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6.46 pm
Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East): Thank you, Mr. Deputy Speaker, for allowing me to speak in this debate. First, I must congratulate my right hon. Friend the Minister for the Environment on the Bill. He has always been a champion of social justice; in the Bill, he clearly demonstrates that he is trying to eliminate injustice for consumers, and I congratulate him. Certainly, all Labour Members would agree with him.
The main thrust of the Bill is to lift the spectre of disconnection for ever. I would argue that the Government need to build on the period of stability that the Bill will provide for the water industry to consult on a truly lasting scheme for water charging, which incorporates environmental, social and investment needs.
Having listened to the debate, I think that we all agree that water is a basic requirement of human life. It is worth reminding the House that the basic need for a hygienic water supply and the need to combat illness and disease led to the setting up of local forms of government and administration. Since then, an unimpeded supply of water has become something that most people take for granted.
The affordability of water is a key issue, as is the need to ensure that no one is denied access to a water supply, whatever his or her needs. Some people have more needs than others. Large families, often headed by a single parent, obviously need more water for washing, bathing and cooking than small families. I take the point that, often, the largest users of water are affluent families who have--or feel that they have--large cars to wash and lawns to water, but we must not lose sight of the needs of the poorest among us. The key issue is the need to eliminate--
Mr. Woodward:
By how much will the cost of supplying water to homes increase as a result of the cost of installing a large number of water meters? What about the effects of moving from charges based on rateable values to meters? If the final cost is more expensive water, will not those vulnerable people--not necessarily the people who would be cut off, but those at the bottom of the pile--have to pay larger bills?
Dr. Kumar:
If the hon. Gentleman is patient, I will come to that point.
The key issue is the need to eliminate the spectre of disconnection. My area is served by Northumbrian Water and the number of disconnections there hardly registers--indeed, there have been none this year, despite the poverty and high unemployment from which many of the region's towns, cities and villages suffer. The arrangements that are in hand in our region are certainly a model for the rest of the country to follow and they comprise the following: the operation of a well-resourced customer services committee; proper collaborative arrangements with local councils and housing associations, which were mentioned by my hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson); and on-going liaison with bodies such as consumer advice centres and citizens advice bureaux.
We recognise that some disconnections occur. Sometimes they are the result of "don't pays" rather than "can't pays", but even in the former case the actions of, say, obstructive husbands can blight the lives, and harm
the health of, wives and children. Despite everything, some "can't pays" slip through the net. My experience as a councillor, and my constituency case load, has taught me that people who are less able to communicate are prone to pulling the blanket over their heads and hoping that problems will go away; of course, they do not.
I appreciate the fear of water companies that merely removing the ability to disconnect will not solve their problem of recovering their costs and charges. The right to an uninterrupted supply of water comes with the responsibility of bearing a share of the cost of having it delivered through the tap. The Government should rule out some ideas now, such as devices that restrict the flow and amount of water delivered. That idea was floated by some water companies in the south of England.
I would like the Government to rule out pre-pay meters, which merely give rise to a problem that already exists in respect of electricity supply--self-disconnection, which often happens without anyone concerned for the well-being of a family being aware of it. I would like some examination of the possibility of pursuing payment through attachment of earnings or deduction from wages.
At present, in the income support regulations, rent, mortgages, gas and electricity rank above water in respect of direct payments. It could be argued that the system needs to be better fine-tuned to reflect the importance of the water supply. That could satisfy the needs of water companies to recover their costs and allow the fine-tuning necessary to reflect a household's financial circumstances. Such a process would stop the use of county court summons and judgments, which create additional costs for water companies and their consumers.
On the broader issue of the Bill's proposals on the charging system, paying for water affects low-income families more than the rest of us. The charges that they have to bear must be balanced against their other pressing needs for food, clothing and accommodation. That affects many in the north-east, where many people are workless and median wages are lower than they are elsewhere. The spatial and demographic reality in which Northumbrian Water operates means that many of its customers are poor and most of them are clustered in large conurbations such as Tyneside, Wearside and Teesside on the coast. Meeting environmental standards and servicing large centres of population mean that the capital cost of the utilities is high, and that has to be reflected in household bills. The Bill provides that the rateable value factor will remain a basis for charging after 2000, creating some stability for the industry and the regulator in judging the equity of household charges. However, everyone recognises that this is not a long-term position and that a new methodology will soon have to be devised to calculate the household charge. That gives the Government a window of opportunity to consider the matter on a far broader canvas.
There is a case for detailed examination of the elements that make up the factors in water charging: the environmental issues that flow from the present water supply infrastructure provision on the ground; the need to stop wastage and leaks caused by outdated piping and drainage; the need to consider the matter on a truly national basis to iron out the geographical and social inequalities that result from the boundaries of the present water companies; the costs that water companies pass on to their customers for running their central office services; the possible contribution that water companies receive
from their subsidiary operations, something of importance given that many of them have branched out into other activities, such as waste management and environmental consultancy, which can be highly profitable; and the need to balance the needs and demands of--and returns to--industries and institutional users against those of household consumers.
The Government should consider whether cross- subsidies exist, or could be induced, to benefit both consumers and local industry. A good example of that exists in my area, where Northumbrian Water has recently completed one of the biggest infrastructure projects in the UK water industry. It consists of a totally new pipeline system and sewage pellet plant which will serve Tyneside and Teesside. It will also process industrial effluent and discharges from local industry. Such provision helps local industry directly and the charges for it can both defray the massive capital cost and eventually help to lighten the cost burden on the household consumer.
There should also be an investigation into how to maximise the efficient use of water. As the National Consumer Council suggested, the process could begin with a simple scheme providing, for example, statements on household goods of how much water they consume. With appliances such as washing machines and electric kettles, there is a correlation between the use of water and the cost of electricity supply, and that approach could allow consumers to make domestic purchases that help both the environment and the household budget.
There is a responsibility on Government, too, to assess the impact of water charges on the social security budget and find how the social security system can best help the poorest with their water charges. A key need is to ensure that the regulator has a duty to examine the need of the poorest written into his or her job description.
Mr. Tom Brake (Carshalton and Wallington):
I congratulate the Minister on being first out of the starting blocks with a new Bill in this Session. I will not seek to pour cold water on his achievement in securing pole position, as I am sure that the experience that he will acquire in taking it through the House will prove invaluable when more substantial environment Bills are brought forward.
The Liberal Democrats support some aspects of the Bill. We recognise that water is not a commodity to be traded, like petrol or steel, but a necessity. We applaud
the Government's intention to ban disconnections and prohibit water-limiting devices, matters on which we too have campaigned. I was surprised that the Conservative spokesman dwelt at such length if not on defending disconnections, at least on minimising their extent. His reasons became clearer when he confirmed that he would prefer to have his water switched off for two days than lose his television.
We do not believe that water companies require disconnection powers to ensure that "won't pays" pay their bills; attachments of earnings or benefits, or the bailiffs should suffice. After all, I hear no clamour from the Scottish water and sewerage authorities and local authorities for powers of disconnection. However, we do accept water companies' concerns about the difficulties that they encounter with the small number of "won't pays" who work the system. Therefore, I ask the Government to consider reviewing the process to allow action to be take more quickly in cases where people are clearly and deliberately avoiding paying their bills. We support the changes relating to the Water Industry Commissioner for Scotland, even if, according to a lawyer who has closely examined the relevant clauses, the drafting appears to have been somewhat hasty. We may choose to return to that point in Committee. Our support is limited to those clauses.
The issue of water tends to leave egg on faces. In 1989, the Tories privatised 10 water companies at an administrative cost of £143.5 million, but they undervalued the companies by £873 million--not a negligible sum. It looks as though the Minister for the Environment will also be left with yolk on his tie--it would be quite visible on the tie that he is wearing today--for the Bill contains many unsatisfactory clauses and there are many unsatisfactory omissions.
The Bill extends the use of rateable value indefinitely beyond 31 March 2000, yet most rateable values are 25 years old and even the most recent are at least eight years old, so that hardly constitutes a fair method of charging. In opposition, Labour proposed a better system of water charging, set out in the document to which I referred earlier, "Ending the Meter Mania", which was published in April 1997. It was written by the right hon. Member for Holborn and St. Pancras (Mr. Dobson), who at that time was the shadow environment spokesman, and is now Secretary of State for Health. I am pleased that the Minister for the Environment has not disowned that document, in which Labour proposed using council tax bands, saying that that method
The Bill allegedly provides for free meters, but there is no rejoicing in the streets about that proposal. The cost of those free meters is identified in the document not disowned by the Minister as being £4 billion. My local water company says of free meters:
The view held by diverse organisations is that the consumer choice on offer from Labour, to which the hon. Member for Sheffield, Hillsborough (Helen Jackson) referred, is all one way: people can either have a meter now or eventually be forced to have one. If anyone is in doubt that the Government's policy is one of "creeping metering", they should consider the 4.4 million--or perhaps 5 million; we await an announcement--new homes that are expected to be built by 2016, which will all have meters.
As well as many flawed clauses in the Bill, there are significant omissions. The Government could have taken the opportunity to smooth out regional disparities in water prices by setting up a water services trust. Such a trust would be paid for by a levy on company profits and would fund water projects of national importance and provide grants and interest-free loans for the installation of water-efficient devices. I believe that Labour Members and even Conservative Members would support that.
The Government, who say that they believe in the principle of the "polluter pays", have made no attempt to address the question of charges for highway drainage. Not many people know it, but all water company customers pay the cost of highway drainage charges in their water bills. The Bill also fails to address the issue of abstraction licences. I am aware that the Government are consulting on that issue, but the Bill represents a wasted opportunity for a Government who claim to have put the environment at the heart of their policies. The Bill should have referred to water abstraction licences and required that they be time limited.
The Bill's overwhelming weakness is its unquantified impact on the poorest section of the population. Sutton and East Surrey Water, which is my local water company, estimates that unmeasured bills could increase by 27 per cent. if 50,000 of its customers opted for meters. Hon. Members may doubt the company's word, so let me quote again from the Consumers Association briefing, which states:
"provides the basis for a system of water charging that would be fair, reasonably simple and cheap to administer".
That is the system used in Scotland. As both the Labour party in its document and I accept, that system would need to be fine-tuned, perhaps with additional bands at either end of the scale, but it is a viable alternative to the use of outdated and therefore unfair rateable values. The use of that system should not be ruled out simply because there would be losers as well as winners, as I understood the Minister to say; that would be a strange way to legislate. A system based on council tax bands is one that the Liberal Democrats support and the Labour party used to support. We believe that the Government should set an early deadline for scrapping rateable values and replacing them with council tax bands.
"The changes to metering will certainly encourage more people to have a meter. It's the one or two person households in high rateable value homes who will benefit. Charges to everyone else, including the vulnerable groups, will go up."
Hon. Members may be thinking, it is a water company, so it would say that, but what about the Consumers Association, whose briefing states:
"We are concerned that the implications of this Bill are a policy of creeping metering"?
What of the Chartered Institute of Environmental Health, which says:
"the theme behind the Bill is increasing metering"?
What of the British Medical Association, which says:
"We are concerned that the customer choice will therefore be increasingly limited as the housing stock with water meters fitted increases",
and continues,
"Water metering has been shown to lead to reductions in use that threaten individual and public health"?
A water expert who advised the Environment Sub- Committee on water conservation and supply said:
"The Government has now agreed to a very expensive approach to charging households for water. It will progressively impose water metering on most households."
It is worth noting that two of the organisations that I have just mentioned were quoted in "Ending the Meter Mania" in support of Labour policy only 18 months ago.
"We are concerned that the implication of this Bill is cross-subsidisation between measured and unmeasured users, meaning higher bills for unmetered consumers (due to the free meter policy)".
I can also refer to "Prospect for Prices", a document which states the belief that the Government's proposals on metering could add between 1.5 and 2.5 per cent. per annum to bills. That means higher bills for lower income households in lower rateable value properties, some of which may not be included in the groups listed by the Minister in his speech. Even if they were included in that list, they might not be able to afford the so-called average bill to which the Minister referred. The Government have at least recognised that critical defect and are apparently trying, in conjunction with Ofwat, to mitigate its effect; but it should have been addressed in the Bill, not as an afterthought.
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