Water White Paper

Mary Creagh Excerpts

Thursday 8th December 2011 Commons Chamber

[Mary Creagh (Wakefield) (Lab)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the water White Paper.

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

Making sure that we have enough water for everyone will be one of the major challenges this country will have to deal with in the years ahead. Today’s publication of “Water for Life” recognises that water is essential for economic growth and that we must protect the environment for future generations.

The White Paper is a blueprint for action. It outlines plans to modernise the rules that govern how we take water from our rivers; it explains how we will improve the condition of our rivers by encouraging local organisations to improve water quality and ensure we are extracting water from our environment in the least harmful way; it announces plans to reform the water industry and deregulate water markets to drive economic growth; it enables business and public sector customers to negotiate better services from suppliers and to cut their costs; it removes barriers that have discouraged new entrants from competing in the water market; it asks water companies to consider where water trading and interconnecting pipelines could help to ensure secure water supplies at a price customers can afford; it enables water companies to introduce new social tariffs for people struggling to pay their bills and seeks to tackle bad debt that ordinary householders have to bear the cost of to the tune of £15 a year; and it tackles the historic unfairness of water infrastructure in the south-west.

The White Paper is the Government taking leadership on an issue of critical importance to our economy and our environment. It is a bold vision for the management and harnessing of an increasingly scarce but vital resource and I welcome this opportunity to discuss it with hon. Members today.

[Mary Creagh]

I start by thanking the Secretary of State for her note explaining why the market-sensitive parts of the White Paper were briefed to the stock exchange this morning and expressing my disappointment that she is not giving us her views on this.

We have just had the driest 12 months since records began 100 years ago. That has affected water quality, restricted boating activity and seen wildfires destroy valuable habitats. Last month, the Department for Environment, Food and Rural Affairs granted Anglian Water a drought permit, a highly unusual move for the autumn, when reservoirs are normally filling up. Last Thursday, the Environment Agency’s drought prospect report revealed that south-east England is at high risk of drought next year with some restrictions possible on customer supply. Ensuring a safe, affordable and continuous supply of water while protecting the environment and managing unpredictable rainfall is a major challenge. The White Paper is of intense interest to the public, who are worried about rising bills as real incomes fall and household budgets are squeezed. It builds on Labour’s Cave and Walker reviews, which we commissioned, and takes an evolutionary approach.

We welcome the proposals to introduce greater competition for business and public sector customers and to establish a cross-border market between England and Scotland for water and sewerage services. We also welcome the fact that water efficiency measures will be part of the green deal, as proposed by my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger) during the passage of the Energy Act 2011. However, the White Paper is silent on how the water sector will reduce its carbon footprint and encourage energy from waste, and the proposals on the removal of historical abstraction licences, which cause such damage to our environment, are given an end date of 2025, which is far too late.

Last week’s autumn statement announced £40 million a year to help 700,000 households in the south-west pay their water bills. Will the Minister tell the House when the £2 billion capital investment in the south-west that South West Water invested be paid off and how long the £40 million subsidy will continue for those customers? How will he ensure that those proposals for South West Water meet EU state aid rules? We know that bills in the south-west are, on average, £157 higher than those across the rest of the country, reflecting the botched Tory privatisation of 1989, which left 3% of the population paying for 30% of the country’s coastline and the £2 billion investment in new sewerage services. Does that money set a precedent for other areas of the country to receive help to offset capital investment costs? The cost of the Thames tideway tunnel is now estimated to be over £4 billion, so can Thames Water customers look forward to receiving similar help with their bills?

More than 2,250,000 pensioners, single adults and families spend more than 5% of their disposable income on water bills. The Government’s proposals to help people with rising bills elsewhere in England and Wales are weak and unclear. How does the Minister propose to force water companies to ensure that those eligible people receive help with their bills when that will come straight off the companie’s bottom line? What sanctions will there be for water companies that consistently fail to help people with their bills? Has he decided whether to fund Water Sure through public expenditure, as mentioned in the consultation in June, and, if so, what will the cost be per annum? Has he rejected the idea of match funding for company social tariffs in the south-west and modifying sewerage charges for non-household sectors?

Today’s water White Paper is more than six months late, and it is a curate’s egg—good in parts. We will work with the Government to ensure a fair deal for water customers, whatever part of the country they live in.

[Richard Benyon]

I am grateful to the hon. Lady for the welcome she has given to large elements of the White Paper. She is right that it builds on work that has been done over many years. I am grateful to Professor Cave, Anna Walker and to David Gray for his report on Ofwat, which informed the White Paper, as have the contributions of many stakeholders, other organisations and Members of the House.

The hon. Lady made a slightly predictable and lame remark about why I am dealing with the issue today, rather than the Secretary of State. We have a style of management in this Government that encourages people to take control of the issues. It is a highly motivational style that I recommend to her, because it encourages greater understanding of the issues. The Secretary of State and I have spent many hours preparing the White Paper and have immersed ourselves in the detail.

The hon. Lady is wrong to suggest that there is not enough in the White Paper on reform of the abstraction system. The abstraction rules go back to the early 1960s and do not take into account changes to our climate and weather patterns, and it is important that we have new and clear rules that take us into the future. We will consult in 2013 on our long-term approach to a transitional system of changing abstraction that will work and be sustainable in every sense.

There are urgent measures that we need to take forward, because in constituencies similar to mine, much-loved and much-valued rivers, which are vital to our eco-systems and to the general health of our environment and to the way in which we value it, are running dry. The White Paper sets out clearly how the Environment Agency will work to bring forward speedily measures that change how we abstract water, so that we return water as quickly as possible to river systems, and our catchment approach, which we announced in March, will soon start to benefit water quality and pollution. I urge the hon. Lady to support that measure, which involves many local people, is effective and tackles the urgent situation that we face, brought about by the current low rainfall and the impending drought, unless we have a proper, wet winter.

The hon. Lady mentioned South West Water. We believe that the announcement in the Budget, on which the Chancellor gave more detail in the autumn statement, sets out a way of righting a long-term wrong. It is to the credit of this Government that they have tackled it, because Members from all parts of the House have raised the issue for a great many years, and we are dealing with it. I am not going to pretend to her or to the House that the announcement will create the equivalence that people in the south-west might feel they deserve, but it is a considerable contribution and is separate from what we are doing to assist those on low incomes throughout the country to pay their bills.

We are consulting on the guidelines that we will produce for companies’ social tariffs, and I recommend to the hon. Lady the details in the White Paper on the excellent work that several water companies are doing to make it easier for people to pay their bills, and on the work that the companies are doing with organisations such as Citizens Advice and others.

The hon. Lady asks how long the payment announced by the Chancellor will continue. In an almost unique announcement, I can tell the House that it will continue beyond the end of the spending review and, in fact, until at least the end of the next spending review. Of course, it will be for Ministers then to decide what happens after that.

The hon. Lady talks about other high-cost items and their impact on people’s bills, and refers to the Thames tideway tunnel, which, as she rightly recognises, imposes a high cost on Thames Water customers. The cost of the project is of great concern to Ministers and to the Government, and we are looking at it very closely. We remain supportive of the scheme, however, and page 55 of the White Paper shows the Government’s clear support for it. The Thames is one of the most important rivers running through an iconic city, and we need to ensure that it is clean. We believe that this scheme offers the best solution.

The hon. Lady asks me about the guidance on tariffs. Water is a monopoly industry, and the monopoly industries are highly regulated by three regulators, so Ofwat will continue to set prices and to be an independent regulator. We will give clear guidance on where we think it should be going, but the relationship will remain the same and its responsibility will be to keep bills affordable.