Water and Sewerage Charges (South West Water)

George Eustice Excerpts

Wednesday 9th March 2011 Westminster Hall

[George Eustice (Camborne and Redruth) (Con)]

I congratulate my hon. Friend the Member for Torbay (Mr Sanders) on securing this important debate on the problem of water charges in the south-west. As he said, it is good to see colleagues from all parties here, many of whom have campaigned long and hard on this issue over a number of years.

I want to focus much more on the difficulty that we have solving this problem than on the problem itself, which has been comprehensively articulated by previous speakers. As I see it, the problem comes down to three key issues, which are often highlighted by Ofwat. First, half a dozen MPs from the south-west face the brutal problem of persuading 600 MPs elsewhere in the country that it is worth their while voting through legislation to require water customers in their areas to pay a sum of money—albeit only £1.50 a year—without, as they would see it, getting anything in return.

The second difficulty is one that the Minister has previously raised: someone on benefits or a very low income—someone living on the minimum wage in somewhere such as Manchester—could end up subsidising the bills of a millionaire with a second home in Cornwall.

The third problem that is sometimes cited is that we might set some sort of precedent. Thames Water is, for example, doing a lot of infrastructure work with the Thames tunnel, and the argument is that if we make an exception for the south-west, recognising what has been done there, the injustice that has been suffered and the infrastructure that has had to be put in place, we would be setting a precedent for other water companies.

The answer is to design a scheme to address those concerns—something that should not be beyond the wit of man. I have raised the issue with the Minister before, so he will be aware of my suggestion for a fair discount scheme. There would be two key criteria at the heart of that formula. First, there would be affordability. We would use the definition of affordability cited in Anna Walker’s report, which says that anyone who spends more than 3% of their household income on water bills is water poor. We should ensure that all those who spend more than 3% are eligible for some form of discount. That would catch about 70% of South West Water customers, and millionaires with second homes in Cornwall would not be eligible because they would not spend more than 3% of their household incomes on water. That would deal with the second argument that I set out about people on low incomes subsidising millionaires.

The second key criteria at the heart of the scheme would be recognising fairness. The scheme would recognise in absolute terms the scale of the bills in the south-west. People often have bills of £700 or £800 a year, and I have even heard anecdotally of people getting bills of £1,000 a year. That is why water charges are a political issue in the south-west in a way that they are nowhere else. There is a real issue of fairness just in terms of the absolute size of the bills.

We would, therefore, have a discount, which would be tapered depending on how much people’s bills varied from the national average. We would say that people in the south-west, whose bills are double the national average in many cases, were entitled to the full discount, which might be £80 or £100 a year. They would still pay more than anyone else, but they would receive a significant discount, which they would recognise as making a real difference.

In areas such as that covered by Thames Water, people might be technically water poor, but the fairness criteria would recognise that water bills in London are already very low and, indeed, below the national average. The taper would ensure that the discount given to those who were water poor in the Thames Water area was far smaller, because we would be recognising that their bills were not such a difficult issue and started from a low level.

The provisions would ensure that we had a national scheme that was open and available to all. Such a scheme would target affordability and not subsidise millionaires. It would also recognise unfairness and the fact that water charges are a political issue in places such as Devon and Cornwall by having a taper and changing the discount depending on the variants.

I put those thoughts to the Minister a couple of months ago, and lots of work is going on. I commend the approach that he has taken; he has worked incredibly hard to find a solution. The coalition has given a commitment to address the problem, and we all have a reason for wanting a successful outcome. I very much hope that we can find a solution together.