if the Government took on a liability beyond a one-in-200-year level, we could expose the taxpayer to extremely large and unpredictable costs. In such a catastrophic situation, many more homes than would be insured by Flood Re are likely to be affected. That is why the memorandum of understanding says that the Government of the day would work with Flood Re and representatives of the insurance industry to decide how any available resources should be distributed to Flood Re customers if flooding exceeds such a level.

Government amendment 58 is a technical one. On the issues raised by the hon. Member for Stoke-on-Trent North (Joan Walley), the Chair of the Environmental Audit Committee—we discussed them in Committee—the Government remain convinced that the existing provisions would be helpful enough in terms of the checks on companies’ financial probity and their technical ability. However, she rightly raised issues that could be addressed following Lord Krebs’s intervention in his letter. I am pleased to hear her calling for things such as betterment, meaning better quality reinstatement, and more information to customers, for which Lord Krebs has also called. Many hon. Members would like to include that in discussions with the ABI.

On misconnections, the hon. Member for Edmonton (Mr Love) is aware that local authorities currently have the power. We are not convinced that giving the power to companies would be helpful. His points are on the record and it is right that the Government take account of what he has said. I am happy to talk to him in future to see that we get the right response.

There is only a very little time for me to respond to all the points hon. Members have made on abstraction. My predecessor as Minister, my hon. Friend the Member for Newbury (Richard Benyon), has rightly said that there is agreement in the House that we want progress. Action is taking place under the existing regime—the Environment Agency has changed 77 licences since 2008, returning around 75 billion litres of water per year—but we need to go much further. That is why we are consulting. The process is under way and will lead to legislation, hopefully with the support of all parties, to reform that complicated system. However, we need to do that properly. I do not believe it is appropriate to do it in the way suggested in the new clause.

Finally, Government amendments 55 to 57, which I have tabled, seek to clarify the resilience duty. We want to make it absolutely clear to hon. Members that we are covering environmental sustainability. I hope the changes we are making to the resilience duty will reassure hon. Members who believe that we need to elevate the sustainable development duty that we are looking at environmental resilience as well as social and economic resilience.

[Miss McIntosh]

We have had a good debate on Flood Re. The Environment, Food and Rural Affairs Committee wanted to flag up the point that the proposals do not reflect the value for money of other aspects of Government policy.

We have also had a good debate on abstraction, but the jury is out. The Bill would be a retrograde step if there is a severe drought between now and whenever the Government introduce provisions.

Obviously, both personally and on behalf of the Committee, I am disappointed that the SUDS provisions will not be in place. The House would wish to record its disappointment and the fact that, if the regulations will be introduced only in April, there is time before those who must apply them are in a position to do so.

However, mindful of the opportunities that hon. Members have had to debate the matter, and that the Bill must continue its passage, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.



New Clause 7

National affordability scheme

‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.

(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—

(a) the Water Services Regulation Authority; and

(b) the Consumer Council for Water.

(3) An order under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.—(Thomas Docherty.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Miss McIntosh]

We have had a good debate today. I welcome the Bill and thank all those involved in preparing it, including my right hon. and hon. Friends. Obviously, a lot of work remains to be done to it in the other place, and we will watch those developments with interest.

I welcome the introduction of retail competition. The Select Committee would like to have seen the primary duty of sustainability in preference to resilience. I believe that too much detail has been left to be fixed at a later stage. I enjoyed the comment from my hon. Friend the Minister on not wanting to rely too much on regulation, because just about every clause calls for implementing regulation to be drafted. We will leave that conundrum with him.

Competition is to be welcomed. It should lead to greater efficiency. In particular, I hope that both the current 2014 price review and the competition provisions permitted following the Bill will lead to more innovation, not least following these weeks of sustained and considerable flooding across the country. I applaud the Government’s search for a partnership approach and for more private enterprise funding for flood prevention measures. I hope that the water companies will step up to the plate in that regard and that other private sector companies might help to fund schemes from which they might benefit.

I believe that there are still opportunities to write other provisions into the Bill before it receives Royal Assent, not least with regard to the partnership approach to flood prevention measures, which has been mentioned this evening, but also for increasing the amount of maintenance that can be done by internal drainage boards. We await the results of the pilot schemes, whereby DEFRA is allowing landowners to permit their own maintenance to be done on the watercourses locally, to see whether that scheme can be rolled out.

It is a joy to me that tomorrow we will see the Pickering pilot project in my constituency reach its final phase with the cutting of the first sod of earth, which will enable the reservoir to be built. It is a great disappointment for me personally, as I am sure it is for many in the country, that the sustainable drainage systems, which are left over from the Flood and Water Management Act 2010, will still not be on the statute book by April this year. SUDS, on their own, will do a huge amount to prevent surface water flooding from entering sewerage systems through the combined sewage pipes that we have heard so much about today and that can cause sewage spills on to roads and, regrettably, into homes and other properties.

Perhaps the most innovative aspects of the Bill that are to be welcomed are those relating to flood insurance. I commend Flood Re, but I hope that the Minister will have listened carefully to the concerns that have been raised today, not least from the Select Committee. We expect to see the same respect and acknowledgment of value for money in that as in other schemes. We will be looking to see that that is confirmed as we go forward.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

My hon. Friend praises the SUDS system, but will she take into account, and ask our hon. Friends on the Front Bench to take into account, the fact that we may be building up considerable liabilities for ourselves in future if SUDS systems are inadequately designed by developers who have clever consultants and local authorities do not have the expertise to vet whether those systems are adequate in the type of floods that we are seeing at the moment?

[Miss McIntosh]

My hon. Friend will have an opportunity to read our proceedings tomorrow and see the debate that we have had on SUDS. For reasons that the Minister has not rehearsed in full, the SUDS regulations will not be on the statute book by April. I am sure that there are very good reasons for that, including those that my hon. Friend raised, but I do believe that SUDS will have a substantial role to play.

If the flood insurance system leaves out leasehold flats, that will be a matter of concern.

[Dan Rogerson]

I am grateful to my hon. Friend for giving way on this point, as I did not have the opportunity to deal with it on Report. I assure her that householders living in those sorts of properties would have access to the contents aspects of flood insurance if they were council tax payers.

[Miss McIntosh]

That will be very welcome news. As I said, I was alerted to this problem after the time for tabling amendments had expired.

What we have seen this week and saw in the weeks running up to Christmas shows the scale of the challenge that we face. I welcome the all-party approach that we have seen across the House today and in Committee, which I was not at liberty to participate in. That is a very good basis on which the Bill can go forward from this House, and I commend it to its future stages.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Fishing Industry

Baroness McIntosh of Pickering Excerpts

Thursday 12th December 2013 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I congratulate the hon. Member for Aberdeen North (Mr Doran) and others on securing this timely debate. I thank the Backbench Business Committee for allowing the debate to take place in the Chamber so that there can be more contributions than there have been in such debates in Westminster Hall.

I welcome the Minister and the shadow Minister to their new responsibilities. I thank them for the contributions that they made as members of the Environment, Food and Rural Affairs Committee and remind them that they both participated in our excellent report in response to the proposals for the reform of the common fisheries policy.

I join the hon. Member for Aberdeen North in commemorating those who have lost their lives in the fishing industry. Fishing and farming are the two most dangerous industries and they both suffer fatalities and other losses. We should recognise that element of the work that fishermen do in bringing the fish to our plates. I pay tribute to my hon. Friend the Member for South East Cornwall (Sheryll Murray) who, despite the personal loss she suffered, continues to take a great interest in the fisheries industry.

Today’s debate is timely, and I pay tribute to fishing ports across the country. The port of Filey has historically enjoyed coble boats—that is why we have Coble Landing—and when I was first elected, six families still depended on fisheries off the North sea coast from Filey port. Sadly, however, for a number of reasons—not least that they needed a trailer to bring the coble boats on to shore—the cost has been prohibitive, and I understand that they now fish mostly out of Bridlington, which I think is the largest shellfish port in England, if not the UK.

The historic common fisheries policy agreement that was agreed by the European Parliament this week is to be welcomed and paves the way for new reforms to take effect on 1 January 2014. Notwithstanding that, I wish my hon. Friend the Minister well in his overnight negotiations. I hope he will be well equipped with refreshments to keep himself in good order, as he will obviously need to be on top form.

[Neil Parish]

Does my hon. Friend agree that although it is great that the European system is now grinding into place to ban discards—I wish the Minister well in that—the process must be kept going and indeed sped up? My knowledge of the EU, and I suspect that of my hon. Friend, is that it will take an awfully long time to get to a situation where we can stop discarding healthy fish. We need to speed up the system.

[Miss McIntosh]

I am grateful to my hon. Friend, and I agree with him. The opinion of the Environment, Food and Rural Affairs Committee on this deal was published in February 2012 and the Government response in July 2012. It has taken three years of difficult negotiations, and I commend the fisheries Minister and his predecessor on the lead we took in securing a significant reform of what was deemed a fundamentally flawed common fisheries policy.

Let me say why the reform is so important. My hon. Friend the Member for Tiverton and Honiton (Neil Parish) and the hon. Member for Aberdeen North mentioned discards, and it is key that we do not replace discards at sea with discards on land. The Committee’s report concluded robustly that we must be imaginative about bringing fish on to land—having been born in Scotland, disappeared, and then returned there, I can say that different fish are eaten in Scotland from those eaten in England. If we can extend the palate and consumer taste to different types of fish and create new markets for existing fish, that would be a great way forward. As the report noted, celebrity chefs and others have a part to play in that by creating a novelty feature for dishes such as pollock, which I am sure would not be so widely eaten had it not been for chefs and others paving the way.

[Mr MacNeil]

The hon. Lady calls for us to be imaginative in dealing with some of the problems that fisheries throw up. Twenty years ago I fished for spurdog as a targeted fish, but things have moved on and, as I said earlier, it is now a non-targeted fish often caught in nets. Spurdog comes in on boats, but under the landing obligation it looks as though it can be neither landed nor discarded. We will certainly need some imagination in dealing with spurdog that we cannot land or discard.

[Miss McIntosh]

Perhaps the hon. Gentleman will join me in tasting some of that to see whether it is edible, and we could look at creating a new market.

As the hon. Member for Aberdeen North said, the key points of the next stage of reform include a ban on the wasteful practice of discarding at sea perfectly edible fish for which there is no current market, a legally binding commitment to fishing at sustainable levels, and decentralised decision making that allows member states to agree measures appropriate to their fisheries.

One of the most exciting parts of this reform is that for once we are going to focus more on the science—I think we have gone wrong with previous reforms of the commons fisheries policy because we have not done that. I am an avid watcher of “Borgen”, the Danish television programme, and I will include in my remarks one or two references to Denmark. I am half Danish—I am very proud of that—and I studied in Denmark. As part of our report the Committee had the opportunity to visit Denmark and see practices that I hope will transform the regional control aspects. Science is particularly important there because Copenhagen is home to the headquarters of the International Council for the Exploration of the Sea—ICES—and if we followed more of the scientific base that it spends a long time producing, I believe we would all benefit.

The health of fish stocks is assessed every six months by ICES, and the EU published an overall assessment of its advice in October 2013. It stated—this is from a Library note so it must be true—

“that 39% of EU fish stocks are still over fished,”

but that is down from 86% in 2009. In spite of that reduction in overfished stocks, the assessment goes on to say that trends giving rise to concern include, for instance, the fact that

“the number of stocks under an advice to reduce captures to the lowest possible level… had increased.”

I am sure the Minister will wish to focus on that. Being optimistic, as the hon. Member for Aberdeen North concluded, Seafish, the industry body for the UK, has said:

“there is reason for cautious optimism in the industry as we continue to see iconic stocks such as cod in the North Sea move towards recovery.”

We must not rest on our laurels, and it is essential we follow the science. Where I would like the science to lead, and where I believe there is an example we can follow, is regional control, and I have a question for the Minister about that.

I also worked for a number of years in Brussels in legal practice, and we must understand how we can get round the problem of fisheries still being an exclusive competence of the EU. If that situation remains, how shall we achieve regional control in practice? I believe that is a legal problem and not insurmountable. Again, I will turn to Denmark, because Denmark and Sweden have established regional control around Danish and Swedish waters that works extremely well. That is down to the size of the nets and meshing they use, and how they fish particular fisheries—I will not go into too much detail because it is well established. I hope the Minister will confirm that that model will be used. I understand that the new common fisheries policy brings decision making closer to the fishing grounds, clarifies the roles and obligations of each of the players, and ends micro-management from Brussels, and that the Commission will agree with fishing nations in the region about the general framework, principles and standards, overall targets, performance indicators and time frames. Crucially, however, member states within that region will co-operate at a regional level to develop the actual implementing measures. If it can be established, and all member states in the region agree to the recommendations being transposed into rules that will apply to all fishermen in the region, it will be a real game changer.

[Richard Benyon (Newbury) (Con)]

My hon. Friend is making a superb speech. She mentioned two key elements to reform, but does she agree that there is a third? History might reveal that that third element—a legal requirement to fish sustainably, to fish to maximum sustainable yield—is even more of a game changer. Is that not a key reform that will get our fisheries back on an ecosystem management basis?

[Miss McIntosh]

I am grateful for that intervention, and it gives me the opportunity to record my thanks to my hon. Friend for the hours he spent on the groundwork to achieve an historic agreement. Sustainability is key, and sustainability will be proved by following the science. We went too far away from the science in the past; we need to hold to it in future.

[Mr MacNeil]

Does the hon. Lady agree that the idea of regionalisation, as described by the EU, is perhaps one of the tremendous ways that the EU misleads us? The first meeting on the regionalisation of the north-west waters took place in Dublin on 12 November. The group includes the UK, Ireland, France, Belgium, Spain and the Netherlands—a pretty big region. We had thought that regions would be smaller than states, but at EU level they are multi-state organisations. It is better than what we had, but it is by no means local control—it is still a horse-trading arena.

[Miss McIntosh]

The hon. Gentleman does the House a great service by pointing that out. I had understood that regions would relate to borders contiguous to the sea within which there would be fishing. We cannot get away from the fact that Spain had historical rights to fish in our waters before 1973. That is something the Minister will have heard about, and I am interested to know how Spain manages to muscle in. I pay tribute to my Spanish friends, in case they are reading this or watching it on television—we have an agreement not to discuss fishing, Gibraltar or Las Malvinas.

[Kelvin Hopkins (Luton North) (Lab)]

Is the next logical step to make the regions the traditional fishing waters of each member state?

--- Later in debate ---

[Miss McIntosh]

Much as the hon. Gentleman is my friend, I am always cautious when he tempts me to go in a particular direction. If I may, I think we shall discuss that over a cup of tea.

[Neil Parish]

My hon. Friend talks about Spain’s access to what, historically, were our waters. One problem is that once there is a common fisheries policy everybody muscles in, nobody more so than Spain. Spain will hoover up fish not only off our shores, but off Africa and anywhere she can find them. She is a menace and I am quite happy to say that in this House.

[Miss McIntosh]

As some of my best friends are Spanish, I hope they are not following the debate too closely. I am sure Spain would wish reciprocal access rights for our fisherman in its waters. Perhaps we can reach agreement on that basis.

The new laws will allow countries working together regionally—under my definition of regionally, which does not necessarily include Spain—to move away from micro-management to true regionalisation and, as my hon. Friend the Member for Newbury (Richard Benyon) said, to a legally binding commitment to fish at sustainable levels.

Our report was so good that I would like to highlight one or two points. We called for decentralisation, rather than the Commission handing down, and for more research into selective fishing methods, which are important. We called for a cipher mechanism to reallocate fishing rights away from slipper skippers, and we called, again, for a register. My hon. Friend the Minister would not forgive me if I did not mention again our call for a register of who owns the current quotas.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Lady is making an excellent speech. My understanding is that the register was due to be published before the end of 2013. I am conscious that we are almost halfway through December. Is it still on track?

[Miss McIntosh]

The Minister and the House will have heard what the hon. Lady says. I await the Minister’s reply with great interest. The House sits for another whole week and I am sure we stand prepared to hear from the Minister on his return not just that he has brokered a good deal for Britain, but that he wishes to publish the register of fisheries.

I am grateful for having had the opportunity to speak. I pay tribute to those who fish our waters and put themselves in harm’s way to bring fish to our plate. I pay tribute, too, to those who called for this debate. I wish the Minister great success in his negotiations on Monday.

--- Later in debate ---

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

I commend the hon. Member for Aberdeen North (Mr Doran) and others for bringing this issue to the House and the Backbench Business Committee for supporting it. It has been a very detailed first fisheries debate for me, and it has provided a welcome opportunity to cover a range of important matters.

As the hon. Gentleman said, it is important that we take this opportunity to remember the four fishermen who have lost their lives in this past year in their line of work at sea and in the harbour. This is a stark reminder that fishing remains the most dangerous occupation in this country, as numerous Members have mentioned, including my hon. Friend the Member for St Ives (Andrew George) and the hon. Member for Tynemouth (Mr Campbell). I was particularly struck by what my hon. Friend the Member for Totnes (Dr Wollaston) said about Andrew Westaway in her constituency. We must remember the courage and sacrifice of individual fishermen, who put their lives in danger to bring food to our tables, and of their families who support them. I remind people of the plug given to the Fishwives Choir by my hon. Friend the Member for South East Cornwall (Sheryll Murray). I know that the House will want to join me in remembering the bravery of our fishermen and the incredibly difficult and dangerous work that they do, and in sending our sincere condolences to all those families and friends who have suffered losses.

Many important points have been raised, and I want to pick up as many of them as I can. First, I want to put on record the sheer importance of this industry to the UK. We have more than 6,400 vessels and nearly 12,500 fishermen, and we produce 627,000 tonnes of fish per year with a value of £770 million. This industry is incredibly important to the UK.

The single biggest development this year has been what I regard as a quite radical reform of the common fisheries policy. I congratulate my predecessor, my hon. Friend the Member for Newbury (Richard Benyon), on his tireless efforts on this front, especially on managing to reform the broken common fisheries policy—a measure that was voted through and agreed by the European Parliament on Tuesday. The reformed CFP, which includes three major UK priorities, has three key elements: first, an end to the wasteful practice of discarding; secondly, an end to the one-size-fits-all approach, with regional decision making; and finally, a commitment to fish at sustainable levels. I want to say a little about each of those important areas in turn.

On discarding, it has been an absolute scandal that we have had these regulatory discards whereby perfectly healthy fish are thrown, usually once dead, back into the sea. A number of Members have raised concerns about the discard ban, but it is important to recognise that to make it work there will be new flexibilities in the quota system. There will be inter-year flexibility so that quota for a species can be moved from one year to the next, and there will be some limited interspecies flexibility so that if a fisherman finds he is catching far more haddock than he expected, he can offset some of that haddock against his cod quota. We also recognise that there is much we can do with improved net gear. Big progress has already been made on this, and organisations such as the Centre for Environment, Fisheries and Aquaculture Science have done a lot of work on it, but there is certainly further to go.

I have always thought that regional decision making is important, because I am of the view that a small number of member states with a shared interest in a fishery and in seeing it fished sustainably are much more likely to come up with coherent management measures than any haggling among a group of 28 countries. The move to regional co-operation is, therefore, very important. It will make it easier to get agreement and we will end up with more coherent policy making.

A number of Members have raised concerns about how that will work. The fact is that, technically, it will remain a European Union competence. We have seen it work. When I attended the Fisheries Council in October, a similar process took place for the Baltic sea whereby those countries with a direct interest in that water came up with an agreement; they got there in the end. I think that that combination—of individual member states deciding management measures among themselves and the Commission standing behind that process and providing the ultimate check to make sure that they are fishing sustainably—works.

The third point—this is really important, as the former Minister, my hon. Friend the Member for Newbury, made clear—is about the legally binding commitment to fish sustainably. This is the essential bit that makes everything else stand up. All these things together represent a radical change in the CFP. This means that we have flexibility to ensure that a discard ban works, a legally binding commitment to fish sustainably, and more local decision making. We have further to go and I am looking forward to the next one to two years, when we can really work on making sure that we implement the measures properly. This has been a very important step forward.

[Miss McIntosh]

What reassurance is the Minister able to give the House that the Commission accepts that this will now be—dare we say it—a shared competence?

[George Eustice]

It is important to recognise that the setting of the total allowable catch will remain a European competence, but the management measures will be decided by the member states. On the signing of those management measures, the Commission’s role will be to ensure that we are fishing sustainably. There is an issue—my hon. Friend highlighted this—that, legally, a competence can reside either directly with the Commission or directly with member states. A hybrid system is difficult, but I think our agreement enables us to do that. The Commission can use mechanisms to make agreements between member states legally binding.

Water Bill

Baroness McIntosh of Pickering Excerpts

Monday 25th November 2013 Commons Chamber

[Mr Paterson]

I am happy to answer the hon. Lady. We are completely clear that we will not allow the procedure to go ahead if it is going to cause environmental damage. We have to respect a whole range of directives pertaining to water. We are absolutely clear that we will not weaken or dilute—to use a watery phrase—the robustness of our regulation. We will completely lose public confidence if we do that. This has to be done in a robust manner.

The hon. Lady should look at examples that I have cited, such as Wytch Farm, which has been extracting hydrocarbons for decades without any environmental damage at all and which is very close to some very sensitive environmental sites. If this is done professionally and regulated properly, the hon. Lady should have nothing to fear. I am as keen as she is to protect our wetlands, including mosses, and I am clear that we will not dilute in any way the rigour of our regulation.

To return to abstraction, I know that some people—we have heard from some of them—think that we are not moving fast enough. Reform of the regime is complex. It has been in place for 50 years and the changes will affect the businesses of abstractors up and down the country—businesses that require water for public supply, electricity generation, manufacturing and irrigation. We must get this right. Shaping a new regime involving up to 30,000 abstractions is complicated, so we will consult on our proposals soon.

Reform of the abstraction regime is only part of the story. We are taking action now to reduce the damage to rivers, such as the chalk streams that support some of Europe’s unique habitats. We are using and improving the tools we have now to vary and remove damaging abstraction licences. For example, we have already made changes to protect the River Darent and the River Itchen.

In this Bill we are making it easier to tackle damaging abstractions in advance of our wider reform by making funding of schemes to restore sustainable abstraction quicker and easier. We will not take any risks with the introduction of upstream reform. We have looked carefully, with both Ofwat and the Environment Agency, at the concerns that have been raised. I am satisfied that there are robust regulatory safeguards in place to prevent upstream competition from leading to environmental damage. We will also co-ordinate implementation. The new upstream markets will not open before 2019 and we expect to implement abstraction reform in the early 2020s so that we can make sure that these reforms are carefully co-ordinated.

Resilience was a central theme of our water White Paper and it is a central theme of this Bill. We listened to calls in pre-legislative scrutiny to make sure that it is also central to the way in which the sector is regulated. We have strengthened Ofwat’s role in safeguarding long-term resilience. The Bill includes a new primary duty to take account of environmental pressures, population growth and demand on our essential services. I know that some are keen for Ofwat’s existing sustainable development duty to become a primary duty. We have looked at the arguments for that change. People want Ofwat and water companies to address longer-term challenges and deliver a better deal for customers and the environment. We want to achieve that, too.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

If we really want to improve environmental stewardship, I would argue, as others have done to the Select Committee, that the statutory duty on sustainable development will put the Government in a better place than resilience.

[Mr Paterson]

I am grateful to the Committee Chair for all her hard work. We have looked at the issue and believe that resilience means a stronger focus on longer-term planning and investment. By creating a new overarching duty specifically designed to increase the focus on long-term resilience, I think we will deliver what the Committee has been looking for. Resilience also means protecting the water resources that are so critical to current and future supplies. As I have said, ultimately 95% of water runs out to the sea, and the Bill will help to manage it more effectively.

Just as water reform measures will help our supply systems and environment to deal with water shortages, we must also be prepared for flooding. I have seen for myself how devastating it is to be flooded. This time last year, I visited Exeter and Kennford and saw the impact of the floods on people’s homes, lives and families.

--- Later in debate ---

[Maria Eagle]

If the hon. Gentleman is slightly more patient, he will hear what I have to say in the rest of my speech on those and other matters, but the Secretary of State was on his feet for 35-plus minutes, so the hon. Gentleman has not been waiting too long yet.

It is time for a wider review of whether we have the right balance between Ofwat’s regulatory role and the need for a powerful champion for consumers. The review should consider the future relationship between, and roles of, Ofwat and the Consumer Council for Water. I believe there is a need for a proper ombudsman role because adequate powers of redress for customers do not currently exist. The Bill should have established such an arrangement rather than simply arranging for it to be possible at some undefined point in the future.

The Government should also consider accepting the Consumer Council for Water proposal for it to be given enhanced rights to be consulted on each water company’s charging scheme and any changes to it, and a continual scrutiny role to “find and fix issues”, as it puts it, as they arise. I believe there is merit in those proposals and hope Ministers agree.

The second major change the Opposition want during the passage of the Bill is the introduction of a clear legal requirement on water companies to sign up to a new national affordability scheme. When I raised that with the Secretary of State last Thursday, he responded:

“The Government encourage water companies to introduce social tariffs for vulnerable consumers and to reduce bad debt.”—[Official Report, 21 November 2013; Vol. 570, c. 1350.]

However, it is absolutely clear that his encouragement is not enough. Just three companies have introduced social tariffs, with fewer than 25,000 customers receiving assistance. Considering that Ofwat estimates that 2.6 million households, or 11%, currently spend more than 5% of their income on water, it is clear that only a tiny fraction of those struggling are being helped.

[Miss McIntosh]

The hon. Lady will recall that the Flood and Water Management Act 2010 contained provisions for social tariffs, but the Department for Work and Pensions refused, as it continues to refuse, to allow the information relating to benefits to be released. I cannot understand why that is the case, but why did Labour Members not push harder for that information to be released when Labour was in government?

[Maria Eagle]

The hon. Lady has a point, and I will shortly say something about what I believe we ought to do about it.

It is not good enough that so few customers can benefit or receive assistance when they have genuine hardship in paying. It is time to replace voluntary social tariffs with a national affordability scheme, funded by the water companies from their excess profits. We need to end the postcode lottery that means that the help one can get depends on where one lives, and we need the Government to set clear eligibility criteria.

In response to my question last week, the Secretary of State said:

“The shadow Secretary of State has to recognise that the schemes that help some water bill payers are paid for by others.”—[Official Report, 21 November 2013; Vol. 570, c. 1352.]

Of course, that is the Government’s approach because he is not willing to stand up to vested interests. He is not willing to say to the water companies that they cannot continue to pay out almost every pound they make in dividend payments—£1.8 billion last year—and leave it solely to other customers to fund measures to help those in need. The Government should finally drop their opposition to a national affordability scheme and require the water companies to step up and meet their social obligations.

--- Later in debate ---

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I welcome the Bill and would like to thank both my right hon. Friend the Secretary of State and the hon. Member for Garston and Halewood (Maria Eagle) for their kind words about the work that my colleagues and I have done on the Select Committee on Environment, Food and Rural Affairs. We must have done something right, as no fewer than four of our erstwhile colleagues serve on either the Government or the Opposition Front Bench. We shall obviously continue to maintain our rule of scrutiny with ever-increasing vigilance.

Today is the anniversary of the floods in Malton, Old Malton, Norton, Brawby and elsewhere in my constituency. In fact, I had to take a 10-mile detour because there was a lake outside my office, which I could not access as I normally would. The floods started in November and went on, intermixed with snow, until about March or April. It is therefore timely that we debate the Water Bill today. There is much in it to commend. It has been a long time in progress and, as the hon. Lady said, there remains a great deal of unfinished business from the Pitt review, the Walker review and the Cave review and, indeed, the Flood and Water Management Act 2010. The largest and most significant recent development since 2007 has been surface water flooding. It is a new threat, particularly with water running off the road in just about every constituency of every Member who has spoken in the debate thus far.

[Nia Griffith]

Given that the Flood Re scheme does not apply to properties built after 1 January 2009, does the hon. Lady agree that planning authorities need to be ever more vigilant not only in refusing to build on floodplains but in avoiding the knock-on effects of building in certain places that can have devastating effects on existing properties?

[Miss McIntosh]

I am grateful for the intervention, but I think the hon. Lady misses the point that so many other people do. Water running off the road in this way is a new development. While the water is on the surface of the road, it is the responsibility of the highways authorities, whether it be the Highways Agency, the county council or the unitary council. As soon as that water runs off the road and goes into a combined sewer, it most frequently becomes the responsibility of the water company.

I believe that the Government should look at the possibility of creating a statutory responsibility on highways authorities—and should be supported by the whole House in this—for surface water while it is on the road. [Interruption.] The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson) mutters under his breath, “What will the cost be?” I do not care what it will be: if we are to have sustainable drainage systems, we have to look at creating a system that will retain the surface water on the road and stop it going into the combined drains and sewers. That has been happening since 2007, for nearly seven years. Surface water has been mixing with sewage and coming into homes, such as the home of Mr and Mrs Hinds, causing health-related and very antisocial problems. Successive Governments have failed to deal with the issue, but I believe that the Bill presents us with a unique opportunity to sort it out.

According to the Environment Agency, 2.4 million properties in England are at risk of flooding from rivers and the sea, 1 million of those properties are at risk of surface water flooding, and a further 2.8 million properties are at risk of surface water alone. The agency estimated that the cost of the 2012 floods was £600 million. I agree with my right hon. Friend the Secretary of State that we need not just to grow the economy, but to limit the damage caused to it by floods.

It is regrettable that the sustainable drainage system that was envisaged in the Flood and Water Management Act 2010 has still not been implemented. I understand that discussions are taking place and that it is all very difficult, but we must get our heads around this. It is not impossible, although the difficult aspects may take a little longer to address. I urge my hon. Friend the Minister to rise to the challenge, and to introduce SUDS before April next year. It is unacceptable for my constituency and others elsewhere in the country to face a possible flood threat this very week because we have not put secondary legislation on to the statute book.

I am at my wits’ end because we have still not implemented the Pitt recommendation that the automatic right to connect should be removed. Sustainable drains are a significant aspect of that. The Environment Agency is already a statutory consultee, but we have not accepted that water companies should have the same status. I believe that they should be able to say, frankly and honestly, that in the case of major developments, there should be no ability to connect without a significant new investment.

[Andrew Percy]

Proposals for new housing in Goole pose the double threat of river and surface water flooding, and are therefore unacceptable to local communities. Goole has been flooded for about five of the last eight years. We want sustainable drainage systems, so that if the new housing development proceeds, it will have no further impact on our already creaking drainage system.

[Miss McIntosh]

I hope that we will all continue to press the Government to proceed with SUDS.

As for abstraction, I can only support what other Members have already said. Abstraction has an important part to play in resilience in times of drought and, potentially, in times of floods, when there are competing demands for the water supply. I urge the Government to show a greater sense of urgency. My right hon. Friend the Secretary of State said that they would be consulting shortly, and it would be helpful to know when that consultation might take place.

The water White Paper, which we also scrutinised, placed great emphasis on the importance of resilience and the need for innovation to improve it, but I think that the Bill has toned down that emphasis slightly. I hope that the Government will find renewed enthusiasm for resilience. There will always be competing claims from the farming industry and angling, but we must not forget jam-makers such as those whom I visited in the constituency of my hon. Friend the Member for Witham (Priti Patel), as well as brewers and other industrial users.

The role of the Environment Agency has been extremely positive, and fewer properties have been built on functional floodplains since it became a statutory consultee. However, I believe that it could do much more to share information, particularly mapping information. It is extremely frustrating for constituents not to be able to access a single map. Sir Michael Pitt—from east Yorkshire—was very clear in that regard, and I think that we owe him a great debt of gratitude for the work that he has done. I believe that there should be a one-stop shop for our constituents, and that they should be able to know exactly where to go.

[Mr Graham Stuart]

Does my hon. Friend agree that not only is mapping important, but it is important for maps to be updated quickly? Following the completion of a £3 million flood defence scheme in the village of Burstwick, in my constituency, it took more than a year for maps to be updated, and during that time residents were still being asked for higher insurance premiums because the insurance companies did not have access to the information.

[Miss McIntosh]

My hon. Friend has eloquently re-emphasised the point that I was making.

[Diana Johnson]

Does the hon. Lady share my concern about the fact that the Environment Agency will not be producing its compound risk maps until the end of 2015? It is taking far too long to convey the necessary information to insurance companies and to constituents.

[Miss McIntosh]

I do regret the amount of time that it is taking.

The Select Committee was very disappointed to hear how little maintenance and dredging of watercourses has been taking place. While it is always pleasing to see capital expenditure increase, the evidence that we heard was more than anecdotal: it is an absolute fact that, were there to be regular maintenance and dredging of the main and even the minor watercourses, floods could be prevented. I urge the Government to spend more than just £20 million per annum in England for that purpose. I also urge them to allow the drainage boards, which do such excellent work, to keep the money rather than passing it to the Environment Agency, and to agree a work programme with the agency but use their own drainage board engineers for the maintenance and dredging.

[Neil Parish (Tiverton and Honiton) (Con)]

I agree wholeheartedly that drainage boards could do much more work. The money that they spend often goes a great deal further than the excessive amount spent by some public bodies. As the Secretary of State is aware, the Parrett and Tone rivers in Somerset are completely silted up and they need to be dredged quickly.

[Miss McIntosh]

I am sure that the whole House, including the Secretary of State, has heard what my hon. Friend said. Dredging little and often can prevent floods. The drainage boards have an army of volunteers, a huge fount of knowledge and, probably, more engineers than the Environment Agency.

I am delighted that the Government have authorised the pilot schemes, and the Select Committee will observe the outcome very closely. I commend the Pickering pilot project, which is one of those schemes at which this country excels. It has already slowed the flow, it is creating new peat bogs, and it is holding water back so that it cannot flood Pickering. If we can succeed with a combination of slowing the flow and building a reservoir, not only will Pickering be safe from flooding, but the benefits of the pilot can be used elsewhere, and resilience to flooding and possible water shortages can be improved.

I believe that the 2014 price review gives us an opportunity to invite Ofwat to reward innovation, which it is not doing at the moment. Ofwat should invite water companies to show that they can bring positive benefits to consumers by creating innovative flood defence and water supply schemes like the Pickering project, and to include such proposals in their business plans. I regret that that did not happen in earlier price reviews and this is a unique opportunity to do that.

I also invite the Government to engage much earlier with EU directives. I yield to no one in respect of the benefits they can bring, but they can be very costly. If we sign up to very short-term, tight timetables, that adds to the costs. My right hon. Friend will be aware of the EU water framework directive, the bathing water directive, the drinking water directive, the urban waste water treatment directive and others. We have to get in there early and put our views across. Their aims and objectives are laudable, but they must be affordable and done on a realistic timetable.

[Mr Graham Stuart]

My hon. Friend made an important point about dredging. It is essential to ensure that unnecessary costs are not imposed on those who try to carry it out. South Holderness drainage board raised money locally to dredge Stone creek and Hedon haven, but then found that the Marine Management Organisation —which, as on previous occasions, would not have charged the EA anything—imposed a cost of several thousand pounds on the drainage board and then at the end more than doubled that amount, imposing a crippling cost on local people raising local money to try to do the right thing.

[Miss McIntosh]

I thank my hon. Friend for that.

I want to mention briefly some new aspects of the Bill and some omissions. On the omissions, bad debt costs each and every household approximately £14 a year. That is unacceptable. We need secondary legislation to progress this matter, and I urge the Government to bring that forward as swiftly as possible.

On social tariffs, I fail to understand why successive Governments have had difficulty in releasing information on benefits. In response to a recent question to the Department for Work and Pensions, the following answer came back from the Minister of State, my hon. Friend the Member for Hemel Hempstead (Mike Penning):

“There is no legislation in place currently”—

well, I knew that and I told him that, but it is always good to know I was right—

“that would permit the release of benefits information to water utility companies: it is likely that new legislation would be required to enable the sharing of benefits data with water utility companies on this scale.”—[Official Report, 18 November 2013; Vol. 570, c. 681W.]

I urge my right hon. and hon. Friends to put pressure on the DWP to release that information so that we can make the best possible tariff available to the appropriate customers at the earliest possible time.

On insurance, the Select Committee came down in favour of Flood Re, but there are a lot of unknowns, and I do not believe we know any more about the known unknowns than we did before this debate started. For example, under Flood Re, why have we chosen household bands as the basis for insurance levy scales? If there is a database, where is it? What is the definition of uninsurable properties? Are small businesses excluded? If they are to be excluded, why are they excluded? It has been put to me that farms might be excluded. Obviously, that would not go down well in my area. I would quite like to know before the end of the evening whether farms and small businesses are going to be excluded.

The memorandum of understanding between the Government and the insurance industry commits the Government to take primary responsibility as an insurer of last resort in an extreme flood event while the fund is growing. We need greater clarity this evening, before the Bill goes on to Committee, on precisely where we are in that regard. The House would also like to know whether the Bill achieves the normal historical value for money requirement in respect of such proposals.

The Select Committee welcomes the commitment to open up the retail market to competition by 2017, but we believe the case for upstream reform needs to be made more vigorously. We need to know precisely what the implications are for customer bills. It has been put to us that there might be de-averaging of household bills. We also need to know the implications for national resilience of upstream reforms, including in respect of climate change and population growth. We note that the start date is two years later, but the House would like to know whether it is feasible at all and whether we even need primary legislation.

It is true that the Select Committee came down in favour of functional separation between the wholesale and retail arms and in favour of a voluntary exit strategy. We would like to hear a little more when the Minister winds up about why the Government are against that.

Members on both sides of the House are interested in cost of living issues, of course, and we need greater assurances on the impact on householders. The Flood Re levy has been set at £180 million per annum, which is £10.50 per customer, for the first years. We also need to know the timetable for the application for state aid. It would be helpful to know that we are going to be in a position to have signed off on state aid before this Bill leaves the House and achieves Royal Assent and, more importantly, by the start date of 2017. Concerns have been expressed about stranded assets and the impact on household customers generally, particularly from the Flood Re insurance levy, and the formalising of the cross-subsidy that has existed under the statement of principles.

To conclude, the potential risks of de-averaging prices in respect of household customers and upstream competition must be addressed. On the comparative merits of the Ofwat duty, we would prefer sustainable development as opposed to the Government’s proposal of resilience. That needs to be explored. We also need to look at possible greater resilience in terms of both water supply and the use of abstraction, and we need the review of abstraction policy sooner rather than later. We applaud the sustainable development and wider environmental aims of biodiversity protection and climate change mitigation, but I personally would argue that this should be addressed through Ofwat’s primary duty of sustainable development. The Government need to explain how the transition in the insurance sector from the cross-subsidy being formalised in Flood Re to an eventual free market will be managed. I believe this is too important to leave to secondary legislation and we need more details in the Bill.

I give the Bill a warm welcome. I have highlighted a number of concerns which I hope will be addressed and I look forward to hearing the rest of the debate.

--- Later in debate ---

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

The Bill does not excite people or generate much interest outside the House. Right hon. and hon. Members who have been involved in previous debates on this issue have shown that they have a depth of knowledge that spans time frames that go back much longer than I have been in the House. However, my constituents have concerns about their rising water bills, and because of their worries and sleepless nights, I am speaking in this debate.

The Bill provides an opportunity to introduce measures to help those who are struggling to pay their water bills and measures to toughen the regulatory regime under Ofwat. In announcing the draft Bill, the previous Secretary of State, the right hon. Member for Meriden (Mrs Spelman), said that it would ensure

“that the water industry continues to provide an affordable and clean water supply”.

Earlier this month, a spokesperson for No. 10 said that the Prime Minister takes the price of household bills seriously:

“The Prime Minister wants to see household costs across the piece being reduced as low as possible. The intention is to try to reduce the burdens on hard-pressed families.”

It is therefore reasonable to ask why the Bill delivers so little for those people. It will not help families who are faced with rising water costs; nor will it empower Ofwat to become the champion for the consumer that it needs to be.

For those who, like me, are new to Parliament, I will remind the House of some of the history of water affordability. The only time when water charges have been reduced was under the last Labour Government. The average water bill in my constituency is now £359 per year and has increased nationally by almost 50% since privatisation was introduced by the Conservative Government in 1989. At the same time, regional water companies made £1.9 billion profit last year. I and my colleagues in the Labour party have been campaigning hard on energy prices, but the situation with water bills is no better—indeed, some would say that it is worse.

Although households spend less on water as a flat figure, the proportion of a water bill that goes towards company profits is three times higher than for an energy bill. As with energy prices, the rising cost of water far outstrips both earnings and inflation. Water is a natural resource; it is essentially free; and it is essential for our survival. Management of that natural resource therefore needs to be conducted with some kind of social responsibility.

During a cost of living crisis, affordability must be the absolute priority, and the Bill must do more to ensure that water companies’ profits are not put before the needs of consumers. The coalition agreement clearly stated that the Government would

“examine the conclusions of the Cave and Walker Reviews, and reform the water industry to ensure more efficient use of water and the protection of poorer households”.

That is one statement that they have not been able to delete.

In 2009, the Consumer Council for Water stated that

“many low income customers continue to pay their water bills even where it becomes unaffordable to do so”.

It claimed that people tend to

“cut back on water usage or sacrifice other essentials such as food or heating in order to ensure their bill is paid”.

The problem now in my constituency is that people are already cutting back on food, heating and water. Since the Government continue to legislate in a way that exacerbates poverty, what are my constituents supposed to do? What should they cut back on next—fresh air perhaps? They have nowhere left to go.

[Miss McIntosh]

I am following the hon. Lady’s contribution with great interest, and she is a leading member of the Environment, Food and Rural Affairs Committee. Water, however, is not free. Drinking water must be processed, as must the foul water that comes from every home. I hope that she will take the opportunity to go to a waste water treatment plant and see the full gamut of where a lot of the costs come from.

[Mrs Lewell-Buck]

I thank the hon. Lady for that intervention and I will take up that offer. I was being glib when I said that water is free. I meant that to most people, including my constituents, water falls from the sky and is therefore free, but I understand the hon. Lady’s point.

People in my constituency are clear in the knowledge that water bills are likely to rise in the future due to a growing population, climate change, the replacement of water infrastructure and additional environmental standards. Under the previous Labour Government, the Walker review, which was published in 2009, advocated affordability and made a number of recommendations to ensure that water remains affordable for all. Two years later, the current Government published a consultation on those proposals and rejected universal discounts, which they cited as “unaffordable”, for people on low incomes and minimum discounts for low-income households with children. Instead, the Government opted for WaterSure and social tariffs, and repeated that intention in the “Water for Life” White Paper.

WaterSure intends to cut costs for households that have a water meter and more than three children under 19 years old and that claim a range of benefits including council tax benefit, housing benefit and employment and support allowance. The scheme ensures that those families pay only the average for their region, so adding approximately 40p to the bills of those customers not on the scheme. Water Direct is another scheme whereby the Department for Work and Pensions subtracts money from the benefits of those who are in debt to their regional water company and sends it direct to that water company. What is not clear, however, is how such schemes are likely to be affected by the introduction of universal credit, and that creates uncertainty for a number of families.

Social tariffs allow water companies to develop tariffs in consultation with customers, with the intention of helping the most vulnerable. However, the Government’s implementation of those tariffs falls a long way short of dealing with the scale of the problem. In evidence to the Environment, Food and Rural Affairs Committee, the Consumer Council for Water estimated that to “effectively address the problem” of affordability would cost anywhere between £162 million and £447 million. The Walker review’s estimate was £340 million, yet it predicted that social tariffs would generate only £36 million a year, adding that that was

“significantly short of what is needed to address affordability”.

Even that limited impact may not be felt in the majority of regions.

Rather than take strong action to ensure that companies have a duty of affordability, the Government introduced tariffs on a voluntary basis from April this year. So far, only three companies have taken that up. Northumbrian Water—my local provider—certainly found little appetite among customers for the implementation of a social tariff. That is hardly surprising when so many people are already struggling to afford bills with stagnating wages. In constituencies such as mine, such a tariff would make water less affordable for even more people.

It is no surprise that the Government’s light-touch solutions have done little to help consumers. Citizens Advice has expressed disappointment that the Government’s guidance for social tariffs is “lacking in detail” and that water companies have been given freedom to ignore it completely with little or no justification. It is no coincidence that Citizens Advice has reported increasing numbers of people coming to it with inquiries about water debt. It is not only Citizens Advice that recognises the problem. This afternoon, I spoke with Northumbrian Water, which is anticipating a rise in debt over the next year, linked to the severity of public sector cuts in our region. It now works closely with Citizens Advice, recognising that if someone is struggling with their water bill, they are likely to be struggling with other bills as well. In short, it is a wider problem than just water bills—it is a cost of living crisis.

The Government clearly do not recognise the need for decisive action. Last week at DEFRA questions, the Secretary of State said that he had written to water companies, calling on them to consider the pressure on household incomes and advising that the Government encourage water companies to introduce social tariffs. As Secretary of State, should he not be doing more than just encouraging and advising? Is simply writing to the water companies the best he can do?

The United Nations recognises water as a basic human right that should be

“available, accessible, safe, acceptable and affordable for all without discrimination”.

Why then are the Government not committed to ensuring just that—that water is affordable for all?

--- Later in debate ---

[Dan Rogerson]

I agree that, as my right hon. Friend the Secretary of State said, we need to capture more of this water and make it work for us in such a way that we can improve environmental outcomes as well as resilience. That is very much what we want to happen.

[Miss McIntosh]

In terms of capturing water, is my hon. Friend going to deal with SUDS and surface water, because I know that he will care as passionately about this in his new position as he did when he was a member of the Select Committee?

[Dan Rogerson]

I had a premonition that I might get such an intervention from my hon. Friend, the Chair of the Select Committee. I know she is pleased that we are, as a Government, making progress towards implementing this process in April 2014. She would like it to be sooner, but we have to make sure that we get it right. The views of the Select Committee have been very useful in making sure that we get it brought in adequately.

We heard a couple of very specific questions on market reforms. My hon. Friend the Member for St Austell and Newquay asked about small charities that operate from residential properties. The reform would affect non-domestic properties, so if a charity is operating from a property that is primarily residential, it will not have access to it, but it will be open to it if it is operating from other premises.

On abstraction reform, I entirely agree with Members’ comments about the need to tackle abstraction, which is damaging our rivers. We are tackling this in two ways. First, we are taking action using the tools already available to address over-abstraction. The Environment Agency has reviewed thousands of abstraction licences and has changed about 80 of them, returning 75 billion litres of water per year to the environment in England. That is equivalent to the annual average water use of a city larger than Birmingham. There is clearly a lot more to do in the individual catchments that have been mentioned, and we have to take account of the stress that is put on them.

The Bill will also help by removing water companies’ right to compensation to ensure that the funding of these schemes moves into Ofwat’s price review process, which is a far better way of tackling over-abstraction. In the longer term, we need a reformed regime fit to face the future challenges, and we will publish a consultation on possible options in December. [Interruption.] These reforms will affect a range of businesses, so we need to get them right.

Oral Answers to Questions

Baroness McIntosh of Pickering Excerpts

Thursday 21st November 2013 Commons Chamber

[Mr Paterson]

I am grateful to the hon. Gentleman for his question. Unfortunately, he did not listen to my preceding answer, which was that under the watch of his Government—because Ofwat did not do its job and because, as with the banks, the last Government did not regulate properly—bills went up. We are fully conscious of the impact of bills on our hard-working constituents. We have a robust regulator in Mr Jonson Cox. It is clear from his statements and negotiations that he expects water companies to hold or reduce prices, while continuing with the enormous investment that privatisation has brought. Do not underestimate the £116 billion that has been brought into the industry, which will make it efficient and keep bills down.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Does the Secretary of State agree that a large component of the increase in the cost of water bills comes from European directives, such as the waste water directive, the urban waste water directive, the bathing water directive and the drinking water directive? All of us would support those directives, but will he commit to the earliest possible engagement of the Department and Ofwat in limiting the cost of implementing them?

[Mr Paterson]

I am grateful to the Chair of the Select Committee for that question. She is absolutely right that we are bound by European law and regulation in this area of competence. We intend to regulate the industry in conformity with those laws. There is a balance to be struck. As I have mentioned, since privatisation, £116 billion has been brought into the industry. We have improved the quality of our rivers and water enormously, but we have to respect the impact of bills on our hard-working constituents.

--- Later in debate ---

[Sir Tony Baldry]

The pay of clergy and how clergy are organised is a matter for the diocese and the local bishop. The hon. Lady has kindly written to me about this issue, which is causing her concern. I will, if I may, take it up with the Bishop of Lichfield and come back to her.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Local churches are at the heart of rural life. We have parish priests who are asked to look after sometimes four, five or six parish churches. Can we keep that situation under review? We want to keep the parish churches open, but it is more than humanly possible for one person to nurse so many parish churches.

[Sir Tony Baldry]

Those are all challenges that we face. How we maintain and keep churches open in rural areas and ensure good ministry for new housing estates in urban areas are the responsibilities of diocesan bishops. We are fortunate in having some excellent new stipendiary clergy coming forward and a large number of self-supporting ministers who support the work of the Church of England. The point that my hon. Friend makes is a good one. Essentially, the Church of England has to be a national church, serving all parts of the country, and we are determined that it should continue to do that.