Water Industry (Financial Assistance) Bill

Alison Seabeck Excerpts

Tuesday 6th March 2012 Commons Chamber

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

rose—

[Dan Rogerson]

I suspect we will hear more about people in Plymouth who are in that situation.

[Alison Seabeck]

Actually, I rose to talk not about people in Plymouth but about the additional costs that the water company has had to bear of placing pumping stations in places that will not spoil tourists’ views of a harbour or a beach. That is certainly the case in some places in Cornwall. People do not see those costs but South West Water bill payers have been burdened with them.

[Dan Rogerson]

The hon. Lady makes an excellent point, and we can set that against the background of what others have said in this debate and in our previous debate on this. People in our part of the world have low incomes and comparatively high housing costs—not as high as those of constituents here in London, but much higher than in the north-west or the north-east. When combined with a low income, those costs are a significant pressure on people’s spending power.

I am delighted that the coalition Government have recognised that this problem needs to be dealt with, but it is not easy. The previous Government looked at the issue for some time and I pay tribute to those who have previously campaigned on this, including many Members who are still in the House. Members from my party and some Conservative Members, as well as Linda Gilroy, who was very useful to have involved, along with the hon. Member for Plymouth, Moor View (Alison Seabeck) and the right hon. Member for Exeter (Mr Bradshaw), all helped to put pressure on the then Labour Government to take action. We got as far as getting the Walker review, so I suppose we should be grateful for that.

[Alison Seabeck]

Before the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) leaves the Chamber—oh no, he has gone—I wanted to draw attention to something he said earlier about the problem being partly due to the fact that there were only three Labour MPs in the south-west. Clearly, it is about quality, not quantity, but on that premise, given that we have a very large number of MPs from the Government parties in the area now, I assume that everything we want in the south-west will happen. That was a little churlish because the hon. Member for North Cornwall (Dan Rogerson) is right that there was complete cross-party effort on this.

[Dan Rogerson]

I think we can point to the time before the Labour Government, during the early days of the privatised industry, when, although there was a preponderance of MPs in the area from the Government party, we did not get anything. We have to recognise that there has been a problem and that it is being dealt with to some extent.

The company still has work to do, so we are not looking at a static position. We are looking at the fact that, as the hon. Member for Hendon (Mr Offord) said in his excellent contribution in our previous debate on this issue, raw sewage is still being washed out. That happens in London, as the hon. Member for Hammersmith has described, and in coastal locations such as Trevone, which I mentioned in an intervention. Water companies argue that that is a very rare event, happening two or three times a year, but the statistics show that it happens far more than that. Rainfall patterns are changing and development patterns have changed. We have, fortunately, got some affordable housing and market housing built in some of those communities, but that has added to the burden on the sewerage systems, which are just not up to the job. South West Water still has work to do and it also has to take responsibility for taking over the private sewerage systems. I welcome that change, but it will add to the costs going forward. The measures are long overdue and will, I hope, help to offset some of the burden on bill payers.

I have some concerns about the debt model that has been agreed between Ofwat and the water companies. The debt that has been taken on over previous decades to provide infrastructure is not being paid off to any significant degree. Under the debt model, those loans are repackaged periodically.

The water companies and Ofwat argue that that is a great deal because it keeps the cost of borrowing down—if we were to start to pay off these things now, we would put bills up even higher. I see that, but I am concerned that, essentially, we are saying that the Government’s sensible proposal will have to continue for ever, because we will never, ever pay off some of the significant debt that has been arrived at to put in the infrastructure. I hope that Ofwat will continue to look at the issue, because my constituents come to me and say, “At least we must have paid off a lot of this money by now and we must be getting to the point where the bills will start to go down.” No we are not, because the debt is constantly repackaged. That issue perhaps needs to be examined.

Hon. Members have talked about national WaterSure, or social tariffs. I know that the advice from the Treasury is that that effectively amounts to a tax—we need to examine that—but any scheme that seeks to help those who are struggling the most ought to do so regardless of where those people live. Even after the welcome investment in tackling inequality in bills across the country, people in my constituency and in other constituencies across Devon and Cornwall—because of low income, high housing costs, and high water and sewage costs—will still be worse off than people in other parts of the country.

I accept that other hon. Members will say, “Come on, you are getting this and surely you must be satisfied with it,” but I will be satisfied when I think there is a fair deal for people in my constituency and in neighbouring constituencies. As I said in a Westminster Hall debate earlier this year—or perhaps at the end of last year; memory fails me—I hope that we reconsider having some sort of national tariff. If measures are kept within region, the pressure on the other bill payers will be so high that those measures will not be allowed to be significant enough to meet the need.

We also need to keep a close eye on the profits of the water companies. In an excellent contribution to the first part of the Second Reading debate, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned the sometimes arcane business models and the layers of companies that manage to pass on significant dividends. Ofwat could do more to look at the profits there. As my hon. Friend the Member for St Ives said, the leadership at South West Water is far better than it was and those people have engaged hugely with the campaign to deliver on this issue. They are being open and realistic about what is achievable, but all water companies need to consider the contribution that they, too, could make to perhaps providing a more generous WaterSure or social tariff scheme. We need to be vigilant about that.

--- Later in debate ---

[Kate Green (Stretford and Urmston) (Lab)]

It is a pleasure to speak in the debate. Many hon. Members have noted that the Bill seeks to deal with two specific local issues, the south-west in respect of the first clause and London in respect of the second, but the Bill is widely and non-specifically drawn.

I take the opportunity to ask about Ministers’ broader strategic intentions. In what the clauses encompass there is some real potential for development of the Government’s broader water strategy, and I am keen to explore two questions in relation to that. The first is affordability. A number of hon. Members, including the hon. Member for North Cornwall (Dan Rogerson), who has just completed his excellent speech, have raised some important issues about that. In common with other non-south-west Members, I want to put it on record that I have no concerns at all about ensuring a fair water deal for customers in the south-west, but customers across the country are struggling with water bills, as a number of hon. Members have pointed out, as the cost of living rises, and the cost of water and other utilities creates additional pressure on household budgets.

The Bill offers Ministers the opportunity to think creatively about how Government can help to relieve those financial pressures, and perhaps to give some indication today of their thinking in that area. Social tariffs have been rightly identified as the route to achieving that, but there is a clear need for the industry and Government supporting the industry to ensure that we raise the game. Water is clearly not a luxury and some families, such as those with young children and families where there is ill-health or a disabled member of the household, are hit particularly hard. WaterSure is helpful in addressing some of the additional need that arises for those families, but it applies only to families with more than three children in the household and the take-up is not particularly good. Only about a third of households that could benefit from WaterSure are taking advantage of the scheme.

The hon. Member for North Cornwall and others mentioned the need to spread water metering more widely and some of the properties where that is quite challenging. It is also important to recognise that without the benefit of well designed social tariffs, families with higher levels of water usage because families are larger or because of health and other needs may find that water metering worsens their position. It is therefore important that we design very carefully the way in which we apply tariffs to meet the needs of particular families and to support those on lower incomes.

I urge the Minister to recognise the lessons that have been learned in relation to social tariffs from the energy industry, and work that has been done with energy utility companies. The first and extremely important lesson is that a hands-off approach is not sufficient. If it is left to the industry alone to apply the sorts of tariffs that support low-income households, the result is poor protection for the poorest consumers. There would be a lack of information about tariffs and the benefits of more favourable tariffs would more often accrue to better-off customers who can pay by direct debit, for example, which reduces industry costs but passes the benefits to those who can operate their personal finances in that way. Customers often end up on a tariff that might initially have been quite good for them but becomes inappropriate, and there is a lack of proactivity on the part of the supplier to seek to inform individual consumers and improve their position. That is understandable in a market where competition pertains, as is the case for energy utility companies, but it will happen all the more in a market that is effectively a series of regional monopoly markets, as is the case for the water industry.

There have been some interesting experiments on improving the coverage of social tariffs and affordable bills in the energy industry, and I hope that Ministers will take those into account in relation to water supply. There have been some interesting experiments on entitlement to the benefits that support low-income families or those that meet a particular additional need, such as disability benefits. There has almost been a two-way trade in working around that linkage with the receipt of benefits. It is of course possible to think more creatively about how information held by the Department for Work and Pensions and other agencies on who is in receipt of financial benefits could be used more widely to identify households that might also be eligible for social tariffs, a point the Secretary of State alluded to in her opening remarks last week. Although I appreciate the concerns about data sharing, I think that the benefits would surely outweigh the risks and urge Ministers to think imaginatively about how the data could be shared effectively.

[Alison Seabeck]

My hon. Friend talks with a great deal of experience in this field. Could she offer a view on whether the introduction of universal credit will make it more straightforward to operate a social tariff through the benefits system or slightly more complicated because it will be less easy to pull out certain elements and see where people’s needs are?

[Kate Green]

I will not venture to speculate on that—it is disappointing that I, a universal credit junkie, do not have an answer. This is one of the rare moments when I say that it might be useful that universal credit is a household benefit, because water is of course a household bill and so the calculation might be easy. However, a number of the elements of local financial support, such as council tax benefits, will not be within universal credit, so it might not be a straightforward indicator of which households and properties are particularly likely to be linked to high water usage. I hope that the Minister will take the opportunity to discuss the localising of benefits with colleagues in the Departments for Work and Pensions and for Communities and Local Government and to explore what the options might be following the introduction of universal credit. The Secretary of State for Work and Pensions certainly makes great claims about the access to data that universal credit will both rely on and introduce, and I think that it is undoubtedly the mood of the House that we would want to see the data used effectively and constructively, with careful attention to privacy and data sharing concerns, in order to help bring water bills down.

As I have said, the linkage to those in receipt of benefits works two ways. It is not just a case of looking at benefits data and identifying people who might be eligible for a social tariff; it is also about looking at people who are on social tariffs and ensuring that they are in receipt of all the financial support to which they might be entitled through the benefits system.

The Minister may be aware of—and if he is not, I urge him to go and look at—the excellent schemes that have been developed with energy utility companies in order to link benefits checks, proactive benefits advice and entitlements assessments, working closely with a number of charities, to customers on social tariffs. That interesting model has worked well in several parts of the country, with several utility companies and advice agencies working in partnership, so I hope that he will consider whether it might work for the water industry, too.

I endorse strongly what my hon. Friend the Member for Bolton West (Julie Hilling) said about help for people struggling to pay water bills, and I ask the Minister also to comment on consumer education in terms of water usage, because if households can use water more efficiently, they will also help to manage their bills.

My second issue relates to clause 2, and I shall look again at its wider potential beyond the immediate need that it seeks to address—that of resolving the serious problems in London. It relates to the substantial infrastructure investment that the Bill envisages but which I again encourage Ministers to think about using proactively in terms of infrastructure development throughout the country.

At Davyhulme in my constituency, United Utilities operates a large sewage and water treatment plant, which was built in the 19th century but has been at the forefront of technical innovation and development since it was established—and no more so than now. Its groundbreaking sludge treatment project, which when fully up and running will be the largest such programme in the world, takes raw sewage and effectively transforms it into renewable energy sources, with the treatment by-product being used as soil conditioner.

That interesting and remarkable project has already benefited from modest financial support from the Government for its pilot stage, but, if drawing such green energy supplies from sewage and water treatment is to be a real runner, we might want to encourage substantial national investment in it. It is estimated that the Davyhulme plant, when fully operational, could supply green energy to 5,000 homes in the north-west, so there is substantial potential for such energy sources to become a major part of the Government’s renewable energy strategy. I should therefore be interested to hear from the Minister what discussions are taking place with his colleagues in the Department of Energy and Climate Change to link investment in our water treatment sector to the development of new energy supplies.

Under clause 2, I see how Government thinking about their role in supporting the industry’s development through investment or pump-priming might be taken forward. There is a real win-win possibility, which I am sure the Minister will want to explore.

I am grateful to have had the opportunity to raise these wider issues in the context of this Bill. I appreciate that it has not been introduced to deal with the long-term strategic issues of infrastructure and affordability, but in the absence of any other water legislation, or of any sign of new legislation, this may be the only legislation that we have to work with for some time to come, and it would be a great shame if we were not able to maximise its potential.