Water Industry (Financial Assistance) Bill

Debate between Gavin Shuker and Baroness McIntosh of Pickering

Wednesday 14th March 2012 Commons Chamber

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

The amendment is defective in that there would be regulatory implications in respect of Ofwat, but they have not been considered. Indeed, I am struggling to understand why we need this amendment at all, given the current text of clause 1.

[Gavin Shuker]

The purpose of the amendment is to ensure that when the power under clause 1 is triggered, there is proper parliamentary accountability and oversight at the time of making any reductions. The hon. Lady mentions the regulatory regime. It would not be particularly affected under clause 1 as it currently stands. Ofwat’s role will be to see the money coming in and the money going out. This amendment would not change that situation at all, except that we in this House would have the opportunity to examine any scheme that is to be established and to have answers to any questions we might have: namely, how long, for which customers and for what duration.

As I have said, we agree with the proposals to give financial relief to the south-west from April 2013. Indeed, we examined this issue when in government and laid the groundwork for helping 700,000 households in the region. We therefore accept the argument that the south-west requires additional help to keep water affordable, but stopping there misses the point.

The south-west has the highest bills in the country and about 200,000 people are under water stress. In the Thames region, that number is 1.1 million, however. Our new clause 1 therefore starts with the simple proposition that by April 2013—the month when financial assistance will start flowing to Devon and Cornwall—the Secretary of State should bring forward minimum standards for a company social tariff. We think that is not too much to ask.

The numbers speak for themselves. As I established on Second Reading, 400,000 households in Wales, 460,000 households in Yorkshire, 780,000 households in the Severn Trent region and 1.1 million households in the Thames region pay more than 3% of their disposable income on water. The squeeze on living standards is real. This Government’s actions are contributing to high inflation and pressure on family budgets. The rise in VAT has pushed up the price of petrol, and the cost of child care is going up at twice the rate of wages, just as the Government cut that element of the working tax credit. Families with children who cannot raise their working hours from 16 to 24 could find themselves almost £3,000 worse off from next month. Energy prices have risen, while for many people pay has been frozen.

The crunch will be felt first and worst by low and middle-income families, particularly those with children. A single-earner couple household with kids that is earning £44,000 might sound well-off—and, indeed, in comparison to many, it is—but it will be hit hard by the £1,750 a year that it will lose overnight when child benefit is scrapped.

[Gavin Shuker]

I will not test your patience, Mr Hoyle, by continuing that debate. The hon. Gentleman puts his case on the record, but one of the key arguments in respect of new clause 1 is the squeeze on family living standards. We believe it would be wrong to park that argument in a different silo from the rising costs of water bills.

People are facing falling living standards, frozen wages and rising water bills. Our amendment would ensure that the power to introduce a company social tariff—a power that we legislated for when in government—is followed by Government action to ensure that these schemes are effective at making water affordable for those who are struggling to pay. Under the current Government’s plans, the design of any social tariff is entirely in the hands of each of our 20 or so water companies. Apart from WaterSure, there will be no national tariff, and there will be no national branding of water affordability schemes. Outside the south-west, there will be no new Government money to help those who cannot pay.

Under this Government’s plans, it is even down to the individual companies to decide whether to introduce a social tariff scheme at all. Although we believe the industry and Government should be working towards a national affordability solution, the first part of new clause 1 would require the Secretary of State to bring forward plans for minimum standards for water company social tariffs.

The second part is just as important. We know that if we cannot measure it, we cannot manage it. Therefore, water companies should be held to account by ensuring a league table is published each and every year reporting on the performance of company social tariffs. In the energy sector, Ofgem sets parameters for what can be included by suppliers as part of their spend on social initiatives, and it annually monitors suppliers’ progress against the voluntary commitment. A handful of water companies already have good social tariff schemes, but we want to raise the bar for all companies to the standards of the rest of the industry, both by requiring the Secretary of State to have minimum standards approved by Parliament, and by the monitoring and reporting of all companies, shaming those poor performers into action. By also requiring the number of households spending more than 3% and 5% of their disposable income on water to be published, we can monitor the scale of the affordability problem and make meaningful comparisons between companies.

Our amendment 1 and new clause 1 are attempts to improve the Bill. We welcome the money for the south-west, but stopping there misses the point. People’s ability to pay for something as basic as water should not be subject to a postcode lottery. This issue is at the heart of shaping a socially responsible water industry in the years to come. I hope the Minister will accept the amendments.

[Miss McIntosh]

I followed the arguments of the hon. Member for Luton South (Gavin Shuker) very closely, and I went along with a great deal of what he had to say, particularly his congratulations to the Minister and the Government on introducing what is a very timely Bill. I think I understand the spirit in which the Opposition amendments have been tabled. The Front-Bench colleague of the hon. Member for Luton South, the hon. Member for Ogmore (Huw Irranca-Davies), is present, and he will recall that we spent many—happy—hours scrutinising the provisions that were to become the Flood and Water Management Act 2010. That Bill was fairly good, but it was improved as we went along—although we did not have sufficient time to address many of its measures, of course.

That Act gives enormous order-making powers to the Secretary of State, and I would be interested to learn from the Minister why the Government have chosen not to draft a parliamentary order in respect of interested parties on this occasion. For the record, a number of hon. Friends—I hope I may call them that—on both sides of the House would normally be discussing the business of the Select Committee on Environment, Food and Rural Affairs, but we deem this debate so important that we thought it was our priority to be here to discuss the Bill and these amendments. Obviously, I am entirely at one with the Government, given that we have worked so hard under successive Governments to come up with a novel means of helping people with water bills in the south-west, but it would be helpful to know why clause 1 made no provision for parliamentary scrutiny. I, therefore, have some sympathy with what the hon. Member for Luton South and his colleagues have proposed.

Amendment 1 and, even more so, new clause 1, on social tariffs, raise the question of why the hon. Member for Ogmore and the previous Labour Administration did not introduce social tariffs as part of the 2010 Act. In addition, why were they not minded to introduce amendments at this stage to deal with bad debt, an issue that is exercising water companies? The Select Committee took evidence just last week on the water bills that the average household is having to pay because of the position on bad debt.

[Gavin Shuker]

The hon. Lady is making her points clearly, and I welcome the spirit in which she makes them. We have accepted the timetabling for this short Bill, which will go through quickly. We have been promised a comprehensive water Bill and if we had more time, we would have much to say about bad debt and we would look favourably on any amendments seeking to deal with it. Unfortunately, such amendments have not been tabled for today.

[Miss McIntosh]

I am grateful to the hon. Gentleman for those remarks. I hope that the Minister will confirm that the draft water Bill will contain provisions on social tariffs and tackling bad debt—I do not know whether there is any more recent news as to when it may be published.

The hon. Gentleman also referred to the Anna Walker report and water efficiency measures. Again, I wonder why he did not include any more detailed provisions on water efficiency measures in his amendment. I also wonder what the Minister and the Government are thinking on such measures, given that we are on the brink of the worst drought for at least 40 years. Anna Walker proposed some imaginative measures that households and businesses could take, and it is disappointing that they were not elaborated upon to a greater extent in the natural environment White Paper or the water White Paper. It would be helpful to know the Minister’s thinking on that. A lot of unfinished business on the 2010 Act could have found its way into this small Bill, but we await confirmation that such things will be dealt with in the wider and more comprehensive draft water Bill.

On new clause 1, I am not sure that I entirely followed the hon. Gentleman’s thinking on minimum standards for water company social tariffs. In what regard are these to be “minimum standards”? Are they to be minimum standards for comparative purposes or will they govern how the social tariffs would apply?

[Gavin Shuker]

I understand the hon. Lady’s confusion on this point. A number of options are available to us in terms of amending the Bill. We felt that the most appropriate route to go down was to allow companies discretion on whether or not to introduce a company social tariff, but to ensure that, at the very least, any such tariff met minimum standards set by the Secretary of State and approved by this House. At the moment, we are at the lowest rung of all the possible interventions and we simply seek to move things up one, in the hope of getting towards a national affordability solution.

--- Later in debate ---

[Rory Stewart]

The hon. Member for Luton South (Gavin Shuker) has made a powerful case for apprentices and for better scrutiny of financial mechanisms. I stand, with enormous modesty, not as someone representing the Thames, but as someone representing a large body of water in Cumbria. However, my disagreement with the amendments, and I suspect my party’s disagreement, is based on profound Tory principles. It is a disagreement not on the nature of scrutiny or the importance of apprenticeships, but on the basis of law, the way statutes should be created, the way administration should be driven through and the importance of the issue. We begin in agreement: apprenticeships are important, as is scrutiny. But Parliament is not the way to do this.

This is an elegant and unencumbered piece of legislation. What we have seen in infrastructure investment over the past 50 years is a complete misunderstanding in this country about the importance of Parliament in infrastructure and where Parliament should not be involved. We have been a catastrophe— not just the Labour Government, but the previous Conservative Government—when it comes to making the right infrastructure investments for this country. Why? It is because, unlike Denmark and Germany, we have never developed a proper attitude towards infrastructure or investment. We have never developed a national investment bank. We continue to believe that highly technical matters, such as those relating to the deployment of water or the details of the financing of infrastructure, can be resolved by Parliament, rather than the kinds of specialists in the World Bank who deliver these projects effectively around the world. We see that in water and, just as powerfully, in broadband.

If the Government are pushing ahead with this legislation, and if we are pushing back against the Opposition, it is because the failings over the past 13 years in delivering infrastructure are reflected in the comments of the hon. Member for Luton South. There are better ways of looking at the financing; there are better ways of looking at apprenticeships.

We have in place flexible apprenticeship mechanisms that are currently delivering more than 100,000 apprentices. Encumbering this legislation or, indeed, any future infrastructure legislation with that degree of detail would not only, as my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) pointed out, prove generally ineffective, as it has in the past owing to a lack of monitoring, but take away from civil servants—which is where it should lie—the real responsibility and accountability for delivering good, imaginative infrastructure projects, well financed and with apprentices in place.

Given the importance of this issue, given that water matters so much to us, given that the drop in public sector demand means that we should make more infrastructure investment, given that we need to be much more creative about how we bring financial mechanisms to bear, given that it is so cheap at the moment to borrow money, and given that it should be possible to make not just this but many more profitable investments on the basis of public sector insurance or financing, I beg the hon. Member for Luton South to withdraw the amendment. It would tie the hands of the Government at a very important moment, when we need exactly this kind of infrastructure and exactly this kind of investment in water not just for apprentices but for economic growth.

The way to proceed is with a serious, responsible approach to infrastructure investment, which will not be delivered through the kind of statutory commitments that the hon. Gentleman proposes.

[Miss McIntosh]

I shall limit my remarks and take a slightly different view from that of my hon. Friend the Member for Penrith and The Border (Rory Stewart), because I believe that there is some merit in parliamentary scrutiny and that, often, we have better laws as a result. Given that there is all-party and, indeed, consumer support for what the measure and, in particular clause 2(6), is trying to achieve, I am sure that in moving amendment 2 the hon. Member for Luton South (Gavin Shuker) is not seeking to delay matters through parliamentary scrutiny.

Will the hon. Gentleman consider this approach, however, which I have shared with the Leader of the House? When we have—as was mentioned in the debate about the first group of amendments—parliamentary scrutiny of draft orders under the Flood and Water Management Act 2010, for example, is it not unsatisfactory that all we are required to do is to vote for or against the statutory instrument? Would there not be some merit in being able to amend it?

I have chaired and served on Statutory Instrument Committees, as all of us have been privileged to do from time to time—although I hope that the Whips do not take that as a bid to serve on any in the future. As a humble Back Bencher, however, I believe—and this is where I part company with my hon. Friend the Member for Penrith and The Border—that if we are going to have scrutiny we should be able to amend statutory instruments. I find it unsatisfactory that we may have an amendable motion but not the power to amend a statutory instrument. I just plant that thought in the minds of the hon. Gentleman and of other hon. Members.

[Gavin Shuker]

I am grateful to the hon. Lady for her warm approach to our amendments and for her suggestion. To be clear, we would not necessarily have chosen the process that we are engaged in with this Bill, which is a money Bill. A hybrid Bill might have provided an opportunity really to scrutinise the two projects that, as the Minister has already said, the Bill is about.

[Miss McIntosh]

Bearing in mind the history of hybrid Bills in this House, and the length of time and the amount of dissent that they can involve, I am not sure that that is the path the hon. Gentleman really, truly wishes to go down.