Water Bill

Debate between John McDonnell and Baroness McIntosh of Pickering

Monday 6th January 2014 Commons Chamber

[Miss McIntosh]

I am grateful to the hon. Lady for her good services to the all-party group, where we serve as fellow officers. We hear of many entrants, but obviously, until the law is in place, it is difficult to put a number on that. I am sure that my hon. Friend the Minister will have heard and can perhaps comment, as he is closer to the issue.

We suggest that if existing companies are unable to compete with new entrants who want to come in for very good reasons and lose customers as a result, it makes sense to allow an exit strategy. I personally feel that we heard no compelling evidence during the pre-legislative scrutiny of the draft Bill and during our consideration of the water White Paper to suggest that the reform should not include a retail exit strategy. That is why we feel honour bound to come forward for the sake of the Bill’s completeness.

New clause 2 would give all undertakers the power but not the obligation to transfer their non-household retail business to a different company. It would give the Secretary of State the power to make any such transfer subject to approval and any necessary safeguards to ensure an orderly exit from the market. I hope that the House will be able to support the proposals because much of the Bill is silent on these matters and we want to use the new clause and amendment to give it more teeth.

There are several arguments in favour of allowing such a retail exit. For example, an exit clause is needed to allow the market to function normally and competitively. Additionally, a company should be able to organise its business in the way it considers best in the interests of its customers and shareholders. An exit clause would facilitate new entrants, especially larger ones, into the water and sewerage retail market because they would not need to win one contract at a time. Without new clause 2, I understand that economies of scale would work against new entrants and either prevent them from entering the market or, at the very least, reduce the benefits that they could provide to new customers due to higher costs of entry. I hope that my hon. Friend the Minister agrees that the proposal is helpful and that he will be minded to accept it. It would not be in the interest of companies or their customers to force companies to stay in a market in which they have few or no customers.

The general thrust of the new clause goes to the heart of this group of amendments dealing with the regime of the water industry. We should learn from what has happened in Scotland. I understand that DEFRA has stated that it intends to create a market in which access is regulated—in other words, with the rules of entry clearly set out and adhered to by all market participants. The reverse side of the coin is that if the rules of entry are to be set out, the House would, I am sure, want rules of orderly exit to be set out. I am not saying that exit would happen in many cases, but it is important that such rules are on the statute book.

Following our pre-legislative scrutiny, we said that as much detail as possible should be set out in the Bill so that the House could consider it. It is wrong—I part company from my hon. Friend the Minister in this respect —to leave too much to regulations, given that many of us with a great interest in this subject will not be selected to serve on the Delegated Legislation Committees that consider them. As the Bill does not provide for retail exit, the strategy is too open. It could be argued that the Government’s approach is based on the premise that parties in the retail market should be left to negotiate among themselves about matters such as service and price, but that could be set out in the Bill.

Considerations of price, service levels and the ability to respond to difficulties go to the heart of why it is important to have a competitive market in England, as has been achieved in Scotland. There must be a way of policing a situation in which incumbents are simply slow in responding to requests for information or services from new entrants. It is important not only to facilitate the path for new entrants, but to allow for an exit strategy and to bring about a competitive market. The Bill is completing its remaining stages in the House today, but little is known about upstream competition. The Government are asking that we take an awful lot on trust, but it would be better if the Bill provided for a definite exit strategy, which is why I commend new clause 2 and amendment 12 to the House.

[John McDonnell (Hayes and Harlington) (Lab)]

I am pleased to follow the hon. Member for Thirsk and Malton (Miss McIntosh). I see in the national press that she has had a little local difficulty. I hope that she can resolve the matter, because she would be a loss to the House if she were not returned at the next election—unless of course she were replaced by a Labour Member.

I want to speak to new clause 14, which is in my name. It suggests to the House that before we move forward with further legislation, we stand back and look objectively at the performance of the water supply industry since 1989 when it was privatised. I am not part of this common agreement among some parties in the House that privatisation and competition have been a success and are the way forward. In fact, I deeply regret what has happened since privatisation.

Flood and Water Management

Debate between John McDonnell and Baroness McIntosh of Pickering

Thursday 8th September 2011 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I refer to my entry in the Register of Members’ Financial Interests that I am secretary to the Fire Brigades Union.

I will focus on the statutory responsibility for flood preparation and flood response, although I almost feel that I should apologise for raising the matter so consistently in recent years. After the 2007 floods, the Pitt review was undertaken; its early recommendations were fairly straightforward, despite what the Committee calls some vagueness. The report recommended:

“The Government should urgently put in place a fully funded national capability for flood rescue with Fire and Rescue Authorities playing a leading role, underpinned as necessary by a statutory duty.”

That recommendation was fairly clear, but, referring to what the report had to say about preparation and rescue, Pitt added that

“the Review strongly believes that a statutory duty is the best means to achieve these outcomes.”

He continued:

“Whilst it is conceivable that non-statutory approaches, such as those proposed by the CFRA”—

chief fire and rescue adviser, Ken Knight—

“might work, such approaches do not provide the certainty the public expect and the Review believes is needed.”

All the evidence demonstrates that the original Pitt recommendations were correct. Despite some additional moneys being invested in equipment and in some elements of training, the evidence that the Committee received from the FBU was that things had gone backwards rather than forwards. Not enough was being invested in training exercises or in the necessary equipment. It should be blindingly obvious to those who have served in local government that if a statutory duty is not placed upon a particular local government role or function, it is no longer a priority at budget time. Statutory duties always gain priority when it comes to the allocation of resources.

I am pleased that the Committee heard more evidence on the subject, and recommendation 3 reinforces what Pitt had said. The Committee said at paragraph 26:

“We are concerned that the lack of a statutory duty for Fire and Rescue Authorities could jeopardise their flood preparation and response work, given pressures on them to direct their limited funding towards fulfilling nondiscretionary duties.”

We had hoped that the Labour Government would legislate on the matter, but what legislation we had did not deal with the question of statutory responsibility.

[Miss McIntosh]

I am grateful to the hon. Gentleman for his declaration of interest. Is the problem in his view a matter of funding, the responsibility for which no longer lies with DEFRA but with the Department for Communities and Local Government? We stand by our recommendation, but does he think that we should go further? We say that the matter should be included in the funding formula applied to the emergency services. Does he share our disappointment that that has not been done immediately?

[John McDonnell]

The Pitt review identified two areas: clarity of leadership in a particular response and resources, because a statutory duty gives security of access to those resources. I take the view that the statutory duty needs to be introduced as quickly as possible to tackle both matters. There should be more clarity about local government’s responsibilities; flowing from that will be both the resources and the clarity of the approach on the allocation of those resources for both Government and local fire authorities.

Unfortunately, the previous Government failed to legislate, but they set up various exercises and consultations that will eventually come to fruition. After the general election, the coalition agreement made reference to the Pitt review. It committed the coalition to taking forward

“the findings of the Pitt Review to improve our flood defences, and prevent unnecessary building in areas of high flood risk”—

in other words, implementing the recommendation of the Pitt review with regard to the statutory duty. The previous Government undertook Exercise Watermark. Although they did not specifically undertake to provide the analysis for a case study for a statutory duty, we were advised by Ministers responding to parliamentary questions that the exercise would inform the Government’s decision about whether statutory responsibility would be required. The interim report from Exercise Watermark told us that there would be a final report at the end of September. Encouragingly, it also said:

“Feedback from the Chief Fire Officers Association (CFOA) suggested the statutory duty for flood rescue should be co-ordinated by the Fire and Rescue Service (FRS) with appropriate funding.”

The interim report indicated that we were moving towards a statutory duty being introduced by the Government.

We then also had the recommendations from the fire futures forum, which advises Government on general safety issues, including fire and flooding. It discussed the options for future reform of the fire service and called for the implementation of a statutory duty, but with some caveats on where the funding for such work should come from.

A consensus seems to have been built up in recent years, stemming from the 2007 floods and culminating in the lessons learned from the 2009 floods, that there should be a statutory responsibility. We simply await the outcome of the final report on Exercise Watermark. Will the Minister confirm whether that report will reach us by the end of September? If not, will he intervene—perhaps in this memorial way that seems to be being pushed to establish his reputation—to ensure that the report is finalised as speedily as possible?

If the report fails to recommend a statutory duty for fire and rescue authorities, there will be many who will be extremely anxious that this is a missed opportunity to clarify duties and responsibilities and to secure funding. If it does recommend a statutory responsibility, I urge the Minister—I am sure that Members in this Chamber will assist him all they can—to lobby others to ensure that there is parliamentary time to enable such legislative activity to take place.