Water Industry

Debate between Simon Hughes and Gavin Shuker

Tuesday 5th November 2013 Commons Chamber

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

It is a pleasure to serve under your chairmanship for the first time, Madam Deputy Speaker; I welcome you to the Chair. I thank the Backbench Business Committee for giving us this opportunity—I lobbied for it, so I am one of those responsible for securing the debate—and I thank my hon. Friend the Member for Dover (Charlie Elphicke) for introducing the debate. I apologise for being unable to hear his contribution—I was detained—but I have been present for much of the debate. I welcome the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson), who has inherited the Water Bill. His predecessor, my hon. Friend the Member for Newbury (Richard Benyon), said that this issue has occupied him for the past three years. I thank him for always being courteous and engaging, not least on matters relating to Thames Water.

I received an encouraging piece of information a few weeks ago, as did other hon. Members who represent the Thames Water area. As my hon. Friend the Member for South Swindon (Mr Buckland) said a moment ago, the provisional view of Ofwat is that it is minded to reject the latest application from Thames Water to increase prices. Given that we had previously been told by Thames Water that it expected to increase prices not just next year but every year by approximately £60 to £80 per household, to fund the Thames tunnel, that is a welcome relief. I understand that Ofwat has not made its final decision, but I hope it will confirm it this week. My constituents would be encouraged by that news.

It was also encouraging to hear the Environment Secretary this week tell water companies to be mindful that price increases should be imposed only where necessary, and remind them to introduce special tariffs for hard-pressed households. That takes me back to debates at the end of the previous Parliament when my hon. Friends the Members for Brecon and Radnorshire (Roger Williams) and for Cheltenham (Martin Horwood) tabled an amendment to the Flood and Water Management Bill to allow for social tariffs, which had never before existed in the water industry. There had been social tariffs in the energy industry, but not in the water industry. The Act became law on 8 April 2010—probably the last piece of legislation to sneak over the line before the general election. Since then, the Government have been positive about encouraging individuals to consider how they can get help with their water bills and ensuring that water companies introduce social tariffs. Since the Liberal Democrats have been in the Government, guidance on social tariffs was issued in June 2012 and water companies have been able to introduce their own social tariffs since 2013. I credit Thames Water with welcoming and responding to that opportunity.

Many families are often hard pressed by the cost of their water bills. For years, I and my hon. Friend the Minister and his colleagues in Cornwall and the south-west campaigned for a reduction in south-west water bills, but the Government have now dealt with that and, in a welcome move, have legislated to reduce bills in the south-west.

For the benefit of those who follow our debates, I should add that there are two other schemes that provide help. The first is the WaterSure scheme, funded by water customers, which provides financial help to householders with three or more children under the age of 19, if on a water meter and in receipt of certain benefits—people should check which benefits and whether they qualify—and for those without children but in receipt of benefits and with a medical condition requiring excessive water use. That is important. Not everybody knows about it, but they should, particularly those struggling who might qualify. The other scheme, Water Direct, run by the Department for Work and Pensions, helps householders in receipt of certain benefits to manage debt with water companies. Under that scheme, the DWP acts as a broker to help make arrangements.

[Gavin Shuker]

Will the right hon. Gentleman give way?

[Simon Hughes]

Before I give way, I pay tribute to the hon. Gentleman for the work he did from the Opposition Front Bench and for his contribution a few minutes ago, which I heard and enjoyed.

[Gavin Shuker]

That is incredibly generous of the right hon. Gentleman. I am just checking I am not dead—people rarely speak nicely of each other in the House, so perhaps I am.

I wanted to be helpful, actually. Does the right hon. Gentleman agree that neither of those quite good schemes is well known, partly because they operate regionally? In other words, there is no clearly identifiable social tariff scheme that the entire water industry can point to—although I appreciate that WaterSure is a national scheme—and there are patches of coverage, which is one reason why all water companies should have a social tariff.

[Simon Hughes]

I apologise if I phrased my remarks as if to suggest that the hon. Gentleman was the former Member for Luton South. He is clearly still the current Member, as I know, not least because when I last went to Luton on official business—to watch Millwall beat Luton Town—he was there to buy me a drink afterwards. I was very grateful—actually, I cannot remember whether I bought him a drink or he bought me one, but anyway it was a very nice pub, and I recommend it. Luton has good breweries, beer and pubs. But we, as the away team, were very well received by our hosts. [Interruption.] He wants me to stop rubbing it in. I apologise.

One of the dates in my diary this week, besides this debate, was that for making representations to the public inquiry into the Thames tideway tunnel. The latest date for written representations was yesterday, which was when I submitted mine. For my constituents and many others, not just in London but in the whole Thames Water region, it remains a live issue whether Thames Water’s current plans for the tunnel are the right ones, given the alternative ways of dealing with sewage in London, and the question whether the route is the right one. Obviously, the route will impact significantly on constituencies such as mine. For example, a big site on Chambers wharf is proposed for the drive shaft, but I and my constituents argue that it should be used for the reception shaft—if it is to be used at all—and that the drive shaft should be elsewhere.

We also have concerns about the financing. The hon. Member for South Swindon said that the debate was ongoing in government about what the right approach should be, if the Government are to respond to Thames Water’s approaches. My constituents think—the right hon. Member for Holborn and St Pancras (Frank Dobson) probably shares this view—it is a bit rich for a non-public company to run down its assets and then ask the Government to underwrite it in borrowing significant amounts of money and expecting the taxpayer, the bill payer or both to pick up the bill, as is currently proposed.

I have regularly urged my right hon. Friend the Chief Secretary to the Treasury and colleagues in the Department for Environment, Food and Rural Affairs—before and after the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall, took up his post—to be careful not to endorse a solution that appears to condone allowing water companies in England to run down their assets and then try to get Government support to bail them out. That would not send the right message. The water companies must understand that, if they make choices resulting in their profits going not to the consumer but to their shareholders in the form of dividends, they really cannot expect the Government to come to the rescue, even if that means that one company eventually has to be replaced by another. I am sure that there is no shortage of companies willing to enter the water market in England.

Water Industry (Financial Assistance) Bill

Debate between Simon Hughes and Gavin Shuker

Wednesday 14th March 2012 Commons Chamber

[Simon Hughes]

Thank you, Ms Primarolo, and of course I will.

I understand that the Minister realises what the issues are. I heard what the Minister said, and I tell my hon. Friend the Member for Hendon (Mr Offord) that the equator principles are now well-established principles for finance companies that are lending nationally and internationally and they were the best form I could find of a benchmark of ethical standards for financial companies that are lending to utilities. Yes, they were developed in the context of the third world, or the developing world, but they do not just apply there. I understand the points that were made.

The negotiations to which the Minister referred are being conducted confidentially, of course, and I understand that, but I hope that after today’s debate we will be able to ensure—the Minister has offered to do so—that there is engagement across the parties and across the House, including with those of us whose constituents, like his, have an interest in our ending up with a rigorous system for ensuring that Thames Water is accountable. We have flagged up the wider issue, which we want to take elsewhere, with Government.

On the comments of Opposition Members, not least those of the hon. Member for Hammersmith (Mr Slaughter), about the meeting held upstairs, I am grateful that colleagues came to that meeting and others held in this and other buildings about Thames Water. My view is that an evidence-based conclusion should be reached about what the right systems are for dealing with what has been a growing problem for the Thames. We need to make sure that we are all confident that we come up with the right solution, and it is perfectly proper to call people who have views and experience to give evidence. Like the hon. Gentleman, I was slightly surprised that Professor Binnie appeared to move from a view that he had moved on to, back to a view that he had originally held. It is important not to ignore the principle that we should not overspend on a capital project if there are other ways of doing things that give better value for money.

I am grateful for the time we have taken to look at this issue, which is now on the agenda. I am determined that engagement with Ministers should continue and I hope that Ministers will be very positive about making sure that not only the Government but Thames Water and Ofwat engage. May I end by correcting one thing that I mis-said when I was talking about an example that should give us a warning? I was talking about the M6 project and the way it had been funded. I said that the company that ran the project, which is linked to the company involved in Thames Water, had a net worth of £67 million and paid no corporation tax, but I should have said that it had a net worth of minus £67 million. I hope that this makes my point a better one—that a company may appear not to have any money but can be paying out large amounts in dividends. I am grateful to have had the opportunity to put that right and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Gavin Shuker]

I beg to move amendment 2, in clause 2, page 3, line 5, at end insert—

‘(6A) No financial assistance may be given under subsection (6) unless the Secretary of State has laid a draft of a statutory instrument setting out the terms and conditions including the duration of such assistance before, and such draft has been approved by a resolution of, each House of Parliament.’.

--- Later in debate ---

[Simon Hughes]

On that important point, I know from my experience of the Jubilee line extension and other major projects that often the issue is not whether a deal is done that in theory ensures jobs, apprenticeships and training for local residents, but whether such a deal is then monitored and delivered. Often the will is there but it does not turn out that way in practice.

[Gavin Shuker]

The right hon. Gentleman makes his point explicitly and brilliantly. If the lessons of the past 20 years on major infrastructure projects where we have required special social benefits are to be learnt, monitoring is absolutely essential. That is why I think that our amendment’s approach is very sensible. It would require the Secretary of State to bring forward her plan, and an agreement with the infrastructure provider, so that it could be approved by this House. The additional level of scrutiny given would not just be an assurance in the contracts; there would be proper parliamentary accountability to ensure that the benefits, for Londoners in this case, are spread across the capital and give young Londoners a fair start.

We know that the Thames tunnel will be a huge infrastructure project, and we have all seen the bad news on youth unemployment today, so we are calling on the Government to ensure that young Londoners get a fair share of the 4,000 jobs the tunnel will deliver. In short, this is a real opportunity to help guarantee apprenticeships and high-level skills. I hope that the Minister will be able to accept both amendments, which would improve the Bill for Londoners now and for all households in the years to come.