Water Industry (Financial Assistance) Bill

Lord Taylor of Goss Moor Excerpts

Tuesday 27th March 2012 Lords Chamber

[Lord Taylor of Goss Moor]

My Lords, I will keep my remarks brief. I start by declaring an interest: I am a member of the board of South West Water. However, it is not South West Water that is the beneficiary of the first part of the Bill; it is the customers of South West Water.

My interest in this issue dates all the way back to when I was first elected as a Member of Parliament and quickly became involved in debates on the privatisation of water. I raised concerns then about the impact on the south-west. There was a fundamental error in the calculation of the costs of the bathing water directive and how they would impact on customers in the south-west. It took far too long for Governments of various hues to recognise the severity of the impact of far and away the highest water bills on people who are among the lowest earners in the UK. This was driven by the simple geography of having 30 per cent of the beaches and just 3 per cent of the population, and the dispersed geography in which that population lives. That made it extremely expensive to deliver the kind of reliable clean water system and clean beaches that are now, quite rightly, being delivered.

I strongly welcome the Bill, as it finally recognises the need to take action to deliver justice to those individuals. It is hard to over-exaggerate how big those impacts are. Those not on a meter can easily pay bills of £800 or £1,000. These people do not live in large houses and are often elderly, and these bills constitute a huge proportion of their income. Therefore, although I welcome the Government’s action, I do not think that it is sufficient in itself. That is why I want to press the Minister on it.

First, the Government’s commitment is actually a short-term commitment. There is no real indication of what will happen in the longer term. The decision was taken not to provide a lump-sum dowry which would have created a permanent solution. Therefore, there is considerable uncertainty around this issue. I still hope that Ministers will indicate where they would like the direction of travel to be. I understand that commitments may not be given short of commenting on the spending review and where budgets will be in a few years’ time. However, I hope that the Government will indicate that they recognise that this is a long-term issue, not a short-term one.

We need to make it clear to customers that, although prices are regulated, there are continuing upward pressures on them. This measure is a £50 discount off what people would otherwise pay year after year; it is not a permanent reduction in the cash amount that they will pay. People will gain from this measure for as long as it is in place but they cannot look forward to a big cut in bills and then no further rises—that is not the basis on which we work.

The second issue on which I wish to press the Minister concerns the fact that the Government want this £50 to go to every single customer. There are some real issues to be overcome in delivering that, particularly for customers in park homes and mobile homes who may be served by a single meter to the site. The water is then distributed round the site and they are charged individually, but not by the water company. Therefore, the water company has no information on the individual householders. I hope that the Government will work constructively to use all the information that they have at their disposal to ensure that those customers, who are often among the poorest, get the benefit of the £50. I know that it is the Government’s intention to do that but it is by no means clear how the measure will be delivered.

Thirdly, I very much regret that the Bill does not put in place a national social tariff. The Government have taken the decision to go down the route of company-specific social tariffs. For those in the highest water bill area—South West Water—that means that there is a higher burden on customers, who will not receive the relevant benefit. The social tariff will not be so low as to take people down to average water bill prices that apply elsewhere in the country, so they cannot gain the same benefit that they would under a national scheme. I understand that the Government think that there are issues with creating a scheme that distributes the costs and benefits nationally but I believe that it is the only fair way of meeting the needs of these very low-income individuals.

Finally, we must remind all customers of South West Water that they will overwhelmingly benefit from going on a meter. Many low-income customers are frightened of metering. However, if they go on a meter, they can very quickly save themselves much of the cost.