Water Bill

Debate between Lord Oxburgh and Baroness Northover

Tuesday 25th March 2014 Lords Chamber

[Lord Oxburgh (CB)]

My Lords, I have to confess that this is a part of the Bill that I have not followed particularly closely, but I have listened to the government and opposition arguments with great interest today and, indeed, have sympathy with both. I would just like to ask the Minister—

[Baroness Northover (LD)]

I think the noble Lord is out of order. We are on Report, the Minister has spoken, and we are waiting for the noble Lord, Lord Whitty, to respond. The noble Lord can ask a quick question for clarification.

[Lord Oxburgh]

Thank you. The clarification that I seek is whether the Minister would be willing, when he brings back these amendments at Third Reading, to strengthen some of the words relating to consultation to something rather stronger and relating to an obligation.

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[Baroness Northover]

My Lords, I thank the noble Lord, Lord Oxburgh, for laying this amendment, and I think I thank the noble Lord, Lord Cameron, for his contribution, with all his liquid metaphors. I was pleased to speak at the WaterAid reception last night, which he attended, so I assure him—I think he knows it—that we recognise the importance of water, whether it is in developing countries or in the United Kingdom.

We have thought carefully about metering in bringing this Bill through Parliament. Our position on metering seeks to strike a balance between the benefits that metering brings and the consequences that it can have for customers and their bills. We agree that metering is a fair basis for charging, but we are also concerned about the potential impacts on struggling customers. As the noble Lord, Lord Oxburgh, has observed, any customer can request a meter. The company must then fit a meter for free. That customer has a year to decide whether to revert to paying according to the rateable value if it turns out that they are worse off.

We are already seeing increasing levels of metering across the country. Next year will see the number of metered households reach 50%, with a trajectory towards 80% by 2040. Where there is a credible economic case, any company may install meters across all or part of their area. The only restriction is on imposing metered charges on customers without their consent. Companies could, as the noble Lord, Lord Oxburgh, suggests, install a complete street or neighbourhood at the same time; and to answer my noble friend Lady Parminter, companies can put in meters throughout.

The evidence shows that the case for imposing metered charges on all customers in an area can be made in water-stressed areas where there is an insufficient supply of water to meet projected demand. The amount of available water varies around the country. When it makes social, environmental and economic sense to do so, charging all customers according to a meter is already a possibility, but in areas where water resources are not under pressure, imposing meter charges is restricted because of our concerns about affordability.

There are two sets of costs that must be considered here. First, the investment cost of installing meters across an area can put up bills for all the customers in that area. Secondly, imposing metered charges across an area can increase the bills of some of the worst off in society. This is not something that anyone wishes to do in areas that have sufficient water to meet demand.

The balance will doubtless change over time. With climate change and population growth, the case for universal metering in particular areas will no doubt shift. That is why we revised the water stress designation last year: to take better account of long-term climate projections and information about environmental pressures. We wanted to ensure that the designation of serious water stress is forward looking. It is also updated on a regular basis, and we will continue to keep the situation across the country under review. I hope that that does something to reassure noble Lords.

The noble Lord, Lord Oxburgh, asked me to clarify the circumstances in which companies can install meters, and he made the point that a number of organisations were not clear about the situation. I hope I have answered his question, but for the avoidance of doubt let me do so again for the record. Water companies are able to install meters wherever there is a good case for doing so. There is a variety of reasons why they may choose to do this, including to improve leakage detection and enhance their understanding of consumer behaviour. A number of companies already do this. What the companies are not allowed to do is to impose charges by reference to that meter without the householder’s agreement. The exception to this rule is in areas of serious water stress, for the reasons that I have mentioned. It is not the installation of meters, therefore, that is restricted; it is making people pay a metered charge without their consent in other areas. I hope that answers the noble Lord’s question.

The noble Lord also mentioned the complexity of the legislation in this area. We agree that the prescribed conditions regulations, which govern the restrictions around metering, are complex and hard to follow. I am glad to be able to confirm that under the Government’s Red Tape Challenge, we have a commitment to consolidate these regulations by April 2015.

Water companies can install meters wherever it makes sense to do so, but it is the householder who decides whether they wish to be charged by reference to it in the areas where that is permitted. There is flexibility to allow universal metering in the wider interest of water efficiency in areas of serious water stress. This is a careful balance. I hope that the noble Lord will be willing to withdraw his amendment, although I am sure he will do so with great reluctance.

[Lord Oxburgh]

My Lords, I thank the Government for their constructive response, and indeed for the clarification, which I think will be welcomed by many of the water undertakings that have expressed their concern about the present legislation and its lack of clarity. I would just comment that there is some concern, in so far as the noble Baroness referred to it, about the recent reclassification of areas of water stress. There is some disagreement that it is sufficiently forward looking. I am delighted to hear that the legislation is being looked at under the Red Tape Challenge. May we encourage the department in its efforts in that direction?

One disappointment is that, given the progress that has been made, the Government do not feel able to take the last step and say that there does not have be water stress if there is general agreement in an area that this would be the most cost-effective and generally acceptable way of charging. However, under the circumstances, I beg leave to withdraw the amendment.

Water Bill

Debate between Lord Oxburgh and Baroness Northover

Tuesday 11th February 2014 Lords Chamber

[Lord Oxburgh]

Amendment 161A scarcely needs any detailed discussion: we have spoken this afternoon on a number of occasions of the importance of getting information to people. Certainly, this was a plea that came to us through many of the verbal representations that we had when we saw various interested groups in the lead-up to the discussion of this Bill. I simply offer this proposal to use council tax demands as a simple and almost cost-free way of disseminating information very widely, reminding people on an annual basis of their vulnerability to flood. It could serve as a portal to the various schemes and proposals that we discussed this afternoon.

[Baroness Northover]

My Lords, I am grateful to the noble Lords for their amendments. We are certainly supportive of their intentions in tabling them. The provision of information to households at risk of flooding is vital for managing the costs and impacts of flooding. We believe that it is essential that households benefiting from Flood Re should know about Flood Re and actions that they could take, for example, to reduce flood risk, allowing them to plan for the future. This was a key issue in the public consultation on flood insurance; some of the issues in these amendments echo some of the issues raised in earlier groups, which my noble friend Lord De Mauley has addressed.

The noble Lord, Lord Grantchester, rightly emphasised transparency; we certainly agree with that. As my noble friend Lord De Mauley has just pointed out, the Government have agreed with the Association of British Insurers the principle that insurers will be required to provide information to customers, both when a property is ceded to Flood Re and at the point of a claim, highlighting their flood risk. We are also keen to ensure that Flood Re plays its part in managing the transition to risk-reflective pricing, which we discussed earlier. We are continuing to develop with the ABI proposals in this area. We strongly believe that it is equally important that households outside Flood Re are aware of their flood risk, and the Government are committed to making this information available to the public. That is why we already have systems in place, through the Environment Agency and its devolved equivalents, to provide this information.

In England, the Environment Agency already makes comprehensive and searchable flood risk data available on its website. This has enabled people to check their flood risk from rivers and the sea and take action to prepare for flooding. The agency provides the same information for insurers to use. In addition, last December, the Environment Agency published surface water maps for all areas of England on its website and will produce a combined map, showing all sources of flooding, by December 2015. This work further helps improve public understanding of their flood risk and I hope noble Lords will be further reassured by that. While this places the onus on home owners to seek the information themselves, it provides clear information to households, is well established and is actively promoted by the agency.

The noble Lord, Lord Grantchester, raised the point about people buying properties. Clearly, anybody purchasing a property should check their flood risk by commissioning property surveys and searches or, alternatively, information on surface water risk that has been available in recent years on request from lead local flood authorities. If they conduct those kinds of searches and surveys, then this kind of information should emerge. Clearly, if, having discovered the flood risk, they discuss it with whomever they are buying their property from, the issue of Flood Re would no doubt enter their discussion.

Since June, we have been working with the insurance industry to go even further to improve the data available on flood risk. We have now agreed that the Environment Agency, and its devolved counterparts, will be able to access Flood Re’s data on where the highest-risk households are. This will help the Environment Agency to improve its own mapping of flood risk and will mean that our record levels of flood investment can be targeted at those areas most at risk.

To add to what I have said to the noble Lord, Lord Grantchester, I also point out that the seller is required to fill in a property information form—he will be aware of that—as part of the conveyancing process. This form asks questions about the flood risk history of the property, and if the seller provided misleading information there would be potential for the buyer to seek damages.

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[Baroness Northover]

Advice on obtaining flood insurance is also readily available. The National Flood Forum offers independent advice and guidance on how to go about getting insurance and how to reduce premiums and excesses. Separately, the Government have published a guide that provides advice on how to obtain affordable cover. We recommend that anyone finding it difficult to obtain insurance should talk to a broker and shop around—this was referred to by the noble Lord, Lord Krebs—as this is the best way to make sure that they get the best price for their insurance. There are a range of organisations that can provide help and advice, such as the British Insurance Brokers’ Association and the National Flood Forum. We hope that this reassures noble Lords and that they therefore will be content not to press their amendments. I am happy to write with further details about those people who are seeking to purchase properties.

[Lord Oxburgh]

Before the Minister sits down, would she care to comment on Amendment 161A?

[Baroness Northover]

As the noble Lord said, this creates a duty on bodies that issue demands for council tax,

“in an area designated as liable to flooding to include prominently on or with such demands the information that the relevant property lies within a flood risk area and information on where relevant advice on flood insurance may be found”.

I hope that even though I did not make explicit reference to the noble Lord’s amendment, I have laid out for him where the information is already provided, which is why we do not believe that his explicit reference is required. If the noble Lord looks at what I have said and is not reassured by what I have laid out in terms of addressing the substance of what he seeks, maybe we can have further discussions after Committee.

[Lord Oxburgh]

I simply say that there is a big difference between having information available—I readily concede that the Government are doing that with their proposals—and ensuring that people know about it and are reminded of its importance.

[Baroness Northover]

As I said in my response, we are putting the onus on home owners to seek the information—and I have indicated where that can be acquired—rather than to receive the information, as the noble Lord suggests. I appreciate that this may not be quite as strong as he would wish, but nevertheless there are a number of different sources for this information and a number of ways in which property owners, when they are ceded to Flood Re, will be informed as to their status. If they make a claim they will obviously be informed that that is the case. Therefore there are a number of ways in which they will receive information, even if it is not quite as comprehensive as the noble Lord might wish.

Water Bill

Debate between Lord Oxburgh and Baroness Northover

Thursday 6th February 2014 Lords Chamber

[Baroness Northover (LD)]

My Lords, I thank the noble Lord, Lord Oxburgh, and my noble friend Lady Parminter for tabling these amendments, which give us an important opportunity to discuss the role of water meters. In many ways, the debate follows on from the comments of my noble friend on water efficiency in the context of sustainable water supplies, which is the context in which noble Lords have addressed these amendments.

I will take the comments of the noble Lord, Lord Oxburgh, on codification and simplification back to the department. I noted that, as he made those comments, the noble Baroness, Lady O’Neill, with her wide experience was nodding behind him. Noble Lords are very good at holding the Government to account in this regard, and so they should.

I will start by laying out the Government’s position in relation to water meters. We are seeking to strike a careful balance. I note that noble Lords feel that we have not struck the balance quite correctly, but I will outline our position. We agree that meters provide a fair way to pay and we want companies to do more to promote metering to those who would benefit. However, we are also conscious that universal metering could lead to increased bills for some struggling customers, which is a point that the noble Lord, Lord Curry, referred to. I thank him for noting that, even if he then went on to say that he did not really agree with it. That is why we do not wish to impose a blanket approach to metering across the country.

This balance reflects the current legislation. Section 144A of the Water Industry Act 1991 ensures that any customer can request a meter from their water company. The company must then fit a meter, which it does free of charge. All the companies also allow their customers a cooling-off period of one year should they wish to revert to paying according to rateable value. As a result, there is a permissive position there. On the very rare occasions where fitting a meter would be disproportionately costly, the company offers an assessed charge, based on an assessment of the water actually used by that household.

However, Section 144B restricts the power of water companies to impose universal metering across all of their household customers, which is the issue that we are addressing here. There are circumstances, as noble Lords have noted, in which this restriction does not apply, which are set out in the Water Industry (Prescribed Conditions) Regulations 1999. For example, companies whose areas of appointment have been designated by the Secretary of State as areas of serious water stress—based on advice from the Environment Agency—may impose metering. They may also do so where the household has particularly high water use for a number of specified reasons, such as filling a swimming pool.

As my noble friend indicated, the purpose of her amendment is to add another reason to allow unrestricted metering. That would allow all water companies to meter all their customers, if they considered that this would enable them to meet their statutory duty to supply water or their statutory duty to promote the efficient use of water. About 41% of all homes already have a meter, and we expect this to rise to 50% by 2015. Anglian Water and South West Water already have 70% metering. A number of companies in areas of serious water stress are in the process of rolling out universal metering or have plans to do so. These include Southern Water, Thames Water, Sutton and East Surrey Water, Affinity Water and South East Water. Noble Lords have made a powerful case for why these developments are taking place.

However, we must recognise that the costs and benefits of metering vary from region to region. The evidence suggests that benefits on a scale that outweigh the costs of metering will only be found in areas where incentivising reduced water usage is of critical importance—that is to say, water-stressed areas, where universal metering is already a possibility. As I have noted, we are concerned that there are costs associated with implementing universal metering, which are funded through the bills of all customers in the region. We have always been clear that, with climate change and population growth, the case for universal metering may change, but it may do so at different times for different areas.

The amendment of the noble Lord, Lord Oxburgh, would ensure that the Secretary of State has powers to allow metering of water supplies in areas that are currently or may become water stressed and where metering may generate other social benefits. I confirm that the Secretary of State already has these powers. He has the power to issue the prescribed conditions regulations, as I have already mentioned. For example, at present under the regulations, water companies in areas classified as seriously water stressed must evaluate whether compulsory metering is the most effective way to address their supply-demand balance alongside other options when preparing water resource management plans.

The Secretary of State recently asked the Environment Agency for updated advice on the designation of serious water stress. The new methodology defines serious water stress as occurring in areas where either the current household demand for water is a high proportion of the rainfall which is available to meet that demand or the future household demand for water is likely to be a high proportion of the rainfall available to meet that demand.

The Secretary of State already has the power to revise and reissue the prescribed conditions regulations—clearly, my noble friend Lord Selborne knew that—but I assure my noble friends Lord Cathcart and Lord Selborne that we hear what they say in this regard. My right honourable friend the Secretary of State would of course revise and reissue these regulations if he believed that allowing universal metering to be rolled out in a larger number of areas would lead to social benefits. We will keep these regulations under review. However, as I have said, I have already set out that at present we consider that the existing regulations strike the appropriate balance.

I heard with great interest what the noble Lord, Lord Oxburgh, said about smart meters and his other proposals. In relation to the installing of meters, restrictions on the power of companies to charge by meter do not extend to their power to fit a meter. Any company may do that and some, such as Anglian Water, have a policy of doing so for the reasons that the noble Lord laid out. We recognise fully the important role that water meters can play. I hope the fact that I have been able to spell out in more detail the Government’s position on this has assisted noble Lords and that they are willing to withdraw their amendment.

[Lord Oxburgh]

I thank all noble Lords who have participated in what has been a very useful discussion about metering. Can I just be clear in my understanding that it is the Government’s position that water companies already have the authority to install water meters anywhere they choose and that the only restriction is on charging?

[Baroness Northover]

As the noble Lord is aware, the emphasis at the moment is on water-stressed areas, which are more widely defined in the reissued regulations that I have just mentioned. I also mentioned that a customer can ask for a meter. I note that there is a bit of a gap between that position and the position for which noble Lords are arguing. If I have stated that incorrectly in any way, I will make sure that the noble Lord has a letter about it. It would be useful anyway if all this was laid out clearly to noble Lords who are interested in it, because it is obviously an area that concerns people and they want to have it clear in their minds.

[Lord Oxburgh]

That is extremely useful. If the Government are prepared to move at all on this area, it might be valuable for the Minister to hold a small meeting, as he has done most helpfully on various topics in recent weeks, to discuss whether the existing legislation covers the desirable possibilities or whether there is something that might meet the concerns that have been expressed here and would also be acceptable to the Government. We do not want—dare I say it—the water horse to bolt too soon.

[Baroness Northover]

We cannot be having that. On behalf of my noble friend Lord de Mauley, I can say that we would be happy to facilitate such a meeting.