Water Bill

Debate between George Hollingbery and Charles Walker

Monday 25th November 2013 Commons Chamber

[George Hollingbery (Meon Valley) (Con)]

I declare an interest as the riparian owner of a small stretch of the headwaters of the River Itchen in Hampshire and as a small part-owner of similar rights on the River Spey in Scotland. I am also chairman of the all-party angling group.

In an ideal water world, we would have cheap bills for all, plentiful and clean drinking water and sparklingly clean rivers and watercourses, stuffed with myriad fish, leaping with baby otters and surrounded by clouds of fly-life with beds of iris and crow’s foot—okay, this is the bit where we hear the needle being ripped off the Enigma Variations, because unfortunately, that dreamy picture does not match reality.

To be clear, things are not all bad. The industry has invested some £110 billion in the 25 years since privatisation, and much has been achieved in restoring antiquated infrastructure. Let us not forget the scale of the task: the industry looks after 414,000 km of water pipes; 1,380 treatment works; 6,000 reservoirs; 392,000 km of sewers and so forth. In 2012-13 alone, £4.5 billion of investment has been made. A great deal of good work is being done; things are improving in tackling water quality in the environment; and the health of rivers has improved. Point sources of pollution have been tackled, and whole catchment management plans promise improvements in diffuse pollution. However, as the water White Paper so tellingly pointed out, only 27% of our rivers and lakes are fully functioning ecosystems. We surely have a great deal more to do.

What does the Bill contribute? Hon. Members know that we face difficult financial times and that consumers must be protected in a monopolistic market. The Bill will help. The opening of certain retail markets to competition, with the prospect of that widening to all consumers of water, must surely be a crucial step in keeping downward pressure on end-user pricing. That and many other measures in the Bill, such as the change in the byzantine regime that compensated companies for the removal or change in abstraction licences, will help to solve a number of problems that the industry faces and that directly impact on pricing.

We face a problem, however. We must not throw the proverbial baby out with the tap water and get into the position in which the energy sector finds itself. A lack of long-term investment has left us all vulnerable to power outages, as old capacity is closed down and new capacity has yet to come on stream. The few hon. Members who are in the Chamber might think that the two sectors are wholly different. They might think, “Surely, the raw materials of water fall freely out of the sky regularly, sometimes on a prodigious scale.” That is true in part, but it is the how much, how often and where that matters.

As was pointed out to me in an excellent briefing from the Angling Trust, the UK has less rainfall per person than our northern European neighbours. London is drier than Istanbul. In the UK, every person uses approximately 150 litres of water a day, which is one of the highest usages in Europe. The UK—believe it or not—has less available water per person than most other European countries.

Last summer demonstrated how precarious our position has become. My hon. Friend the Member for Newbury (Richard Benyon), who is in his place, has painted a compelling picture of the crisis that we faced. It is not an exaggeration to say that many parts of the country would have faced severe shortages. Many people in the south and east of the country would have relied on standpipes, and there might have been an absolute disaster for our natural environment. Rivers had begun to run dry, as their natural sources dried up and as water companies abstracted yet more to meet demand.

We need to understand that the three-year scenario will happen—it is not a matter of if, but truly a matter of when. We should remember that it does not matter how cheap water is if there is none. I therefore want to make a few comments on resilience. More can and is being done on leakage. There is some success on consumption through metering, through the advent of modern technologies that use less water for the same tasks and through education, but we face a potential structural problem in the regulatory environment.

Resilience necessarily means building infrastructure. Ofwat rightly has a primary duty to protect customers, but it therefore has a perverse incentive not to sanction investment in what is, by definition, redundant capacity. That is why I am particularly pleased by clause 22, which promotes resilience to being a primary duty for Ofwat. The measure is very much helped by the explicit guidance published in May by my hon. Friend the Member for Newbury and the Department, “Strategic policy statement to Ofwat: incorporating social and environmental guidance”. Paragraphs 3.6 to 3.9 explicitly set out the Government’s expectation that Ofwat should ensure long-term resilience and, crucially, sustainability in the system.

It is important to recognise that resilience is not the same as sustainability. None of us wants a system that creates resiliency in the water supply that relies on sources that are environmentally damaging. In the round, however, I am glad that we now seem to have a regulatory environment that recognises that protecting customers also means protecting a sustainable supply of water. However, I wonder whether we might go a step further. Hon. Members know that one of the biggest problems faced by large-scale infrastructure projects, such as those likely to be needed by the water industry, is delays in the planning system. To that end, I wonder whether the Minister has considered a national policy statement for water. After all, we have one for waste water, so why not have one for water? Such a statement would go a further step towards allowing Ofwat’s two conflicting duties to be resolved in a timely and structured manner. It should ensure that the necessary infrastructure is introduced in a way that is controlled by the Government, at a reasonable pace, and as the economy and consumers’ wallets allow.

As we have heard, one of the most urgent but complex areas of change that is needed is in abstraction. Hon. Members know that over-abstraction is damaging our environment and that the governing regime is antiquated and not fit for purpose. Licences granted in an entirely different social and historical context are still in force and in urgent need of change. I accept that that is a complex matter, but I remain somewhat disappointed that the necessary reform is not tackled in the Bill. I am reassured by the Secretary of State’s remarks this evening on our intentions in that regard, and I hope we hear similar commitments from the Opposition.

[Mr Charles Walker]

I agree with my hon. Friend that water abstraction is complex and that it does obvious damage—that obvious damage is dried up river beds.

[George Hollingbery]

Who could possibly disagree? That is clearly one consequence that we need to reform shortly. I will come to that in a moment.

Those of us who hold our natural environment dear, particularly those rivers and streams across the country that are fed by chalk aquifers, cannot wait for ever for change. Too many of our chalk streams, such as the Chess, the Beane, the Kennet and many others, have been irreparably damaged by over-abstraction. That simply cannot be allowed to continue, as my hon. Friend says. How can we possibly continue to lecture countries such as Brazil and Indonesia on environmental damage when we, the custodians of 85% of chalk streams—unique ecosystems—are complacent and allow them to be degraded over time, doing nothing about it? That simply will not do. We must change the system, and do so soon.

I understand why the Government have delayed reform, but the fact that the Bill does not change abstraction licensing at the same time as allowing new upstream supplies may well present a problem. One of the proposed resilience reforms is that those with unused abstraction licences for purposes other than general water supply and those with water surplus to their needs can sell water on. I welcome that in principle, but one concern is that, if proposals to reactivate old licences or sell bulk water across borders are not very carefully assessed in respect of their impact in source areas—in terms both of the environment and of local pricing incentives and competition—unanticipated damage could easily be done. I am glad to note that the Government have partially recognised that and committed to introducing changes to the Bill in Committee to ensure that permission must be obtained from the Environment Agency before any changes of use of water abstraction rights are made. May I suggest that a similar assessment of the impact on local pricing and competition in source areas also be made?

The same rules must surely apply to the bulk transfers proposed by the Bill. The Government have said that they are considering that, and I hope that similar changes will be introduced. It is worth noting we will need to consider how permitting would apply across the border into Scotland and Wales. No doubt, the ministerial team have that under review. Furthermore, it would be reassuring if the Government considered allowing such arrangements to be terminated on advice from the relevant assessor if it is clear that they are contributing to over-abstraction, causing environmental damage or skewing the competitive environment.

Finally, on water metering, as undertakers have made more progress on leak reduction, measures to reduce demand will become more important. Measures in building regulations and the advent of new technologies that reduce the amount of water needed to perform certain tasks have a part to play, but so does water metering. That is another complex matter. Hon. Members know that water metering increases costs for some people and reduces them for others. We should never allow companies to cut off supply to those who cannot pay their bills. However, water metering reduces consumption and allows householders and undertakers more accurately to identify local leakage, which can then be dealt with.

The Water Industry (Prescribed Conditions) Regulations 1999 allow universal water metering to be introduced in areas of water stress. I wonder whether it is time to take that a step further. We should consider not standing in the way of rolling out water metering schemes throughout all areas, water stressed or not, if an undertaker can demonstrate that they have a clear, deliverable plan to help customers to deal with the change; that they have similar, robust plans to deal with the difficulties faced by those who are least likely to be able to deal with increased bills; that their request for the roll-out forms part of a long-term strategy to reduce demand; and that the Secretary of State retains the power to remove the scheme if those things are not delivered. All I ask is that the Minister and his team consider such a change.

In conclusion, the Bill is a step in the right direction towards reform of the water industry. Its measures will help to increase competition and so keep down prices. It clearly recognises the need to guarantee long-term supply, but does so in the context of other measures and proposed changes that acknowledge that sustainability of the source of supply is as important as resilience. It would have been hugely preferable if abstraction reform were followed by changes to upstream competition in that order, but, when taken with the licensing requirements that Government are contemplating, the dangers posed can be mitigated. I look forward to joining colleagues in the Aye Lobby should a Division be called.