Water Industry (Financial Assistance) Bill

Julie Hilling Excerpts

Wednesday 14th March 2012 Commons Chamber

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

I call the Minister—

[Julie Hilling (Bolton West) (Lab)]

rose—

[The Chairman]

Ah, I call Julie Hilling. You were a little late, but I am glad that you have joined us.

[Julie Hilling]

I apologise, Mr Hoyle, for being a little slow in standing to indicate my intention to speak. You can take it that I was confused about which clauses were being debated at which time.

I want to speak briefly about new clause 1 and, in particular, to press the point of a national social tariff. In the north-west, the affordability of water is affected by deprivation. Unlike the south-west, it is not affected by geographical issues or expenditure. We are a region with considerable difficulties and the bills of United Utilities, which is the north-west water company, are close to the national average, but income deprivation is worse than in any other region. More than half of the country’s most deprived communities are in the north-west, even though we have only 13% of England’s population. Ofwat’s analysis shows that once households in the South West Water region receive their proposed £50 bill reduction, affordability problems will be more severe in the north-west than in the south-west. Company social tariffs will not solve the problem, however, as too many customers in the north-west are in financial need to make the in-house cross-subsidy work properly. We therefore need a national social tariff scheme that all water companies would pay into. Taking the hands-off approach of leaving it to water companies to provide their own affordability schemes, and certainly giving them the choice of whether or not to provide it, will not help the people who are most in need in Bolton West.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

As Members know full well, the only purpose for which we currently plan to exercise the power in clause 1 is to reduce the charges on household customers in the South West Water area. We have recognised that the circumstances in the south-west are exceptional and we will be addressing that unfairness. I am grateful to Opposition Members for bringing forward the amendments because they allow us to explain a little more clearly what we are trying to achieve in this part of the Bill.

Our policy has been set out clearly both in the water White Paper and by the Chancellor in the autumn statement. We will fund South West Water to reduce its customers’ bills by £50 a year from April 2013 and we have committed to do that until the end of the next spending review period. To answer the question that my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) asked, yes, from then it will be for the next comprehensive spending review period to negotiate this out of the Department for Environment, Food and Rural Affairs’ budget, but that certainly does not imply cuts across other vital parts of its budget. I assure her that this is an absolute priority. It has been hard-fought for by hon. Members from across the south-west, and there is an absolute commitment from the Government to continue the important work to address an unfairness that we recognise.

As hon. Members from the south-west will testify, this support for customers in the south-west is the result of their long campaign. They have fought hard for this and the problem of high water bills in the region has been raised many times in the House. I am proud that the Government are making progress on this issue but I am a little disappointed that the Opposition wish, through amendment 1, to force a further round of discussion on the merits of reducing bills in the south-west before we can move forward. Let me explain why. The Chancellor’s Budget or autumn statement is the appropriate place for setting out Government spending plans and for doing so within the broader economic context in which such decisions are made. It is inappropriate to micro-manage the economy through individual statutory instruments committing future Government spend. The Government make many decisions on spending and Parliament does not examine each one in detail through a process involving the laying of statutory instruments. However, the opportunity for parliamentary scrutiny does exist. DEFRA spending is subject to scrutiny by the excellent Environment, Food and Rural Affairs Committee and, if so wished, by the Public Accounts Committee. Government spending is also subject to the usual supply and estimates procedures with which we are all familiar. If the Government decided to use this power to provide further support, I would fully expect Members to scrutinise the case and to ensure that assistance was given only where and for as long as it was right to do so.

I draw to the attention of the hon. Member for Luton South (Gavin Shuker) the fact that new section 154A(1) within clause 1 focuses on an “English undertaker” and a “licensed water supplier”. We have to accept that there is not a lot of money floating around in Government at the moment—I am sure he recognises that—and so the idea that the Government are going to start sloshing money around freely without any public debate is absolutely ridiculous. One must also accept that that would be the case in future. We do not know what the future holds, but we want future Secretaries of State to be able to use the power where genuinely necessary. We therefore do not think the amendment is necessary. The Government are not going to start doling out money to water companies on a whim. We are using this power this time after years of debate, but it is unimaginable that any future use of the power would not attract the same level of debate.

In a similar vein, new clause 1 would threaten the action we are taking to deal with wider affordability problems. I point out that we will have the opportunity to develop the House’s thinking on this with the water Bill. I know that the Bill is eagerly sought by Members on both sides to take forward many of the issues we set out in the White Paper, which have been the subject of past reports to the Government. The Government have given a clear commitment that the Bill will be available for proper and full pre-legislative scrutiny and I hope that we will be able to publish it soon. Whether or not it is in the Queen’s Speech is not a matter for me.

[Julie Hilling]

May I press the Minister a little more on this? When he says “soon” does he mean in the next Session or the Session after that?

[Richard Benyon]

The hon. Lady will understand that I am not privy to what is in the Queen’s Speech. I very much want a water Bill as soon as possible, but we have given a commitment that the Bill will be available for pre-legislative scrutiny, and that is not something that happens overnight—it requires a process and it would be tight to get in the full level of pre-legislative scrutiny and a Bill in the next Session. However, I accept her point that it is needed by many people as quickly as possible.

We know that some households in the south-west and other regions—let me reiterate that other regions are also affected—struggle with their water and sewerage charges. We will soon be issuing guidance that will allow for the development of company social tariffs. Water companies will be able to reduce the charges of customers who would otherwise have difficulty paying in full. In consultation with their customers, companies will decide who needs help in their area and then design local solutions to address local circumstances. Water companies know their customers and local circumstances. Companies vary in size and customer base, and average bills also vary from company to company. On Second Reading, Members spoke about the different kinds of affordability problems faced by their constituents. They also recognised that in some parts of the country there might be less scope than in others for customers to cross-subsidise others in the region. I urge hon. Members to consider the Cholderton company, which serves only about 2,000 people. The difficulty of having a nationally mandated tariff that would apply to that company as well as to Thames Water, which has several million customers, accentuates the problem.

Imposing one-size-fits-all standards, as new clause 1 would require, on companies that decide to develop social tariffs would prevent them from reflecting the circumstances of their customer base and what their customers want. Some companies might be less likely to introduce social tariffs if the model did not suit their local circumstances. If hon. Members intend that all private water companies should be forced to introduce a centrally imposed social tariff scheme, I cannot support the introduction of that regulatory burden.