Water Bill

Baroness Northover Excerpts

Thursday 6th February 2014 Lords Chamber

[Earl Cathcart]

I thank my noble friend for correcting my wrong conclusion that the power lies with Ofwat. I should probably change my question to ask what the Secretary of State is going to do to change his attitude in this regard.

[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.