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6.37 pm
Mrs. Helen Jackson (Sheffield, Hillsborough): It is interesting that two of the three Conservative Back Benchers who have participated in the debate have been driven to do so by exasperation at their experience of their local water companies. That gives the lie to the wealth of rhetoric, rather than considered argument, that we had from the Secretary of State earlier.
Today we have focused on one aspect of the water industry--the charging, or rather, the overcharging, of its domestic customers. What do we pay for when we pay our water bills? After all, we expect a lot from the water industry, including clean water; safe sewerage; enough water to cultivate land; unpolluted river systems, for fish and flowers; water-based leisure activities; security from flood and drought; and efficient road drainage. That is quite a list. It flies in the face of economic reason, and the costings, to think that the most effective way to pay for the overall management of the water environment is according to the amount of water that comes out of domestic taps.
The cost of drinking water is less than half the overall cost of the whole industry. The fixed costs of supplying drinking water are four times greater than the costs related to supplying the volume of drinking water; and, as Which? said in a publication this week,
The Environment Select Committee is considering water conservation at the moment. It is becoming clear that there is total confusion between the need to measure for the purposes of good management and the need to measure to charge, and the Secretary of State made that point again today. The two are quite different.
The industry should, of course, measure what goes where, if only to discover where the leaks are. Nobody suggests that, because health services are available to everyone who needs them, doctors should not record how many patients come to them with what problems; but that does not mean that each patient has to pay extra every time he sees a doctor--at least, not yet. Careful district metering is the key to careful leakage detection, as the Environment Committee has discovered.
We have heard much today about water metering and conservation, but the Government have said nothing about the most cost-effective way of achieving those aims--and they have put cost-benefit analyses into every line of every piece of environment legislation. The contributions from the hon. Members for Truro (Mr. Taylor) and for Teignbridge (Mr. Nicholls) show just how costs affect customer attitudes to the water industry.
As my hon. Friend the hon. Member for Delyn (Mr. Hanson) pointed out, water metering is very expensive. Leaving aside the cost of installation--about £200--and the cost of replacement every seven years and of repair every time the meters get grit in them, the extra costs of maintenance, reading and billing are estimated at £27 per year.
My figures show that, through metering, it costs £1.95 to save 1 cu m a year. According to the National Rivers Authority, if one compares metering with other methods of water conservation, it is seven times more expensive than saving the same amount of water through leakage reduction, and four times the cost of saving the same amount of water using water-efficient devices in the home. That does not take into account the minimal cost of common-sense measures such as installing water butts in every garden to catch the run-off from roofs and gutters.
A specialist in the water industry--I will not embarrass him by naming him--told me:
Mrs. Jackson:
No, because the hon. Gentleman has just come into the Chamber.
The same obsession with metering has led the Government and the regulator to fail to take action on every other water conservation front. As hon. Members have pointed out, water leakage is worse now than at the time of privatisation. The Secretary of State mentioned the revision of the water byelaws, which could be used to upgrade standards of water efficiency and improve the design of water appliances in the home. They have been awaiting upgrading since 1992. This afternoon, the Secretary of State said that he will announce the members of the Committee that will consider the byelaws. He has been promising to do that for four years.
Research into water-saving toilet devices by the Building Research Establishment was well under way, but it was shelved by the Government in 1982, because it placed greater emphasis on other ways of conserving water--such as metering. My hon. Friend the Member for Holborn and St. Pancras detailed the way in which the water conservation legislation, which was supported by every member of the all-party parliamentary group--I pay tribute to hon. Member for Batley and Spen (Mrs. Peacock) for her contribution to that group--was rubbished by those on the Government Front Bench. Only yesterday, the Government had an opportunity in the housing grants legislation to introduce a grant aid scheme for water efficiency in the home, but again they failed to act.
Is water metering is fair? The Secretary of State again parroted the phrase, "You pay for what you use"--the old poll tax argument. However, that approach is distinctly unfair when we are talking about essentials.
Some months ago, the parliamentary group decided to explore which charging system reflects most fairly people's ability to pay. We asked Ofwat and the water companies what research they had conducted in that area, and for their comparative range of billing on rateable value and metered charges. We immediately discovered how little work had been done in that area.
Ofwat conducted its only study in 1992, and that is now out of date. In its recent document issued to water companies about efficiency action, Ofwat does not refer once to the social impact of proposed efficiency measures. Even Anglian Water--a company that has embarked on more systematic work--admits:
Our exercise has shown that both billing systems--metering and property value--have a correlation with household incomes, but for different reasons. The property value link with income is well understood. With a metered supply, those with higher incomes have higher bills, as they are less likely to cut down on water usage. Poorer families have lower bills, because they must cut down on their water usage as they do not have the money to pay. Pensioners--among whom water meters are popular--try particularly hard to economise around the home. They worry even if extra water usage is essential for their health care regime. That concerns Labour Members.
Two classes of customers stand out as exceptions: first, large, poorer families who have low incomes and high bills; secondly, single wealthy individuals or couples, perhaps with more than one house, who have low bills and high incomes. At the top of the rateable value scale, the folk with large houses and gardens make a killing if they switch to a meter--even if they run their sprinklers all day in the summer, that amounts to a mere 4 per cent. of usage when spread over the year. Savings for some must be paid for by others.
Conservative Members have congratulated water companies on installing free meters, but those costs must be met by someone--by the 92 per cent. of customers who are paying for water in the usual way. The public should be warned about the regulator's latest attempt to alter the rateable value charge. In his recent tariff reform document, he states:
Nobody wants water metering. By last autumn, only 20 households in Scotland took up the metering option. Ralph Symons, an eminent pensioner from Huddersfield, has collected 47,000 signatures from people protesting at Ofwat's failure to introduce proper water conservation measures. It makes no mention of metering. Has there ever been a petition in favour of metering?
"basing water charges solely on the volume of water used does not make sense."
Ofwat has published a little leaflet that puts a cost on each use of water in the home, but it would do better if it published some facts about what we actually pay for when we pay the bills from the water industry.
"I have no time for those"--
such as the Secretary of State--
"who advocate looking at demand management from an economic viewpoint, and then ignore the messages which do not suit their agenda."
9 Jul 1996 : Column 228
It is a sign of the regulator's obsession with metering that last year's enormous peak demand for water for gardens was met by calls to meter everything. He did not question whether we should pour gallons of drinking water on to grass.
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury):
Will the hon. Lady give way?
"Income was not one of the criteria used in setting up the programme".
It was left to the Save the Children Fund, the British Medical Association, the National Federation of Housing Associations and the National Association of Citizens Advice Bureaux to point out what water metering means for poor families, who must try to cut down on water usage in the home by not flushing the toilet so often, sharing baths or not allowing the children to play with water.
"the overall revenue from unmeasured customers remains the same, but the range between the highest and lowest bills is reduced".
In everyday language, it means that the poor will pay more, and the rich will get another handout.
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