House of Commons Hansard Debates for 8 May 1996 (pt 18)

5.13 pm

Mrs. Helen Jackson (Sheffield, Hillsborough): What an incredible finish that was to the Secretary of State's tirade.

We called the debate so that we could talk sensibly. We are not here to make the usual easy gibes about fat cats, or to gripe about the continual price increases. I have not come here to pillory Yorkshire Water yet again; what interests me is growing public concern that the very delivery of water and sanitation to people's homes is being threatened by company greed on the one hand, and Government inaction and drift on the other. Our argument is that the Government have used the excuse of privatisation to wash their hands--metaphorically--

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of what must be one of their core duties: the duty to ensure that people have adequate clean water and sanitation.

Last weekend, I listened to many leading Tories trying to come to terms with the humiliation that they had suffered last Thursday. Half of them claimed that they would win the next election on the basis of their well-tried principle of minimal government--taking government out of people's lives. Let us look at what that means for the water industry. Those of us who have been asking Ministers questions about this issue for some years--whether our questions have concerned resources, leakage control, pollution control, investment or top salaries--have lost count of the number of times when the response has been "It is for the company to decide on investment levels", or "It is for the shareholders to decide on the level of top salaries", or "It is for the director general to comment on this, not me".

Each water company is supposed to set its investment priorities on resources, leakage reduction or repairs and renewal. The companies are to be guided by an economic regulator. Consultations take place, and decisions are made, on the basis of a five-year financial cycle and five-year business plan. Those plans are not open to public scrutiny on grounds of commercial confidentiality--spurious grounds, given that each company is a monopoly in itself.

The regulator's guiding principle, which he often states, is "incentive" price regulation, which basically means giving each of those private monopolies an incentive to make excess profits, and to make only the investment that, in their view, is economically reasonable. Whatever the Secretary of State may say, environmental, social and public health factors are subsidiary.

We say that in a highly capitalised industry such as the water and sewerage industry, in which 85 per cent. of the cost is fixed, a five-yearly financial overview by a narrowly focused economic regulator is grossly inadequate. It makes it far too easy to put off the necessary long-term investment for the sake of short-term gain. Yorkshire Water's announcement last week of a£40 million investment in a link between the River Tees and the Kielder reservoir was welcome, but it came10 years too late.

Contrary to what the Secretary of State says, there was a national water resources board that promoted the link with the Kielder in the mid-1970s because it was thought that Yorkshire would run out of resources by the early 1990s unless such a link was built. The regulator and the advice were there 20 years ago, but the investment was not made. It is being made now, in a crisis management exercise that will not lead to value for money or well-run contracts. Will not rushing £172 million into Yorkshire in six months lead to mistakes and poor planning for the future?

Then there is the case of North West Water. On a recent visit to south-east Asia with the Environment Select Committee, my hon. Friend the Member for Denton and Reddish (Mr. Bennett) felt quite at home, because around every corner he saw signs saying "North West Water" and personnel from the company whom he knew. He also felt uneasy, however, because he knew that back at home the Longdendale reservoirs were still only half full after last summer, and that those same North West Water pipes were leaking 30 per cent. of all the drinking water that the

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company treated at home. So what if North West Water's investment in south-east Asia is more economic than supplying Stockport? Where would that leave my hon. Friend and his constituents? What redress do they have?

Water resource planning must have a national overview and it must be open to public scrutiny. It was disgraceful when the Director General of Ofwat, who has a major part to play in any national overview, said that he was not prepared to be subjected to any public scrutiny at the public hearing in Leeds last month into the difficulties in Yorkshire because he was undertaking his own private, confidential survey.

Sir Donald Thompson (Calder Valley): The hon. Lady has been wonderful in looking after Yorkshire Water. She has played her part valiantly and I agree with her entirely about the Director General of Ofwat hiding himself at that public inquiry. It was a completely inadequate response. She will not be surprised, however, if I say that I think that she has come to entirely the wrong solutions about the privatisation of the water industry. We would be in dire straits without it, but I shall not rehearse the points made by my right hon. Friend the Secretary of State.

Mrs. Jackson: I am grateful to the hon. Gentleman.

Mr. Gummer: I want to take the most urgent opportunity to tell the House that it has been drawn to my attention that the hon. Member for Holborn andSt. Pancras (Mr. Dobson) said:

"I must say that I have never felt compelled to agree with experts . . . Whatever experts say, the current system is unfair".--[Official Report, 1 April 1996; Vol. 275, c. 56.]

I am perfectly willing to say that that could clearly be interpreted as him saying merely that, on occasion, he did not think that experts were right. Although I am reasonably rumbustious in debates, I do not think that I have ever tried to mislead people on what has been said. The hon. Lady was very kind to give way.

Mrs. Jackson: I am grateful. Two friendly interventions by Conservative Members have left me almost lost for words. But we should recognise that on resources, leakage and the early-day motion that has been tabled today, there has been cross-party support.

Last year, the Government introduced legislation to establish an integrated body to deal with the environment--the Environment Agency, which we supported. However, they missed a huge opportunity to define and put in place the public national overview of water resources about which Opposition Members are talking today. Last week, the agency issued its first major report, and, indeed, it was on water. It has the right priority, but it has no powers: no powers to co-ordinate with any strength the other regulatory bodies concerned; no powers to insist on any investment in resources; and no powers to insist on preventive pollution control--only the power to prosecute when things go wrong. It has no input on leakage control. Section 6 of the Environment Act 1995 says that the agency's duty is to "consider", where necessary, means of

"conserving, redistributing or otherwise augmenting water resources in England and Wales",

but it has no power to insist that the industry makes the necessary investment. The Government have missed an opportunity to use the Environment Agency to take a clear

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and proper overview of sustainable water resources. There should be a regulatory body for the entire water industry with which other regulators could work and to which they address their responses.

I should like to look a little closer at leakage. Of all the factors that affect water conservation and resources, the National Rivers Authority, the Environment Agency and all other experts agree that stopping leaks from company pipes is the most cost-effective way in which to meet demand more effectively in future; people out there know that too.

The Royal Society for the Protection of Birds undertook a survey through Mori two months ago in which it asked people what they thought was the best method of water conservation. Of those surveyed, 69 per cent. put mandatory leakage control at the top of their list and 41 per cent. put as their second best the possibility of grant-aided schemes for water efficiency devices in the home. People know what they want from water conservation and water policy. The Government are, however, refusing to act on those two issues.

What is more, the RSPB received more than 70,000 letters in support of the Water (Conservation and Consumer Choice) Bill, to which my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) referred. The issue of water is certainly well understood. The difference between now and before privatisation is that although it is still of great interest, it has never been the subject of such great public anger about the way in which it is managed and controlled.

For years, the Government's response to calls for leakage targets has been, "Well, that is the responsibility of each company. Each company will reduce leakage from its pipes to economic levels, and they are best placed to decide those levels." Ofwat has asked only for an annual report of leakage rates, which it publishes, but the companies' voluntary leakage reduction targets have not been published, as--again--they were said to be commercially confidential.

It was only as a result of Labour's campaign last summer that the gross wastage of 830 million gallons of treated drinking water leaking each day from company pipes was exposed. That amount is enough to meet the daily needs of half the population of England and Wales. The figures are amazing and instructive. Only last week was the campaign to publish leakage targets in Hansard successful. I was very pleased to see them published on 30 April at column 420.

We have only gone one quarter of the way to winning the battle that we need to win. Having published the targets, we must ensure that figures on how each company is meeting those targets are also published not only annually but quarterly so that everybody has access to them. I was interested in what the Secretary of State said in his closing remarks. We must ensure that where those targets are set, spending and investment to meet them is met by each company. If that is the pledge that the Secretary of State has given, I welcome that major U-turn, and so will everybody else in the country.

Will the Government go further? The Secretary of State mentioned the Housing Grants, Construction and Regeneration Bill, which received its Second Reading yesterday. Will the Government ensure that they use it to introduce sustainable water conservation measures so that each home in future will be water efficient and installed