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Column 54unsaleable because its prices are too low, or saleable because its prices will be too high? It is impossible even for the hon. Gentleman to sustain both propositions.
Mr. Boateng : As the hon. Gentleman knows only too well, the gap between water prices and the retail price index has increased dramatically under the present Government, whereas under the previous Labour Government it closed. The hon. Gentleman makes an entirely spurious argument.
On the basis of what occurred in Committee and in another place, and of today's proceedings, consumers are right to be fearful of the fact that hidden within factor K is a remedy for increased prices. Factor K gives those who want to acquire the water industry the ability to boost profits, pass on any unforeseen costs, and avoid any risk that might otherwise arise in meeting required European standards. Built into the Government's proposals are practices that are discriminatory as between the urban and rural consumer and that will exploit the water companies' monopoly at every turn. The public know of that, which is why they are overwhelmingly opposed to water privatisation and to the pricing mechanism that the Government try to defend.
Only this morning I received a letter
Mrs. Alice Mahon (Halifax) : I know that my hon. Friend is about to say that this morning he received a letter from the chair of a water authority. Is my hon. Friend aware that over the past five years river and sewage pollution in Yorkshire has doubled, yet the chair of Yorkshire Water spends taxpayers' money hand over fist on advertisements that have got up my constituents' noses? Everyone who has written to me is outraged about the doubling of pollution.
Mr. Boateng : My hon. Friend has put her finger on the speciousness of the propaganda put out by the chairmen of the water authorities. The letter that I received today from the chairman of Thames Water contained the usual series of anodyne points seeking to justify the unjustifiable-- and, one is bound to add, to obscure the truth, which is that there is no way in which consumers will benefit from the sale.
One of the Government's proposals for the price mechanism attempts to buttress the advice already seized upon by Warburg Securities, the Government's broking adviser. Of course, the Government must work hand in hand with the brokers, who are the only people likely to benefit from privatisation. The main selling point for shares that already seem
"to have been condemned to slow profit growth"
" stable and, probably, highly in elastic demand allied to rising prices make the revenue characteristics of the industry extremely attractive,' says Warburg, making the best of a difficult task." It is a difficult task, but one thing that we know for certain is that it will be made even more difficult for the consumer who will have to meet the rising prices.
The chairmen of the water authorities have not always spoken with quite the pleasant, reasonable voice with which they purport to speak in the letter. I cannot but refer to the position in the north-west, and to a report that appeared in The Independent on 22 May, headed "Where there's mucky water there may be investors' brass".
Column 55That has a familiar ring, when we think of the muck and the worms that now infest our water.
What the chairman of Thames Water says is interesting and worthy of consideration. According to The Independent,
"one water authority chairman described it"--
the flotation and purchase of shares in water--
"as better than a gilt because it will be inflation-proof, with a little bit of sparkle and risk added by the diversification opportunities-- like safe sex'."
The mind boggles. That we should have sunk to such depths that chairmen of public bodies describe share flotations in terms of safe sex! It raises the spectre of Messrs Howard and Ridley as the Masters and Johnson of water privatisation. They are trying to sell the unsellable, and, whenever possible, to exploit the consumer for the benefit of the shareholder. We shall oppose them at every turn.
Mr. Nicholas Baker : We heard a good deal from the hon. Member for Brent, South (Mr. Boateng) in Committee, and were vastly amused by most of what he had to say--especially the bits that related to opera, which constituted the greater part of his speeches. Today, however, he finally told us his real concern, which is not for the consumer but for the shareholder.
The hon. Gentleman gave away the secret at the start of his excellent speech by expressing anxiety about the report that the Bill had received a thumbs-down from the City. It is a bit early for him to worry--the industry has not yet been privatised, so there is hope for his children sitting in the car park about which we heard so much. I advise him to go for the shares when they eventually appear. 5.45 pm
Lords amendment No. 13, which I welcome, is about consumers. We have heard remarkably little from Opposition Members about the consumer's interests. We have not even heard that the director general is to control prices, although that is surely one of the greatest consumer measures ever devised.
My hon. Friend the Minister mentioned another consumer measure--the connection charge. As he kindly said, my hon. Friends and I suggested that in Committee, but apparently the Opposition were not listening at that point. The hon. Member for Cardiff, South and Penarth (Mr. Michael) got into some difficulties in his speech--it is a great pleasure to see the hon. Gentleman in his place now--because he did not realise that the connection charge was a consumer measure. It is a one-off charge to be paid by developers on new properties to cover the capital costs of water and sewerage services. I will anticipate the hon. Member for Dewsbury (Mrs. Taylor), who has a pencil ready to write down her question. The price will come out of the land. If the hon. Lady talks to developers, that is the answer that she will hear from them.
Mrs. Ann Taylor rose --
It is existing consumers who will benefit from the connection charge, and it is right that they should not pay extra capital costs from new developments in their areas, and that the charge should be paid from the new land, with its inflated building costs. The measure will also replace the
Column 56section 52 agreements arrived at by many local authorities, and will end uncertainty and some of the less desirable deals done by local authorities and developers involving new capital costs. I therefore reject amendment (a) and reiterate my support, and that of my hon. Friends, for Lords amendment No. 13 which, like so many of the Government's amendments to the Bill, is a consumer-friendly measure.
Mr. Allan Roberts : This has been a wide-ranging debate. The Minister has accused Labour Members in the other place of voting against measures designed to protect the consumer, but that is not possible as there are no such measures in the Bill. The powers of the Director General of Water Services are such that the consumer will be far from protected.
The party of so-called choice is introducing compulsory metering. In Committee, Conservative Members said that they wanted metering. They can have meters now. Metering is not compulsory, so if people choose to have water meters there is nothing wrong with that. The Minister claims that the likelihood of the introduction of compulsory water metering in many areas has nothing whatever to do with privatisation. He believes that that exonerates the Government from blame. But it has everything to do with the poll tax legislation. If rateable values are abolished by the poll tax legislation, another means of charging has to be found. When compulsory water meters are installed in every home--at a capital cost of £1.6 billion--that will be a good way of providing the private water companies with a licence to print money. The compulsory water meter, which is a direct consequence of the poll tax legislation, is thoroughly unfair, switching the burden of taxation from the rich to the poor, who will be charged for the amount of water that they use. The Minister extols that fact as a virtue, but the cost of water bears no relation to the amount that is used. Unlike electricity, which is expensive to produce but cheap to distribute, water is cheap to produce but expensive to distribute. As soon as the infrastructure is paid for and the pipes are there to take water to households, people can use twice as much water without it costing the water companies twice as much. The extra cost is negligible. It is the cost of getting the water there in the first place that is the problem. If people economise and use half as much water as their next door neighbours, the water companies will not save half the cost. Once the pipe has been laid and the water provided, the cost has already been met. There are no savings to be made by water metering. If the Government are concerned about economising and getting people to think about saving water, they should do something about the 20 to 30 per cent. of water which is leaking out of an aging system. That is the amount of water that leaves the reservoirs but never reaches people's taps because the system is out of date. The £1.6 billion capital cost of installing meters would be better spent on mending an aging leaking system so that water is no longer wasted.
Water metering is a tax on bath time. Large families will be reluctant to use water to bath their children as often as they should so as to cut down their water bills. The elderly, who already economise on electricity and other forms of energy for heating their homes because they are worried
Column 57about the size of their bills, will economise on the use of water as well. They will be reluctant to flush the loo or to bath as often as they would like.
If compulsory water metering is not introduced, the alternative is a water poll tax. That is the prospect that the Government are offering in this Bill, which they say shows their concern for the consumer. There will be a flat rate water charge--another shifting of the burden of costs and taxation from the rich to the poor. North-West Water is determined to introduce compulsory water metering for all industrial and commercial users immediately after privatisation. It is already determined to compel any new dwelling to have a water meter, and it has made plans for the compulsory fitting of water meters over a period of years throughout the whole of its area. North-West Water is not concerned about the consumer. There will be an army of meter readers. Huge capital expenditure will be involved, which will lead to a tax on the use of water--a tax on cleanliness and a switch in the burden of taxation from rich to poor.
With the 27 per cent. price increase that all independent experts have calculated is likely after privatisation, we shall have the Government's disgraceful cut-off regime. The policy statements by the Department of the Environment on disconnections and guaranteed standards of service by private water companies are also a disgrace. The water industry clearly expects an increase in the number of disconnections from the domestic water supply. That is how much the Government care about the consumer. Last year, 9,000 people supplied by water authorities and 6,000 supplied by water companies had their water supply disconnected. The Labour party believes that water disconnection should never be necessary. Water is fundamental to the health and wellbeing of the nation. Giving privately owned monopolies wider scope and greater powers to disconnect customers who have difficulty paying for their water has no place in a civilised society. Yet that is what the Government and the Ministers are proposing. According to their revised code of practice, people on low incomes with a history of payment difficulties will be legally discriminated against. Their case will not be heard in the county courts. It is essential that every water consumer should at least have the option of a county court hearing to explain the circumstances of non-payment.
The Bill ought to provide much stronger safeguards for the sick and the disabled who are large users of water. Payment by instalments should be an option for every water consumer, not just those with payment difficulties. It is outrageous that the provisions were drafted by the industry and the Government without consulting consumer organisations. Privatisation of the water industry is already leading to huge price increases, which will inevitably lead to financial hardship for many consumers and to the likelihood of more people on low incomes being denied access to a domestic water supply. The prospects for families with children, for the disabled and for the elderly are horrendous. The social and health consequences of water supplies being cut off are so great that in many areas the Government are putting at risk the health and the wellbeing of whole communities. It is amazing that the Government are so callous about their cut-off regime and about the potential difficulties that people will face in paying their water bills as a result at having to meet the costs of privatisation and water metering.
Mr. Allen McKay (Barnsley, West and Penistone) : Does my hon. Friend recall that we were able to produce water bills in the Sheffield area which proved that 67 per cent. of the water charges for single pensioners were not for water but for water metering? The Minister referred to the payment of welfare benefit, but I recall the Department of Social Security saying that there would be no financial help to meet water bills.
Mr. Roberts : I am grateful to my hon. Friend. Our concern for people in such difficulties is clear. The Government's lack of concern is equally clear. They claim that this is an environmental measure because it will release water authorities from the constraints of the public sector borrowing requirement, but that can be done at a stroke anyway. Privatisation is not needed for water authorities to be able to borrow on the open market. One can imagine what will happen after flotation. During the lunch break at the Stock Exchange, the developers, the speculators and others in the City will be saying, "What shall we invest our money in today to make a quick buck or a long-term gain? Let us invest in the problems of cleaning up the river Mersey. Let us put our money into cleaning up Britain's bathing beaches and drinking water. We can borrow money on the open market as we are sure to make a packet out of it because it is very profitable."
My car broke down last week outside the House of Commons. It had a puncture. The police did not help me, so I got out and jacked up the car. I was about to take the wheel off when the Secretary of State for the Environment came by, opened the front door of my car and started to remove the radio. When I said, "What are you doing, mate?" he replied, "If you're having the wheels, I'm having the radio." Then the Prime Minister came along. She opened the bonnet of the car and was messing about underneath. The Secretary of State for the Environment and I asked, "What are you doing?" She replied, "Taking the water out of the radiator--you don't know how much this will cost very soon."
Mr. John Heddle (Mid-Staffordshire) : I wish briefly to pursue the point raised by my hon. Friend the Member for Dorset, North (Mr. Baker). I agree with him absolutely that the cost of connection for new homes will ultimately have an impact on the value and cost of building land. Anything that can legitimately keep down the cost of building land must ultimately be to the benefit of the consumer, particularly first-time buyers, whom we must protect.
May I press my hon. and learned Friend the Minister a little further? If I heard the hon. Member for Dewsbury (Mrs. Taylor) correctly, she said from the Dispatch Box that the cost of connection could well be some £2,000 per dwelling. As I understand it-- It being Six o'clock, Mr. Deputy Speaker -- proceeded, pursuant to the order this day, to put forthwith the Question already proposed from the Chair.
The House divided : Ayes 188, Noes 303.
Division No. 272] [6 pm
Abbott, Ms Diane
Archer, Rt Hon Peter
Ashley, Rt Hon Jack
Banks, Tony (Newham NW)
Column 59Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Beith, A. J.
Benn, Rt Hon Tony
Bray, Dr Jeremy
Brown, Gordon (D'mline E)
Brown, Nicholas (Newcastle E)
Brown, Ron (Edinburgh Leith)
Bruce, Malcolm (Gordon)
Buckley, George J.
Campbell, Menzies (Fife NE)
Campbell-Savours, D. N.
Clark, Dr David (S Shields)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Cook, Frank (Stockton N)
Cook, Robin (Livingston)
Cunningham, Dr John
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham Hodge H'l)
Dunwoody, Hon Mrs Gwyneth
Evans, John (St Helens N)
Field, Frank (Birkenhead)
Fields, Terry (L'pool B G'n)
Garrett, John (Norwich South)
Gilbert, Rt Hon Dr John
Godman, Dr Norman A.
Golding, Mrs Llin
Grant, Bernie (Tottenham)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Harman, Ms Harriet
Hattersley, Rt Hon Roy
Heffer, Eric S.
Hoey, Ms Kate (Vauxhall)
Hogg, N. (C'nauld & Kilsyth)
Howarth, George (Knowsley N)
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport E)
Hughes, Simon (Southwark)
Jones, Barry (Alyn & Deeside)
Jones, Martyn (Clwyd S W)
Kinnock, Rt Hon Neil
Lestor, Joan (Eccles)
Lloyd, Tony (Stretford)
Macdonald, Calum A.
McKay, Allen (Barnsley West)
Mahon, Mrs Alice
Marek, Dr John
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Martin, Michael J. (Springburn)
Michie, Bill (Sheffield Heeley)
Moonie, Dr Lewis
Morris, Rt Hon A. (W'shawe)
Morris, Rt Hon J. (Aberavon)
Oakes, Rt Hon Gordon
Orme, Rt Hon Stanley
Pike, Peter L.
Powell, Ray (Ogmore)
Quin, Ms Joyce
Rees, Rt Hon Merlyn
Reid, Dr John
Roberts, Allan (Bootle)
Sheldon, Rt Hon Robert
Shore, Rt Hon Peter
Smith, Andrew (Oxford E)
Smith, C. (Isl'ton & F'bury)
Smith, Rt Hon J. (Monk'ds E)
Steel, Rt Hon David