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Mr. Nicholls: The hon. Gentleman is a fair man, so I hope that he will make it clear in his speech that there was no painless way of raising money to do what had to be done. Whatever we may think about the way in which it was done, it is misleading to suggest that there was a painless way of doing it.
I hope that the hon. Gentleman is not seriously trying to suggest that it was not the combined efforts of west country Members of Parliament and Ministers who were prepared to take our side that persuaded the regulator that charges should be pegged. That was no mean achievement, bearing in mind that many of thehon. Gentleman's supporters did not believe that charges could be pegged, let alone reduced.
Mr. Taylor:
The hon. Gentleman is correct in one respect: political pressure counts. The Government are
Prior to the preparations for privatisation, the cost of cleaning up our coastline was spread across the country--however inadequately--through an equalisation scheme, which relates to the point that the hon. Member for Teignbridge raised. Privatisation imposed a huge extra burden on the people of the south-west who were required to pay for a greatly expanded clean-up without any proper system to distribute the costs--some 3 per cent. of the population were left to pay for cleaning up 33 per cent. of the nation's beaches. A national asset became a regional burden.
That cost was emphasised last year by the chair of the South West Water consumers committee, who said that if the cost of environmental improvements--they are future improvements which are not yet in the pipeline--continues to fall solely on South West Water consumers, it will add £150 per year to their average bill. However, if the cost of the same clean-up were spread nationally and if everyone paid a fair portion of the cost of the national clean-up programme, it would add just £15 to the average bill.
Mr. Atkins:
The hon. Gentleman advanced that argument in debate on the Environment Bill in Committee. I asked him then--and I do so again now--how his right hon. and hon. Friends who represent seats in other parts of the country, such as the erstwhile Treasury spokesman, the right hon. Member for Berwick-upon-Tweed (Mr. Beith), would feel about inviting their constituents to pay more in order to clean up the beaches in the hon. Gentleman's constituency?
Mr. Taylor:
The short answer is that it is party policy. It is not difficult to argue that we should have clean beaches and clean water if it adds £15 to people's bills across the nation. It is more difficult to say the same thing to consumers in the south-west while adding £150 to their water bills. I would find it easier to argue the case for a £15 increase in Yorkshire than the hon. Gentleman would to argue the case for a £150 increase in the south-west. [Interruption.] If that is what the hon. Member for Teignbridge believes, that message will be relayed to all of his constituents come the general election.
The Government cannot argue that there is no precedent for sharing the burdens. Indeed, the green dowry explicitly recognised the need to spread the cost of the clean-up. However, the levels were set far too low before the environment regulations were finally agreed, and they were never increased in response to the Government's decision to raise environmental standards. As I said earlier, the decision on environmental standards was taken by the British Government in advance of the European Community determination.
The burden that the decisions have placed on the consumer is highlighted by the number of water disconnections. Higher water charges increase the
likelihood of disconnection for low income families. With that in mind, at the time of privatisation I sought a guarantee from the Minister that the 9,000 disconnections of the previous year would not be increased after privatisation. Unfortunately, the number of disconnections has increased. According to a study by the British Medical Association, there was a 48 per cent. increase in the number of domestic water disconnections between 1989 and 1994--little wonder, in view of the increasing bills that I have outlined.
More worrying still is the fact that the number of disconnections may rise if plans to encourage budget metering go ahead. Low-income families with cards or keys for meters who cannot afford to charge them up will effectively disconnect themselves. Those disconnections will not show up in the official figures, and therefore will remain unaddressed. There will certainly be no room for the existing customer protection measures. I cannot accept that there is a need for those disconnections, when it was shown that there was no need for them in Scotland.
I cannot forgive the fact that, in full knowledge of the burden on consumers that I have described, the Government have failed to reassess the charging system for water--despite having an opportunity to do so only six months ago. In an extraordinary decision last Easter, Ministers announced that charging for water would continue to be based on the outdated rates system. That system was abandoned for local government in the 1980s as it was considered outmoded and unfair and based on valuations made in the 1970s. If it was considered unfair and outdated for use by councils in the 1980s, it cannot be acceptable for water charging by private companies in the 1990s. How can Ministers justify charges in the next century based on valuations from the 1970s?
In addition, the valuations bring with them a system which, despite the rising prices that I have mentioned, gives no relief to those on the lowest incomes or those who live alone. That means that in high charging areas such as the south-west there is no help for people who are literally unable to pay their water bills. I remind the House that pensioners in my region may spend 9 per cent. of their annual pension paying their water bills.
Despite that situation, Conservative Ministers have continued to disclaim any responsibility. In a letter to south-west Liberal Democrat Members of Parliament, the Secretary of State argued:
Yet Mr. Byatt confirmed in the Western Morning News that price limits were based on environmental obligations laid down by the Government and that he had little room to manoeuvre.
In addition to announcing that water bills would continue to be based on the rates system for the time being, Ministers argue in favour of introducing compulsory water metering as a new system of charging. I shall turn briefly to that issue. Metering creates huge problems for families on low incomes, as revealed by a recent Save the Children report entitled, "Water tight. The impact of water metering on low income families". Families with children are most likely to use more water for basic needs, and therefore have higher water bills. According to the report, under metering, families face huge pressure to cut their water bills and they try to save money by
We have reached a worrying situation when a respondent to the Save the Children survey can say:
Imagine what it will mean in the south-west, where families face higher than average bills under compulsory metering. Extra environmental burdens are to be imposed upon them and the water companies continue to take their ever-increasing cut. The risks posed to those families by cutting water use is not imagined or exaggerated. The British Medical Association has said that families who economise on water over a long period are at risk from a number of diseases.
Water metering has its advantages, but Ministers must not contemplate it without the Government's first addressing the needs of the poor and the huge extra cost of introducing a compulsory system for every household. The Government do not answer those questions; they simply hope to blame the privatised companies for problems which they cannot bring themselves even to acknowledge. Meanwhile, the Government continue with the existing out-of-date, unfair rating system.
Having set out my concerns about the charging system for water and the need for more effective regulation, let me consider for a moment last summer's drought and its environmental implications. The water companies emphasise the need for domestic water users to cut consumption. Although that is desirable, it is not the main issue. A report by the Parliamentary Office of Science and Technology points out that leakage from water company distribution pipes remains more than four times higher than that from customers' supply pipes. That backs up figures from the Royal Society for the Protection of Birds that 500,000 gallons of water are lost through leakage every minute of the day. The combination of rising demand and leakage is putting huge pressure on our rivers and wildlife. Before we discuss cutting the amount of water that families use, let us cut the amount that water companies waste.
Since the summer, water companies have committed themselves to an accelerated leakage control programme which will double the current rate of improvement, but as the current rate is only 1.2 per cent. per year it will be too little and too slow. The Secretary of State for the Environment has simply accepted the water companies' argument that that is the most efficient approach, leaving the water companies to take measures to minimise their total costs, including those of leakage, under the regulatory system. That may well be the best answer for shareholders, but it is unlikely to be the best answer for customers suffering water shortages or for an environment that is literally drying up.
I come now to the measures that the Liberal Democrats believe would solve the problems facing water consumers and the environment. We have repeatedly proposed long-term and transitional solutions to cut bills and help consumers.
"responsibility for water charges rests with the Director General of Water Services".
"sharing baths, taking fewer baths or showers, washing clothes less often and flushing the toilet less".
"You have to bath the kids, but some people are afraid to bath them as it costs too much".
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