Water Bill

Debate between Baroness McIntosh of Pickering and Emma Lewell-Buck

Monday 25th November 2013 Commons Chamber

[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?