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5.32 pm
Sir Kenneth Carlisle (Lincoln): I am glad to take part in the debate, which takes place under the umbrella of global warming and climate change. Those are the most significant factors influencing the supply of water, and my right hon. Friend the Secretary of State mentioned them. We and other countries need to concentrate our efforts in that direction, because a solution in those spheres may solve our water problems.
Last year was frighteningly dry, and the winter rains were insufficient to replenish water levels in the soil or in streams. So far, this year has been even dryer. Those who
are in contact with the countryside and with plant growth find terrifying the effect so early in the year of the lack of water. If it continues, the effect on domestic consumers later in the year could be severe. Perhaps we have to accept the dictates of global warming because any solution is long-term, but we must certainly look carefully at how we might mitigate the effects of this year's drought. In doing so, we should judge whether we have a better chance of finding a solution under the current water regime or whether we would have been better off if it were still nationalised.
The evidence shows clearly that privatisation is working. The Secretary of State told the House what happened in 1976--not only was water rationed, but the Government of the day cut all capital expenditure in the industry. The worrying fact about a nationalised water industry is that investment can be turned off at the whim of the Treasury. It is easy to do that because the effect is not apparent in the short term and it saves money. That was what happened when the industry was nationalised; now that its future is in its own hands some £17 billion has been invested. Some £450 million will be invested this year and it is planned that companies will invest twice their annual profits over the next decade. That would have been inconceivable if the industry had remained nationalised.
Investment on that scale has a significant effect on the consumer, but it is somewhat inconsequential to quote such global sums. Perhaps it is more relevant to consider what is happening in our constituencies because that can help us to appreciate the scale of the change. There have been many improvements in Lincoln. Many old water pipes have been replaced. That has improved water quality, which is better without iron deposits. There has been investment in a new pipeline from Nottinghamshire to help to secure supplies, and an extension and improvement of the sewerage system. Those are capital investments, but we have also enjoyed much better and more effective administration.
I have had far fewer complaints from the public since privatisation because, despite what the hon. Member for Sheffield, Hillsborough (Mrs. Jackson) said, the privatised industry has to operate under a strict code of practice. It has targets to meet and it has to perform in certain ways. I have not had the problem of severance of supply to a house for a long time. We are all aware of the trouble that that used to cause but, somehow, Anglian Water has got over the problem and it no longer seems to be an issue.
My one word of advice for Anglian Water is that it should try harder to be a presence in the community. It is an important part of the community and it should have someone who is known there to represent it. Like any other good local firm, it should have a significant personality within the community. Anglian Water is confident that it can maintain supplies this summer. The levels in reservoirs which fell to nearly half empty last year are back to 94 per cent. capacity and Grafham reservoir, which is one of the largest, is full.
I agree with hon. Members who have said that we cannot be complacent about leakage. I am glad, therefore, that Anglian Water has decided to dedicate 65 teams to detect leaks and repair them, and that it plans to reduce the overall leakage level to some 10 per cent. by the year 2000. In the past 12 months, it has renewed 250 miles of mains. Generally, however, we accept that we must live
with some leakage, which is inevitable in an industry of this nature. We just have to work hard to try to reduce it to the minimum.
To a certain extent, I am concerned about increased extraction from groundwater sources by Anglian Water. It is lowering the level of aquifers in the chalk. More work must be done before it taps further into that valuable long-term supply.
All hon. Members think that what people pay for water is important--it has been mentioned on several occasions. Water charges have gone up, but the increase has been largely to meet the dramatic increase in investment, which will help to protect us during dry times. After paying for that investment, we can look forward to more stable charges in the next 10 years and, during that time, our bills are likely to increase by less than 1 per cent.per annum in real terms.
I should like to raise one other issue connected with the water industry: the environment. From my observations, water companies are now far more sensitive to the environment and to the various habitats of which water forms a part. For example, Rutland Water in the Anglia region has developed not only a source of water supply, but a remarkable wildlife reserve.
This debate gives us a chance to re-emphasise the need for water companies to focus properly on the environment. My right hon. Friend the Secretary of State for the Environment rightly mentioned the improvement in the quality of drinking water and rivers, and the cleaning-up of many beaches. I hope that the hon. Member for Holborn and St. Pancras (Mr. Dobson) will take up my right hon. Friend's offer of a nationwide tour to witness those improvements.
I am especially glad about the improvement in the quality of our river systems. In 1990, 85 per cent. were judged good or fair; that figure has been raised to 90 per cent. We need to continue that performance. One of the good results of the improvement is the return of otters to our rivers. They require both quality of water and more sensitive management of rivers, so, if the authorities which are concerned with rivers leave more wildlife and curves in the river instead of digging straight channels, the habitat will improve. They have learned that. Some years ago, in our local river in Suffolk, the otter was reintroduced and it is breeding successfully. That has been one of this country's wildlife success stories. Such successes depend on stringent attention to water quality.
I wish the Environment Agency well in its daunting task of continuing that improvement. It is good that it is drawing up statutory water quality objectives in eight pilot regions. Those are targets to aim for to achieve improvement. We asked for such a policy during the passage of the Environment Act 1995 and it is good that it is being introduced. We must, however, be in no doubt about the pressure that drought can put on all river systems. There is drought, and the result is a reduced flow through river systems, so pollution is more likely to happen. That may be one of our challenges during the summer.
Privatisation has led to greater investment, to better management of the industry and hence to much better use of water supplies, which are becoming a scarce resource. It has been better, too, for the consumer and clearly better for the environment. We have not heard yet how the Opposition will improve on that progress. We expect the
hon. Member for Holborn and St. Pancras to be much clearer about what he thinks and what his fundamental views are. We have heard many opinions, but without much clear policy. If he is honest with himself, he may recognise that he is big on florid paragraphs, but still thin on policy.
Mr. Matthew Taylor (Truro):
I welcome the opportunity to speak on this subject and the fact that the motion has been put to the House, because there is no doubt that whether a full water supply can be maintained during the coming months, and the environmental impact that the struggle to do so may have, is in many people's minds and needs to be dealt with seriously by hon. Members. Although the Government and water companies seek to assure the public that water supplies will be maintained this summer, the experience of last summer does not do much to put minds at ease. Furthermore, the stresses on the environment are becoming increasingly clear.
Unless there is an immediate heavy rainfall, many parts of the country will again face a serious water shortage, which will manifest itself in widespread restrictions on water usage and put real pressure on the environment as rivers and lakes drain. We have been here before. Two years ago, the Liberal Democrats published figures showing the exceptional water leakage in all the privatised water companies. Last summer, many people throughout the country suffered from a restricted water supply, whether because of hosepipe bans in the south-west or the near cessation of supply in Yorkshire.
Following much stronger warnings issued by the former National Rivers Authority in February, at the start of this month, the Environment Agency found it necessary to warn of restrictions on water use next summer. Water companies on the whole--although not all of them--have been shamefully slow to tackle the problem, and serious doubts must be raised about their ability or will to ensure that water is properly managed as a natural resource, rather than being supplied as a source of profit.
Since privatisation, water prices for domestic customers in England and Wales have risen by an average of 39 per cent. in real terms, yet the water companies claim that they are underfunded and so cannot introduce the necessary measures to tackle leakages. In my constituency and throughout the rest of the region served by South West Water, the price rise has been much higher. Since privatisation, average water bills have risen by more than 100 per cent. in the south-west.
On that point, I noticed that the Secretary of State for the Environment--I commented on this to him directly--claimed that water companies have found £400 million more to invest without having to raise prices. That raises a serious question about where the money came from, given that customers were told that their bills had to rise to sustain the previous investment level. It appears that the water companies now admit to having an extra£400 million to invest, which they previously intended simply to pocket or to pass on to their shareholders--hardly a reassurance that the regulatory system on either prices or water leakages is working. One or the other--if not both--was clearly misjudged.
Our perception is that the problems that are giving rise to hosepipe bans in the south-west are more to do with ineffective management, a lack of effective regulation and ineffective distribution, than genuine water shortages. Yesterday, for example, I spoke to the chairman of the neighbouring Wessex Water. He says that there are no plans for a hosepipe ban, yet it has less water than South West Water, which services fewer people. With the highest bills in the country and on-going water restrictions, South West Water consumers are right to be angry. The same can be said for consumers in Yorkshire, in the north-west and in many other regions.
Given the huge prices rises, and the large profits widely perceived to be paid to water directors and shareholders, the prospect of another summer of hosepipe and sprinkler bans cannot go unaddressed. Equally pressing are the longer-term and further-reaching issues of the impact on our environment, such as the effect on aquifers, including their possible pollution, and the killing of important areas of the natural environment.
I do not suggest that we shall never need a hosepipe or sprinkler ban. In exceptional circumstances, such a ban may be a short-term necessity, but it should be imposed only in the context of a proper plan of supply and an understanding of the emergency measures needed, in terms both of the environment and of consumer needs.
There is clearly an urgent need for a published long-term strategy for the whole United Kingdom, which it would be the water companies' responsibility to ensure was understood by consumers, yet it is equally clear that such a strategy is missing. It is the Government's responsibility to ensure that one is put in place.
The Government have already announced that there will be no standpipes this summer, and the water companies continue to tell us that domestic water supplies will be protected, but 57 drought orders are already in force, and that number is likely to increase during the summer. In fact, the water companies have applied for drought orders in six of the past eight years, so it is hardly coherent to argue that they are used only in exceptional circumstances.
In the south-west, there is considerable doubt about the regional water company's ability to keep water supplies steady this summer. Roadford, one of the biggest reservoirs, is not even 40 per cent. full, which is perhaps not surprising given the fact that the company managed to pour away 1 billion gallons of water into the sea last year.
Apart from the threat to water supplies, any drought would have huge environmental implications. The only time that I agreed with the Secretary of State was when he said that the Labour party had failed to address the environmental issues, and that its motion failed to mention them at all.
As water reserves drop, reliance on abstracting water from rivers increases. That happened last summer, and the signs are that the process will be repeated this year. Rainfall over the past 12 months, including winter rainfall, has been well below average, which has left reservoirs in parts of the north-west, north Wales, Yorkshire and the south-west in a depleted state. Consequently, many water companies are again relying on river abstraction to meet demand.
A recent report from the Environment Agency found that 11 of the 33 rivers it identified had below average rates of flow for the time of year. That was in early April, and the situation is not likely to improve as the summer progresses. Moreover, following last summer's drought, the agency identified a general deterioration in the overall ecology of rivers, so any increased abstraction will cause significant environmental damage.
The overall response has taken the form of ever more pleas to the public to conserve water, but it is unreasonable to expect consumers to take a more active role in water conservation--and it is unlikely that they will--if the water companies do not play a more active role and if, at a time of huge profits, they are not seen to be taking the issue more seriously.
Reducing leakage is of paramount importance, yet there is still no coherent or consistent approach to target setting for leakage control. Two of the remaining nine companies in the Water Services Association--Northumbrian Water and Welsh Water--have yet to set a leakage target, fully six months after the association made a commitment to voluntary targets. That must raise doubts about the effectiveness of voluntary leakage targets, and it should make the Secretary of State pause for thought.
I should like there to be clear targets for reducing water wastage from pipes, and customers to be compensated if they are not met. Setting and monitoring those targets should be the responsibility of the Government in conjunction with the regulators, the Office of Water Services and the Environment Agency. The Environment Agency could take account of the environmental issues, and Ofwat the consumer issues. The Minister should ensure that the targets were acted upon and that the companies understood that, rather than setting the minimum targets that they can get away with to maximise profits for shareholders, they must set the highest standards that can be achieved, to ensure the best service to consumers.
Because Ofwat enforces the water companies' licence conditions, it has the means to ensure that they comply with the targets. Plans for leakage targets should be agreed as part of the licence conditions. Only when water companies and consumers fully understand the need to conserve water shall we make a start towards being able to preserve that resource.
Alongside a strategy for dealing with leaks, companies must develop strategies for encouraging households to avoid wasting water. In August 1994, Which? tested the advice from 10 water and sewerage companies in England and Wales, and found their advice on water efficiency wanting. There is little evidence that that has greatly changed.
The Environment Act 1995 gave water companies a new duty to promote efficient use. That duty should be performed, which can best be done through the provision by water companies of grants, advice and information for consumers on installing water-efficient fittings in their homes. There would be a benefit to the companies in so doing, because they would have to invest less in alternative sources of water supply.
Although reducing leakage and introducing water efficiency measures are important, they cannot be seen as a full solution to the problem of water conservation. Besides, it is unlikely that any increased leakage control or water efficiency measures will arrive in time to prevent water restrictions in the coming months.
A national overview for emergency water planning in England and Wales is needed. Regional emergency water resource plans could then be developed for each company, in liaison with the Environment Agency, Ofwat and other interested parties. The plans should identify the main measures to be adopted, depending on the severity of the drought and its location, and they should be subject to a full environmental impact assessment.
It will not do for water companies to believe that they can simply resort to the rivers and natural lakes and destroy the environment to maintain a service which they are already very adequately paid to provide without such extreme measures. However, the companies' belief that they can act in that way is based on evidence, because they seem to be granted the powers to do so quite easily. Such measures should be the last resort, and everything should be done to avoid them.
The plans should obviously involve such issues as a programme of publicity to explain why we need to save water, and a programme of measures to restrict non-essential use of water. In the long term, a more strategic approach to emergency water resource planning is needed.
The Government must develop a national action programme for water resources that deals with the long-term issues, such as leakage control, rising demand for water and increasing pressures on rivers and wetlands from abstraction. The Government's proposals as published in "Water Conservation: Government Action" fail to do that. The fact that the companies are no longer nationalised does not mean that there cannot be a national approach to solving the problems, in conjunction with the regulatory bodies and the companies. That is where I believe the Government have failed.
In consultation with the regulators and non-statutory bodies, the water companies should prepare a review of their water supplies. They should examine how much water is available for use, how much is needed in the long term, and the costs and benefits of the options identified, including support for consumers taking steps to conserve water.
In addition, all available options should be subjected to a strategic environmental impact assessment so that the best environmental option can be chosen--a proposal that I regret to say the Labour party did not make. If the Secretary of State is serious about a sustainable approach to water, I hope that he and the Minister who is to respond to the debate will at least agree that a full environmental impact assessment is vital.
If all those measures are adopted, and the water companies work with their customers to meet water conservation targets, public confidence may yet be restored in the water industry. Drought orders would then need to be used only in genuinely extreme circumstances, rather than almost every year, as they are now.
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