Water Industry (Financial Assistance) Bill

Stephen Gilbert Excerpts

Wednesday 29th February 2012 Commons Chamber

[Mary Creagh]

I am happy to report that the pigs I met in the farmer’s field in the hon. Lady’s constituency were extremely well. There was a very strong smell of bacon coming off them, even while they were alive, which was very nice, and I was very happy to see them.

On privatisation, we accept the consensus that privatisation is here to stay and that it has delivered the investment in the infrastructure at no direct cost to the taxpayer. It is clear that that cost has been paid indirectly by customers through their bills, however, with particular damage to customers in the south-west. That is why the Bill is with us today.

[Stephen Gilbert (St Austell and Newquay) (LD)]

This seems to be a particularly smelly debate. Can the hon. Lady explain why over 13 years, despite recognising the problems of privatisation in Cornwall and the south-west, Labour did nothing to help address the concerns that the Bill addresses?

[Mary Creagh]

I have in my hand a graph from Ofwat’s website about the annual average bill. The hon. Gentleman will see—I am not sure whether he can see this far, but I would be happy to pass it on to him—that when we passed the relevant water legislation in 2000 water bills dropped from an average of £325 a year to £285 a year. During that water review period, water bills were much lower. We took action across the country and that will also have affected the hon. Gentleman’s constituents in the south-west. He is also ignoring the fact that we asked Anna Walker to consider the issue of affordability. We have had the Walker report and only one aspect of its many recommendations is being debated today. The rest are being left, I am afraid, on the long finger.

--- Later in debate ---

[Miss McIntosh]

I am most grateful. If it does not clash with our Committee meeting, all of us who are available will endeavour to be there.

I echo the comments of the hon. Member for Wakefield (Mary Creagh) about there not being an impact assessment. The explanatory notes state that because the Bill is concerned solely with public expenditure, no impact assessment has been undertaken. Clearly, it is not just about public expenditure; a substantial amount of money is being requested by the water companies, through the Government, to give a £50 reduction. The Minister will be aware that some of those who live in and represent the south-west are concerned that increases in inflation will wipe out the £50 reduction.

Today, the Select Committee took evidence from the Minister of State, Cabinet Office, who is responsible for providing policy advice. He told us that an impact assessment is meant to look at the environmental impact of a project. I am not suggesting that the Bill is defective because it does not have an impact assessment, but I would like to record my personal disappointment that there is no impact assessment. It would have allowed the House to perform proper scrutiny on Second Reading and in subsequent parliamentary stages. It should have been incumbent on the Government to produce an impact assessment on the implications for the water companies of the reduction of water bills in the south-west of England and on the impact that the Bill will have on Thames Water.

The Select Committee produced an excellent first report of this Parliament, if I may describe it as such, entitled, “Future flood and water management legislation”. It is right at this moment to pay tribute to the work of the previous Government. There was all-party support for the Pitt report and its recommendations. There was also all-party support for, and obviously positive scrutiny of, the Flood and Water Management Act 2010. The fact that we are having to wait for the draft water Bill, which will cover all the other aspects, is a source of concern. We are approaching apace 30 June 2013, when the Association of British Insurers will look to replace its statement of principles on the provision of flood insurance. There will also be a host of other measures to consider.

Perhaps in responding, the Minister could explain what he is doing about insurance. I want to record my personal resistance to any state funding of insurance. There are hard cases, which many of us will have in our own constituencies, where houses remain at a substantial or high risk of flooding. I can think of examples such as Thirsk, Pickering, Malton in the past, and Sinnington at the moment. There are therefore insurance aspects that need to be considered. However, as soon as a Government introduce an element of state funding or state insurance, it leads others who are on a low or fixed income to argue that they have concerns about their ability to pay insurance. I know from the visits I made as shadow floods Minister to parts of the country such as Cumbria that there is real concern, particularly when properties are rented, about whether those on low incomes can afford even contents insurance.

[Stephen Gilbert]

With some 200,000 homes in the country at risk of flooding, what mechanism would my hon. Friend propose for ensuring that the people affected can access affordable insurance?

[Miss McIntosh]

Speaking in an entirely personal capacity, and looking at sustainable development and flood prevention, the one thing we could do today is to stop building on floodplains. Perhaps the House would like to unite around that and an amendment could be tabled to a future water Bill.

There are things that we can do now. There has been lots in the papers recently about water stress and scarcity, and drought. That will inevitably have an impact on homes. There is a risk of subsidence and there are reports of roads cracking. That obviously has insurance implications for householders and business properties, but also for highways. Again in a personal capacity, I challenge the Minister on how we will pay in those mostly rural areas for roads that are cracking now because of drought rather than the flood damage that occurred in the previous two years.

I welcome the fact that our report discusses the new responsibilities of the upper-tier authorities for flood and water management, and that funds are available. The Government response talks about providing the funding to lead local flood authorities through direct grants and says that that is expected to fund fully their new responsibilities under the Act. However, my local authority tells me that those moneys are not ring-fenced. If that is the case, and we are reducing, because of austerity, the money for the core tasks of the upper-tier authorities—county and unitary—that will pose real difficulty for them, and I put that to the Minister.

My hon. Friend the Member for Tiverton and Honiton (Neil Parish) mentioned affordability. The Minister and others have been challenged about that in many forums, not only the Select Committee, but all-party groups. It is right that the Bill focuses on affordability for the south-west region. [Hon. Members: “Hear, hear.”] I have no connection with the south-west, other than hoping that I have many friends on both sides of the House who represent the region extremely ably. However, there is a particular issue in that the population is small and there is a heavy emphasis on fixed and lower incomes. As I said, the application of the EU drinking water directive, and especially the bathing water directive, posed enormous problems for the south-west.

I therefore welcome the fact that the Bill addresses affordability. I hope that when the House has ample time—I am sorry if it will not be this year; we keep hearing that something will happen in the coming weeks or the coming months—and the draft Bill is before us, we can address some of the other affordability problems and also a social tariff.