Water Bill

Lord Cameron of Dillington Excerpts

Monday 27th January 2014 Lords Chamber

[Lord Cameron of Dillington (CB)]

My Lords, I declare an interest as a farmer in possession of two abstraction licences. Also, not to be totally outdone by the Minister, I must own to having several fields that frequently lie under water, particularly this month.

On the whole, I think that this is a good Bill which is much needed to ensure that our watercourses, our water supplies, our water environment and our water management safeguards are all in good condition to face the future. Water, although not very highly valued by most people in this country—particularly in one of the wettest Januarys for years—is in fact the most valuable commodity on the planet. Ask any scientist looking for signs of life in the universe or any African farmer struggling with climate change, and you will find that water is indeed the key to life.

There is much good in the Bill, but to my mind it is lacking in ambition—a point on which I shall expand. My main point is that, even if the Government are right to proceed on a softly-softly basis, I for one should like to see more enabling clauses that permit the water industry to make more competitive and environmental progress without having to wait for another water Bill, which, after all, is unlikely to come along for a decade or so.

Let me run through various aspects of the Bill to show what I mean. First, retail competition for commercial customers is a good idea. As many noble Lords have said, it has been beneficial to more than half the businesses in Scotland, even if most of them ended up staying with their existing supplier. The reforms in Scotland have also resulted in household customers benefiting from the thought processes that such non-domestic retail competition has provoked in the water companies, but surely the end game must be to have retail competition across all water customers, commercial and domestic. I am therefore surprised that it appears we have to wait for another water Bill before such household competition can be introduced. There ought to be some enabling clause in this Bill to allow progress on this front, as and when it becomes appropriate.

Having said that, I for one would want to ensure that any future competitive structure was to the benefit of all customers and did not lead to de-averaging, and thus the unfair exploitation of rural and remote rural customers. I am told that competition can happen without de-averaging. Equally, it is important that water-saving activities by retailers do not result in anti-competitive activities by wholesalers. In other words, the Bill before us lacks the “no detriment” provisions of the Scottish legislation which protect both customers and the environment.

Moving on to the next lack of ambition, I think that there is a total absence of foresight over the question of metering. Southern Water, which covers the most metered area in England, believes that 100% metering would result in a 12% saving in water. That is a gigantic amount of water to remove from the system day in, day out. This could be the most environmental part of the Bill—if only it were there. Furthermore, the current voluntary-only metering actually puts the price up for those not metered and thus has proven negative social implications. I realise that if there was a universal tariff for every litre of water used, some poor households with large families, and others, would find themselves worse off under 100% metering. However, with transitional tariffs, social tariffs and even block tariffs and the like, and with the meter in the house and not at the end of the garden, it is perfectly possible for everyone to benefit from 100% metering. There is absolutely no doubt that the environment would win hands down—I repeat that there would be a 12% saving.

Furthermore, 100% metering results in retail water companies having a better and more direct relationship with individual customers. So metering is good for the environment and should also be good for customers. However, there appears to be nothing about metering in the Bill. At the very least, as I have said, there should be an enabling clause for greater incentives for water suppliers to work towards 100% metering—if that makes sense for their customers. The Government need to show some leadership in this field. For instance, the current barrier of having to prove the existence of a water-stressed area before promoting metering is totally unnecessary.

Moving on, I will touch on abstraction. Again, so far so good: upstream transfers—good, in my book; the flexibility of buying water from farmers’ winter storage reservoirs—good; and the free surrender of unused water company abstraction licences—very good. The latter unused licences have been hanging over the proper economic and environmental management of our river basins for far too long, and I am glad we are finally gripping that particular problem.

However, looking deeper at future plans for abstraction, I read the Defra consultation document Making the Most of Every Drop with interest. It is rightly ambitious in its proposals and I would go with either of the two main proposals that are in it. This is an important subject as water becomes more and more valuable to a growing British population, who are subject to ever more extreme climate events and yet possesses an admirable desire to protect their environment. However, I worry about the timetable. Why, as the consultation suggests, do we have to wait until the 2020s before implementing any changes? This would seem to be unnecessarily cautious. What guarantees do we have now that anything is going to happen at all? Again, why can we not have an enabling clause in the Bill or, at the very least, a time limit by which any new scheme has to be introduced? I urge the Government to be brave and to grip this issue firmly to bring about reforms as soon as they can.

So far, my comments have been largely about saving water and benefiting the environment, but I want to cover two other areas. The first is Flood Re, which I think is a good scheme and will work well. While I suspect that many of us would prefer it to cover band H properties and even SMEs, I recognise that the more it covers the greater will be the cost to ordinary householders, so I support the boundaries as currently proposed.

However, I am not sure that the cut-off date of 2009 can be quite so easily defended. We have to bear in mind that a large number of people outside the Westminster bubble, who bought houses in good faith which were built after 2009, would have been unaware that an Act would be introduced in 2014 which would make it impossible for them to benefit from a government flood insurance scheme. After all, those houses were built with the approval of local government through its planning system, and it is quite possible that central government even encouraged those people to buy them through its Help to Buy scheme. It therefore seems grossly unfair to impose on largely unknowing householders a retrospective date of 2009 for a scheme introduced in 2014. I think that people will be amazed to find that they are ineligible, so it would be better to set a date in the future, or at the passing of the Act, rather than holding the line on 2009.

My last point has not been mentioned so far in the debate but it came up in Committee and on Report in the Commons. It is to do with the protection of water supplies and the environment from fracking. I am very much in favour of fracking. I wish to see the multitude of boreholes necessary for a successful industry to be able to come into being in this country with the minimum of fuss from the public. One of the great concerns of the public is that their water supplies will be contaminated by stray gas concentrations from the fracking process. The industry assures us, and I believe it, that this is virtually impossible. All I can say is that, in that case, the public liability insurance bond will not cost them very much.

Meanwhile, the Minister in the other place assured us that such a compulsory insurance bond was unnecessary because the Environment Agency already has powers to make the polluter pay in the case of any required pollution clean-up and that, anyway, rigorous financial tests would be carried out on the fracking companies which would ensure they were as safe as the Bank of Scotland, so no government bailouts would ever be necessary. Quite apart from the fact that not all the companies currently involved in fracking exploration have totally pristine balance sheets—in fact, in some instances, it is very much the opposite—I do not believe that the public have confidence that the Government will not have to step in to protect water supplies and the environment. So why not insert a clause into this Bill which reassures the public that the companies will take on their own liabilities through an insurance bond—as they say, it should not cost them very much? I believe that that would go a long way to reassuring some potential objectors and thus help get the fracking industry off the ground, which I am keen to see.

Finally, by way of summary, I believe that this is a good Bill, but it is slightly lacking in ambition to really to get to grips now with all the problems that the water industry will have to face in the future.