Water Industry (Financial Assistance) Bill

Alison Seabeck Excerpts

Wednesday 29th February 2012 Commons Chamber

[Mrs Spelman]

My hon. Friend is quite right. Indeed, I look across the Chamber to the right hon. Member for Exeter (Mr Bradshaw) as a demonstration of the cross-party consensus that existed, which I have acknowledged. The diligence with which south-west constituency Members raised awareness of this historic unfairness is the reason our Government have sought, finally, to do something about it and stop turning a deaf ear to families struggling with that historic legacy, which is what had happened for too long.

There are limits to the help that we can give, because of the vast economic deficit that we inherited. However, we believe that the Government should help to correct the historic inequity that has left water bills in the south-west so markedly out of kilter with those elsewhere in the country. We have therefore committed to funding South West Water to enable it to cut bills by £50 a year for all household customers. The payments will start in April next year and will be maintained to the end of the next spending review period. The £50 reduction will be transparent on customers’ bills and, contrary to the impression that might have been gained, will not provide any sort of benefit to South West Water. It will simply be passported straight through to the householder, who will receive that money in full.

We take pride in helping hard-pressed families in the south-west, but we recognise that the challenge of helping vulnerable customers with water affordability problems is a different and more general problem that can be felt in households anywhere in the country, as the hon. Member for Birmingham, Selly Oak (Steve McCabe) suggested. As constituency MPs, we all know the families that we are talking about. That is why our water White Paper has set out definitively the dual approach that we are taking to tackling affordability issues. First, we are taking measures now to enable water companies to introduce social tariffs and to tackle bad debt. Secondly, over the longer term, we are introducing a package of reforms to increase competition and innovation in the industry that will help to keep bills down and improve customer service.

We consulted recently on how water companies could design social tariffs to reduce the bills of those who would otherwise struggle to pay in full. We will publish final guidance in the spring to enable companies to bring forward social tariffs in their charging schemes from 2013. Water companies’ responses to the consultation have shown their commitment to addressing customers’ affordability problems. Many already have schemes in place, such as trust funds, matched payment schemes, referrals to benefits advice and some existing social tariffs, but we have to be realistic in acknowledging that bad debt is also a serious problem in the water industry.

Bad debt adds an average of £15 to all paying customers’ bills, and this Government are taking action to address that. We are consulting on measures to reduce bad debt, and we are considering two options. The first is a regulatory measure that would make landlords liable for the water charges for their tenants’ properties if they failed to supply details of those tenants to the water company. However, we are mindful that the measure has to be proportionate and easily administered, so we are also consulting on whether we should ask landlords to share their tenants’ details with water companies voluntarily.

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

Will the proposals that the Secretary of State has just mentioned be similar to the present regulations involving landlords and energy companies, or might they be somewhat different?

[Mrs Spelman]

Electricity utility bills are the domain of the Department of Energy and Climate Change, rather than the Department for Environment, Food and Rural Affairs. We are seeking to ensure that people who use water pay for it; it is a question of fairness. Water has historically been treated somewhat differently from other utilities such as electricity and gas, so there might be some differences in the details of the proposals. The hon. Lady will have an opportunity to raise that point as part of the consultation.

This Government are going to get a grip of the issue of bad debt, which is forcing up bills for those who do the right thing and settle their bills on time. We are on the side of those who play by the rules and pay their bills in good faith and, unlike the previous Government, we are going to ensure that their interests are properly served by clamping down on those who do not, or will not, pay their bills.

Despite the considerable progress that has been made on cleaning up our water environment, challenges still remain, not least in the river that ebbs and flows outside these very walls. The House has previously debated the fact that London’s sewerage system is operating close to capacity. We are now at a stage at which waste water containing untreated sewage overflows into the Thames between 50 and 60 times a year, involving an average total of 39 million cubic metres a year. The sewage discharges kill fish and leave litter and debris floating in the water. Because of the tidal ebbs and flows, that debris can take up to three months to reach the mouth of the river, and frankly, it stinks—just ask David Walliams. Hon. Members will recall his Sport Relief challenge last spring to swim 140 miles along the length of the Thames here to Westminster. His challenge should have been the distance, the strong currents and the undertows, not the quality of the water he swam in—water that was bad enough following heavy rain to place his entire endeavour in jeopardy.

We might not quite face the “Great Stink” of 1858, when the stench of sewage led to this House’s curtains being soaked in chloride of lime in an attempt to disguise the overpowering smell and, ultimately, to Parliament being suspended, but the sewer outflows will only get worse with population growth, increased urbanisation and more extreme rainfall events caused by climate change. This, as I am sure all Members will agree, is unacceptable.

We are the world’s seventh largest economy; this is our capital city; this city is a shop window for our entire country—and the status quo is simply not good enough. This Government are going to put the “Great” back in “Great Britain”—a Government who are showing that Britain is open for business and competing globally. That is why we need a 21st century solution, not a 19th century one that would still rely on allowing the Thames to function as a sewer.

--- Later in debate ---

[Mary Creagh]

The right hon. Lady might want to answer her own question. We commissioned the Walker report, which said that Ofwat should do a six-monthly league table of water companies showing the best and worst performers. She has had 18 months. Has she implemented the recommendations of the Walker report? She has made her own guidance to water companies on social tariffs voluntary, not mandatory, and I fail to see how allowing them to choose whether to implement them will help customers.

[Alison Seabeck]

Perhaps I can shed some light on what was going on under the previous Government. In the Plymouth south-west area, a detailed pilot was undertaken to identify people for whom water was unaffordable. That was to feed through into forward policy development. Anna Walker used that as part of the basis for some of the work that she did, so it is not true that we were not considering how to reach the people who needed help.

[Mary Creagh]

I thank my hon. Friend for that clarification. It is clear that much work was done in the south-west because it has the highest penetration of WaterSure customers and the highest rate of metered households, despite the fact that water is plentiful in the south-west, so it has nothing to do with scarcity. It has to do with people making a rational economic choice and understanding that if they move to metered bills, their costs will go down.

The Government should be using existing data about benefits to ensure that everyone who is eligible is on the WaterSure tariff. I hope we have described the heavy lifting that we did on that tariff. Last year the Government consulted on taking on the costs of WaterSure and absorbing them at a cost to the Exchequer of £10 million a year, as opposed to continuing the cross-subsidy. This idea was dropped from the water White Paper. What has happened to that notional £10 million? Why is it not being used to part-fund company social tariffs or a wider tariff to help the wider population?

Londoners will see their bills rise by £70 to £80 a year when the Thames tunnel is finished in, we hope, 2020. London has some of the poorest people in the country and a significant number living in water poverty. WaterSure will not help most of them. It is imperative that company social tariffs are introduced well before the Thames tunnel is completed to minimise the financial impact on Londoners, yet the Government’s draft guidance on company social tariffs shows that they are adopting a minimalist approach.

The Government have ruled out data sharing, which is key to helping water companies identify customers in water poverty and enabling them automatically to reduce their bill, which is obviously the least painful way, rather than allowing people to get into water debt and then taking action through the courts to pursue the money. They have ruled out an affordability scheme administered nationally, and they have ruled out an extension of WaterSure, which is the only national social tariff. Under DEFRA’s draft guidance, the design of social tariff schemes is left entirely to the water companies. Indeed, it is their choice whether to implement a scheme at all. This is the big society in action: a postcode lottery for millions of customers facing water poverty. We believe that it is untenable for the Government to pass a water financial assistance Bill without providing any assistance to the rest of the country. We will pursue amendments that would oblige water companies to deliver a social tariff scheme that meets clear and uniform criteria.

--- Later in debate ---

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

It is a great irony for us in the south-west, surrounded by water as we are, that we have the highest water bills in the country. I represent a coastal city that sits on three rivers, and the injustice of the expense of water bills in Plymouth aggravates almost everyone I know in my constituency and the wider region.

Water bills in the south-west are, on average, 43% higher than in the rest of the country and we have 200,000 households under water stress—paying, as we have heard several times, more than 3% of their income towards their bills. A Government Member said that there were more people in his region to which that applies, and that is true, but we have the highest percentage of people in that position. Those people are pensioners and families with high and essential water needs. They are often supported through WaterSure, but only about a third of those eligible get that help.

People have been paying through the nose for a basic commodity. I accept that it needs to be valued because, with climate change and other pressures, it could become more scarce. If we do not prepare well for the decades and century ahead how we manage the future costs of the necessary work and, from my perspective, prevent a repeat of the mistakes that were made when water was privatised and the south-west paid a disproportionately high price, we will all fail water bill payers. The Bill clearly tries to set out some ground rules in that regard.

The high cost of water is not a new problem, but it has dominated concerns in Plymouth throughout my time in Parliament and for many years before that. It has posed problems for Governments of all political persuasions and it will clearly continue to exercise the current Minister in the months and years ahead.

As we have heard, for many years, I and other south-west Members have campaigned to address the higher bills left us by privatisation. The detailed Walker review did, to Anna Walker’s credit, much of the groundwork for the announcements that followed, including the Chancellor’s announcement of the £50 refund for households in the south-west, and ultimately led to the Bill.

Through parliamentary questions, Adjournment debates and the work of the all-party parliamentary water group, which was initially chaired by Linda Gilroy, who has rightly been lauded in the Chamber today, then by the hon. Member for Thirsk and Malton (Miss McIntosh), and then by the hon. Member for St Ives (Andrew George), Members of all parties have sought to keep the issue high on the agenda.

At a time of soaring utility bills, high inflation and stagnant wages, action on water bills is welcome. However, it needs to be meaningful and lasting to make water bills more affordable in the long term. The continuing upward pressure on the south-west, despite the refund, will mean that many families dip below the poverty line. It is not acceptable to increase the number of children and pensioners in poverty. Although I welcome any help that the Government are able to give—it would be churlish not to welcome the £50—it is small relief from ever-rising bills. This is not the end of the debate and the problem extends beyond the south-west.

That said, all of us who live in and represent constituencies in the south-west—I should declare an interest as a South West Water bill payer—have a duty to ask whether the Bill will effect meaningful and lasting changes. Sadly, my conclusion is that it will not. There is a strong view that this gain will be temporary, and that even with the changes, water bills in the south-west will be back at their current levels within two or three years, for the reasons I have set out, with wages stagnant and inflation high.

Will the Minister look at the issue of water companies overcharging for surface water drainage, which affects water bill payers specifically in the south-west, but also more generally? Very many households do not connect their waste water into the sewerage system and water companies do not have complete data on where those properties are—I have been out in my patch trying to identify them. In Plymouth, no council data exist for the 1950s from the plans, and it is believed that later plans are inaccurate in terms of the connection of mains sewers to properties. It is wrong that the default position is to assume that people are connected and charge them. As a result, the onus is on the bill payer or house owner to understand exactly where their water goes and whether they have a direct connection into the mains sewer. That adds further unfairness to the system, and I ask the Minister to address it at some point.

I wholly support the comments of the hon. Member for Newton Abbot (Anne Marie Morris) on park home owners. Many people in Glenholt park in the north of my constituency are anxious about how the proposals will play out for them, and I am afraid that not all park home owners are responsible or willing to be generous with the people on their sites.

A number of related issues, including the adoption of private sewers, will impact on the cost of water nationally, and they need to be understood with regard to the Bill. I note that the explanatory notes state that the Bill gives the Secretary of State

“a power to give financial assistance”

with regard to the

“construction of…sewerage infrastructure”.

I assume that that is partly designed to reassure Thames Water bill payers on the linked new ring main sewer. However, civic schemes are not mentioned in the Bill, so when the Minister winds up, will he tell the House whether assistance could be applied for by a water company that finds it has a much more extensive private sewer commitment than it believed it had inherited? The Minister will know—we have written to each other on the subject—that we are unclear what the burden is likely to be for some water companies in that respect.

The Government need to introduce measures to tackle long-term water affordability, not just in the south-west but nationally, and they should consider the feasibility of a national social tariff. We have heard that from other hon. Members and I hope the Government will consider the proposal.

Anna Walker, who dedicated a whole chapter to the injustice felt and experienced in the south-west, set out a number of main challenges nationally, including the cost that other bill payers incur as a result of bad debt—it is around £15 per person, as we have heard. She looked at the implications of metering and considered how future costs should be met, acknowledging some of the issues that we have debated. She was also clear that it was appropriate for water customers to pay for improvements to the quality of water and the disposal of sewage, because they ultimately benefit from such improvements, but she was also clear that customers should be fully consulted before the Government agree to such changes to avoid the accusation of imposing a stealth tax. I believe that the proposals of my hon. Friend the Member for Wakefield (Mary Creagh), the shadow Secretary of State, on parliamentary oversight of specific schemes, should be debated seriously in Committee on the Floor of the House.

The Bill will be a waste of time if, within a short period, the problem of affordability comes back on to the agenda, not just in the south-west but nationally, and if customers feel that they have not had input into the reasons for the higher bills that they pay. The Government will do them no favours if they simply appease us in the south-west who have kicked off over the years and made a lot of noise about our bills, and they will miss an opportunity not only to consider water affordability in a more strategic and inclusive way but obviously to tackle the historical injustice in our region.

Whatever the new regime, basic standards must apply, but that is not entirely clear from the Bill, and it needs the appropriate regulation, which also is not entirely clear. As has been said, the House must be able to consider every proposal on its merits, but that is not in the Bill either. So more work needs to be done. Given the expertise and experience of Members across the Chamber, I hope for further and more detailed debate in the short Committee stage because it would be of benefit to the Bill.