Water Bill

Alison Seabeck Excerpts

Monday 25th November 2013 Commons Chamber

[Richard Benyon]

My hon. Friend is right. I see this in household terms: my simple view is that if a builder wants to build 1,000 houses in the Test valley—I do not know why I am picking on the Test valley; I could pick on any number of catchments in the south or east of England—for that to be considered sustainable development, he should have to prove to his local authority that he is hardwiring into his thinking recycling rain water, greywater systems and permeable membranes outside the houses. In fact, he should think of everything to ensure that the development’s water demands are as low as possible.

An important change is being made that will assist investment in our water sector, by cracking the problem with the investment cycle that we have faced for years. I am grateful to British Water—the organisation that represents supply chain companies—for drawing my attention to how investment fell off a cliff edge a year or so before the end of a price review period. That is a problem. Britain is losing jobs, losing skills to abroad and losing much-needed infrastructure investment. Three changes will make a difference in that regard. The first is the resilience duty, which I have already mentioned. The second is the requirement on water companies to invest for the long term, particularly through the 20-year reviews of their water needs. The third is the need for a six-year investment programme, which is a major step forward. Over time, the cycle of investment will level out rather than fall off that cliff.

We need to think beyond the Bill on sustainability. I am pleased, for example, that improvements to the building regulations include a standard daily usage of 125 litres per head. The code for sustainable homes refers to 105 litres per head. We use 155 litres per head in this country—a figure higher than almost anywhere in Europe. We must consider the demand side as well as the supply side.

I hope that that clause on flood insurance goes through with the support of all parties. All Members with constituents who live at risk of floods feel strongly that the statement of principles, worthy though it might have been when it was drawn up, was full of faults. There was no affordability element. Our constituents face excess charges that are at times more than £10,000—an impossible situation that cannot be allowed to continue.

I have the scars of the negotiations on Flood Re on my back—I pay full tribute to the ABI for the constructive way in which it negotiated—but I think we have reached a point at which we can address the needs of the 500,000 households that are at the highest risk. It will limit the cost, and as best it can, it will link that limit to people’s ability to pay. Linking the scheme to council tax banding is the right way to do that. Excess charges will be capped at somewhere between £250 and £500. That is a major win for those people who come to see us in our surgeries and tell us that every time it rains their stress levels rise considerably.

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

I am listening with interest to the hon. Gentleman’s comments, given his experience. Does he have any concerns at all that linking the scheme to council tax banding, which is based on property values from back in the 1990s, could still be problematic for some households, as those figures are skewed?

[Richard Benyon]

I understand the hon. Lady’s point, which is justifiable, but if she is involved further in the machinations on the Bill, I urge her not to try to unpick that one. The scheme is not perfect, and she is right to have concerns. Band H has been cut out, so millionaires are not covered. Only bands A to G are included, and I think that this is probably the best way to do things. Obviously, it can be reviewed in the future.

The key question is how we make the transition from a system under which a subsidy supports the change to a much more risk-reflective form of insurance, which reflects betterment, such as when a household spends money from the scheme to improve resilience to flooding in the future. For example, sockets would no longer be placed at the skirting board but a metre above it. Other household measures could be reflected. We should encourage households to see the process as a transition under which they will be rewarded when they take responsibility. If they take measures to reduce the flood risk to their property, they will benefit.

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[Stephen Gilbert]

As with everything my hon. Friend says, her question was good in part—the first part was very good, but on the second part I am afraid I must disagree. The Liberal Democrats in Cornwall have certainly fought for many decades to redress the unfair water bills that my constituents and others in Cornwall suffer, and thanks to both parties coming together we were able to do that.

[Alison Seabeck]

rose—

[Stephen Gilbert]

At the risk of breaking my earlier promise to you, Madam Deputy Speaker, I will give way once more.

[Alison Seabeck]

This rewriting of history is wonderful. The effort to get bills down in the south-west, led in no small part by my former colleague Linda Gilroy when she chaired the all-party group on water, was an all- party effort. The groundwork that enabled the coalition Government to introduce the £50 rebate was all done under the previous Labour Government, particularly through the Walker review.

[Stephen Gilbert]

The hon. Lady and I know each other well, and I certainly would not be so churlish as to deny the all-party effort in Cornwall and Devon to drive the issue forward, but unfortunately in Westminster for 13 years the Labour Government did nothing. It was the coalition Government who delivered that change.

To finish my points on the introduction of competition, I want to ask my hon. Friend the Minister about charities. It strikes me that charities can be run from people’s domestic residences. Many charities are small, as he will know from his constituency as much as I do from mine. Are there going to be size restrictions and criteria for qualifying for the introduction of competition in the market for charities? How big will they have to be, for example? I would appreciate some clarity on that, as would others across the country.

Finally, I want to mention Flood Re, following some of the comments from my hon. Friend the Member for Newbury (Richard Benyon), whom I congratulate on his hard work to secure the renegotiation with the Association of British Insurers and the National Flood Forum. He and I crossed swords here when I tried to push him to accept a deal to ensure that flood insurance remained affordable and available for my constituents. I am delighted to welcome a deal that I think takes a huge step in that direction. I suspect that he and his colleagues played the Government’s hand as best they possibly could. Hopefully we have the rudiments of a deal that will be in place for the long term.

Three years ago this week parts of my constituency were under water and hundreds of businesses and homes had been damaged by flood water. I think that it is timely and right that the Government have brought forward these proposals, which will mean that people will still be able to insure their homes, sell their homes and, if disaster strikes, barring the loss of life, rebuild their homes and reassemble their lives.

However, some key issues remain. I seek assurance from the Minister that premiums for those people in flood risk areas will not be dissimilar to those for people in non-flood risk areas and that there will be some equivalent of the premium element on the household insurance policy that flood insurance will cover. In particular, I support the calls from other right hon. and hon. Members on excesses. I have constituents who were hit by the flood three years ago and had a £15,000 excess on their flood insurance. Clearly, if they do not have £15,000 in the bank, having insurance that requires them to pay £15,000 before being able to make a claim is nonsense. We must ensure that we drive down those excesses as far as possible. I welcome the figure of £250 to £500 that has been proposed.

I have one final question. The Secretary of State said that homes built after 2009 would not be included—I quote, I hope—“if built on floodplains.” Does that mean that homes built after 2009 which are not built on floodplains will be included? We need some clarification on that.

Overall, I think the Bill introduces long-overdue competition into the water market, driving down costs for business and, ultimately, I hope, for consumers. It delivers on one of my pledges to my constituents, which is that flood insurance will remain affordable and available.

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

This is one of those occasions when there are Members with enormous experience of the subject under discussion sitting on both sides of the House. As a result, the discussion we are having is extremely useful. I draw attention to the contributions from the hon. Member for Newbury (Richard Benyon), who said that he has scars on his back from this, which I quite understand, and the hon. Member for Thirsk and Malton (Miss McIntosh)—she is no longer in her place—who has contributed significantly over the years, and it is years, to bringing forward the Bill.

It is ironic that we are surrounded by water in this country—certainly in the south-west, which has some of the highest levels of rainfall, because of the prevailing winds—yet we are in need of additional powers to protect us against drought. Such measures are important, so there is a lot of sympathy with the general thrust of the Bill, but the issue is with the detail and with what is not there. I was concerned to hear the Secretary of State say that he hoped to bring forward—not that he would do so for certain—the clauses to Committee. It would be helpful if the Minister, when winding up the debate, confirmed whether all the clauses specific to the insurance elements, and any other key elements, will be dealt with by a Commons Committee and not left to a Committee in the House of Lords.

Flood insurance is desperately needed to protect domestic properties. A number of Members have seen their constituents flooded regularly, or indeed have been flooded themselves. In Plymouth we are relatively fortunate, but we have small areas that flood regularly. Our biggest problem is the railway, which is regularly cut off. The organisations involved seem incapable of coming up with a solution that does anything other than cut off the far south-west every time there is flooding at Exeter, which is desperately bad news for business. I am not sure how the insurance companies view claims for loss of business, but without doubt there is a loss of business. That is a separate issue, but it is very specific to our region.

Another point that concerns me is that so much of this is being done by order and by statutory instruments—that is, secondary legislation. Indeed, the EFRA Committee, which has done sterling work in this area, felt that the draft Bill relied heavily on secondary legislation in a number of key areas. The Government have obviously not listened with regard to this aspect of the Bill. I am absolutely confident that in Committee my Front-Bench colleagues will press for some of those key issues to be firmly and clearly included in the Bill.

The Bill seeks to extend competition, which most people would say is a worthy aim, but not to extend it to domestic bill payers—a point well made by the hon. Member for St Austell and Newquay (Stephen Gilbert). That is another missed opportunity. The Government are failing yet again to get a grip on the things that could make a significant difference to the cost of living that all my constituents are facing. Despite the welcome £50 rebate, the south-west still has some of the highest water bills in the country. The amount paid by people on relatively low incomes is extremely high, and about 200,000 households are described as being under water stress.

[Sheryll Murray]

Can the hon. Lady tell us exactly what her Government did, in the 12 years when they had the chance, to help the hard-pressed, hard-working people of the south-west with their water bills?

[Alison Seabeck]

Their first review cut water bills, even in the south-west, and then, admittedly, as my hon. Friend the Member for Wallasey (Ms Eagle) explained, there was a constant battle and a need to bring something forward. I fully accept that it was a slow process. I personally went to see the Chancellor of the Exchequer to make exactly that point—to say that we needed, frankly, to get our fingers out and do something about bill payers in the south-west. I do not think that anybody argued that as vehemently as I and Linda Gilroy, my colleague in Plymouth, Sutton at the time. Even the hon. Lady, in all fairness, will be aware of the work that went on.

In the south-west we have a high percentage of people, including pensioners and families, with high and essential water needs. In fact, there are more than in any other English area, and some of them are being supported through the WaterSure scheme.

South West Water bill payers are the victims of a botched privatisation process. We have too large an area, with a massive need for capital investment, including cleaning up our shoreline, and very few bill payers to meet those costs. It is a dreadful situation, and one that was not thought through but driven through purely for ideological reasons. This Bill develops the market in water further, with a new retail market. The proposed changes are interesting, but they are not embraced entirely by the water companies, which are asking questions about the need for a provision to allow for retail exits, about why the system is voluntary, and about whether there will be a level playing field for all retailers.

South West Water has expressed concerns about the Government’s ill-considered and risky-to-implement proposals on the relaxation of the selling of licences without reforming abstraction methods, and says that it can foresee problems for rivers. During this debate, people have been tweeting me about the importance of the chalk streams. Indeed, several hon. Members on both sides of the House have touched on that point. The Secretary of State talked about new sources of water. However, if my local water company is saying that it has concerns, I have to be concerned. Equally, if the general public and Members of this House have concerns, the Minister must respond to them when he winds up.

Water companies across the UK, many of them based overseas, are making significant and increasing profits, with soaring dividends for shareholders. I am sure that they would say that the picture of their accounts is much more complicated than that which appears in the headlines, and that, in some cases, they hold significant debts, but that just means we need greater transparency so that we can fully understand where the pressures exist. The new chair of Ofwat has suggested that some of the financial arrangements that these companies pursue are complex, or perhaps they could be otherwise described as hidden, and that they are running a debt in order to minimise tax payments in the UK, but—surprise, surprise—they are still managing to pay out huge dividends. As we have heard, they have announced £1.9 billion in pre-tax profits and given £1.8 billion back to the shareholders. This is a system for the few, not the many. People in Plymouth have been paying through the nose for a basic commodity while shareholders seem to be benefiting. No one denies that shareholders are people who have backed a company for a decent return, but we need to understand that it is a decent return and not an excessive one.

Water is a commodity that needs to be valued because it will potentially become even more scarce as climate change kicks in further. If we do not prepare well for the decades and century ahead, we could be left with water in short supply or prices rising further for the taxpayer. At a time of soaring utility bills, high inflation and stagnant wages, water customers really do need to feel that they are getting a fair deal from their supplier. South West Water has invested in new technology in Plymouth—I recently saw it for myself at its treatment works in my constituency—and there are, at last, some improvements to the local sewage works, but it needs to offset that capital expenditure and the benefits to customers against its profit and dividend levels.

The Bill does not put in place measures that achieve transparency or affordability. The notion of a national scheme to assist with affordability, which has been discussed over very many years, and in depth by the Walker review, needs to be implemented. This Bill could have been the vehicle to do that—another wasted opportunity. Some companies are doing some of the work on a voluntary basis, including, in all fairness, South West Water, but it makes much more sense to bring them all together into some sort of national scheme—to get them all signed up and have a level playing field where good companies feel that everybody else is pulling their weight.

My hon. Friend the Member for Wallasey and the hon. Member for Thirsk and Malton raised a very important point about access to data, particularly in relation to the Department for Work and Pensions. I urge the Minister to do all he can to press the DWP to sort itself out on this one; it is almost a no-brainer.

My constituents find it impossible to understand why the regulator seems to have no teeth and simply rubber-stamps increases in bills. I am sure that the Minister will say that is not the case, but that is how it is viewed by my constituents. We know that the regulator has to perform a complex balancing act, with requests for increases from companies because they need to develop major schemes such as new ring sewers, new reservoirs, and so on, but my constituents are not convinced that anybody is listening to them. No one would argue against the vital work on infrastructure, protection against flooding and drought plans, which the Bill champions, but what is missing is the fairness agenda. The Government fail to understand that if my constituents feel they are being unfairly penalised while shareholders, perhaps overseas, are benefiting, this legislation will have failed and this Government will have failed them.

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[Dan Rogerson]

It is my intention that they will be available for the Committee to look at as soon as possible, but we have to get them right and make sure that they deliver what the Government and my predecessor agreed with the industry, so that we deliver effectively.

[Alison Seabeck]

I thank the hon. Gentleman for giving way; he is being very decent with his time. Will he confirm that the new clauses will be available for the witness sitting, which will take place before the Committee considers the Bill? Will he make it clear that they will be available for the witnesses and not just the Committee?

[Dan Rogerson]

We would be much further forward had the previous Government done some of this work before they left office, but we have had to act on what we inherited, which, sadly, was very little.

Members have raised a number of other issues, including the use of council tax banding. I hope that all Members accept that that is a way forward. It may have some problems around the edges, but fundamentally it is the right approach. It is not my intention to move away from what was originally agreed, although the hon. Member for Cardiff North (Jonathan Evans) has made a case on behalf of his all-party group and Members who have an interest in issues such as band H and the 2009 cut-off.

The hon. Member for Kingston upon Hull North (Diana Johnson) made an impassioned plea, understandably, for her constituents and the issues faced by communities such as Hull, which is constructed in such a way that it has historically been subject to flooding. My hon. Friend the Member for Wells (Tessa Munt) pointed out similar issues with her rural constituency. The agreement takes forward the work that was already in place. The hon. Lady set out the argument—although she came to a different conclusion from ours—that we do not wish to incentivise more building in areas prone to flooding, which explains the 2009 cut-off. The Government will respond to any argument for change, but our current view and, indeed, our agreement with the industry—which is, crucially, at the heart of this—is that that is the right way to proceed.