Water Bill

Baroness Parminter Excerpts

Monday 27th January 2014 Lords Chamber

[Baroness Parminter (LD)]

My Lords, I have neither the interests that the Minister had to declare nor the form of the Opposition Front Bench. Indeed, this is the first Bill that I will be taking through this House on behalf of the Liberal Democrat group. I may not have the interests or the form but I certainly have the passion to ensure that the Bill delivers to meet the challenges that our water resources currently face.

Only one in four of our rivers and lakes is a fully functioning ecosystem. Equally troubling, many of our water supplies are under pressure from unsustainable levels of abstraction and the combined effect of climate change and a growing population. Liberal Democrats accept that each generation is responsible for the fate of our planet so it is no surprise that we want to protect natural resources, on which future generations and economic prosperity depend. We therefore support the Bill, which sets the framework to improve the health of our precious lakes and rivers while keeping water available and affordable.

We are members of a coalition Government so of course there are areas where we would like to see the Bill go further. Opening up the upstream water market should go hand in hand with the reform of the abstraction licensing regime, rising demand for water should be tackled by greater metering and affordable flood insurance should equally help to build up our resilience to future flooding. These are areas that I will be seeking to strengthen in the Bill through clarification and amendment.

I credit Ministers who have gone a long way to meet the widely held aspirations for a stronger commitment to sustainable resource management in the remit of the water regulator, Ofwat. The introduction of a primary duty to secure the long-term resilience of water supply and sewerage systems is significant, and made all the stronger by the new Minister, Dan Rogerson, during the Bill’s passage in the Commons. To make crystal clear the Government’s intention to protect our natural resources, I would hope that Clause 24 could be amended to oblige rather than invite future Governments to take into account social and environmental matters when drawing up future strategic priorities and objectives for Ofwat. I invite Ministers to reflect further on that.

It is a disappointment that the Government are not legislating now to reform the water abstraction regime. The current system, in place for more than 40 years, has left ecosystems damaged. As the House of Lords EU Sub-Committee D’s 2012 report into EU freshwater policy said, and I must declare an interest as a member of that committee,

“delaying this reform for at least 15 years fails to respond to the urgency of the situation”.

Like the Opposition, we on these Benches think that without the proposals for abstraction reform running in parallel with those that create a market for trading water, there is significant risk to our scarce water resources. The Government’s consultation document on abstraction reform confirms as much, saying:

“Significant volumes of water are licensed but unused. If this water is used, for example, as a result of increased trading in a reformed system, this could cause environmental deterioration”.

Equally, the Environment Agency has identified a large number of catchments where increased trading could leave less water in river or groundwater than is needed to maintain required environmental standards.

The Government so far have committed that the timetables for both reforms are “likely to be broadly similar”. We need assurances that proposals for upstream reform, which are in the Bill and which could come into force by 2019, will be fully aligned with reform of the abstraction regime, which is not legislated for. In the absence of the Minister being able to give such assurances, there must be further environmental safeguards put in place prior to the introduction of upstream competition.

Liberal Democrats support the proposals to open up retail competition in the business market which has worked so well in Scotland, saving money for businesses, charities and public authorities with multiple sites and enhancing water resource management. However, in Committee we will seek clarification over the proposals to open up the upstream wholesale market to competition. While this may make trading between water companies easier, this theoretical market model seems to include the potential for the de-averaging of prices and currently lacks parliamentary scrutiny of central elements, such as the setting up of the market operator.

Managing water resources for the long term has to take account of affordability for consumers now, with more than 2 million households currently spending more than 4% of their income on water bills. This coalition Government are to be applauded in getting more families on low incomes out of paying tax to boost the money they have to meet household expenses. The water companies could do far more to bring those household expenses down by more firmly tackling bad debt which adds £14 to all our water bills. Recognising that finding non-payees is critical and that 80% of them are in rented households, a voluntary database for landlords to register tenant details will soon be introduced. In Committee in the other place, Water UK expressed the view that a voluntary approach simply does not work, a view echoed by the EFRA Select Committee. The evidence of Northumbrian Water which has had such a website for two and half years shows that only 7% of landlords have registered, and they were the landlords who were already committed to tackling the issue.

Why are the Government, unlike the Welsh Government, not implementing the bad debt provisions in the Flood and Water Management Act 2010 which would make compliance with the database mandatory when such a move could help company debt recovery and bring household bills down? Do the Government support the fixing of the date for implementation of those proposals, should the voluntary database fail to work?

The Bill rightly seeks to build up our national water resources, but unlike the water White Paper, there is insufficient focus on the equally important issue of demand management. The Government argue that this can be pursued outside legislation, and of course it can. Indeed, it is good to see the recent changes Ofwat has made to its calculation of a total expenditure approach which should incentivise water companies to use demand management and green solutions such as water catchment management as opposed to capital investment, but we need leadership on metering to help tackle the demand for water, and such leadership should be reflected in this Bill.

In the UK, every person uses about 150 litres of water a day, which is one of the highest levels in Europe. Anglian Water confirms that households which are metered use 10% to 15% less water, yet less than half of the country is presently on a water meter, and current water company plans aim to reduce water usage by just 5 litres a day per person by 2020. Metering gives consumers greater control over their water consumption and the chance of improved affordability. It also helps water companies target households using large amounts of water, provide water efficiency support and tackle leaks. The case for smart water metering, combined with advice on how to reduce water usage and social tariffs which minimise affordability issues for disadvantaged heavy-use households, is strong. The independent Walker review in 2009 recommended a widespread switchover to metered charging. This conclusion was supported by the EFRA committee and more recently, at Second Reading in the other place by the former Defra Minister, the honourable Member for Newbury, who called for a possible legislative stimulus for metering, adding,

“knowledge is power for households”.—[Official Report, Commons, 23/11/13; col. 79.]

The Government’s response in the other place was that companies might invest a lot of money in meters that,

“could be spent on other infrastructure”.—[Official Report, Commons, Water Bill Committee 10/12/13; col. 164.]

Surely this Government believe it is for companies to decide their own business priorities within the framework set by government and the regulator. At present, if a company wants to consult its customers about introducing compulsory meters, it cannot unless the Secretary of State determines that either the whole or part of the area of that company is one of serious water stress. Location should not be a bar to action, and so I will table an amendment to the Bill to remove this restriction on business and send a strong signal to water companies about moving towards universal metering.

Like many in the House, I feel deep sympathy for those who, as a result of recent flooding, face the worry, upheaval and stress of rebuilding their lives. I am sure that we will hear more about the impact of flooding in Somerset from my noble friend Lady Bakewell of Hardington Mandeville later. The fact that the Bill guarantees affordable flood risk insurance to all householders is therefore extremely welcome and Ministers are to be congratulated on negotiations with the insurance industry which could deliver this.

Flood Re will be a private sector body handling public money and, as such, its aims should clearly reflect the need to act in the public interest and to incentivise householders to reduce their flood risk over time. By amending Clause 51 in this way, we can transition to a stronger place at the end of the scheme’s 25 years. By doing so, it will reflect the Liberal Democrat view that to successfully manage flood risk we need a greater people and community focus, not just a focus on institutional responses, with their infrastructure plans for flood defences and installing huge pipes. Moreover, given that a number of new clauses were added in Committee in the Commons and therefore lacked pre-legislative scrutiny, I and my noble friend Lord Shipley, who sadly cannot be here today, look forward in Committee to teasing out a number of questions about Flood Re’s operation and the ability of key agencies and local communities to respond to the flooding challenges which the adaptation sub-committee of the Committee on Climate Change recently set out so clearly.

In conclusion, Liberal Democrats strongly welcome the Bill. It will help to meet the Government’s stated goal of securing the most efficient use of scarce water resources. I have, however, highlighted a number of areas which I hope will be addressed in Committee, and look forward to participating enthusiastically as the Bill passes through this House.