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7.9 pm
Mr. Richard Burden (Birmingham, Northfield): I have enjoyed the debate, as good points have been made by hon. Members on both side of the House. I was especially interested in the speech of the hon. Member for North Thanet (Mr. Gale). Although I profoundly disagree with his remarks about pre-payment meters, his comments on responsibility for the supply pipe deserve consideration. I hope that he will not follow through on his statement that the issue might affect the way he votes, but the question of who is responsible for the supply pipe on consumers' premises will have to be addressed at some stage.
I was joint secretary of the all-party water group in the last Parliament and I welcome the fact that many of the measures that we argued for are in the Bill. My hon. Friend the Member for Sheffield, Hillsborough (Helen Jackson), who spoke earlier, mentioned her Bill to ban water disconnections. I pay tribute to her and the work that she has done on that issue over the years. I tabled a private Member's Bill, the Water Conservation and Consumer Choice Bill, which not only called for a more systematic approach to water conservation and leakage, but sought to allow the consumer to choose whether to have a meter, rather than leaving the matter entirely in the hands of the water company or the water company and Ofwat. I welcome the fact that that issue is addressed in the Bill.
This Government have had a real impact on the water industry. Shortly after we came to office, the water summit agreed a 10-point plan which signalled real improvements in water leakage prevention in the first two years. I also pay tribute to the progress made by the water companies. Many of those who know me may consider that quite surprising, as I spent much of my time in the last Parliament--and before I came to this place--criticising the water companies, the process leading to privatisation and many of the attitudes that followed it.
Following privatisation, the water companies seemed to adopt a gung-ho approach in their search for ever-increasing profits and dividends. Water prices increased by a third in real terms and any increases in quality did not match the increases in price. The disconnection option was used too readily, with a threefold increase in the number of disconnections in the year following privatisation. I got the feeling, in the immediate post-privatisation era, that the water companies' desire to underline the fact that they were now part of the private sector was leading to a loss of the public service ethos that is so important in the water industry. The water companies became disconnected from the communities that they served, and I believe that that attitude has caused many of their subsequent problems.
I am pleased to say that, since then, the water companies--including Severn Trent in my area--have shown a new sensitivity and a greater willingness to listen to criticism. Before privatisation, the then chairman of Severn Trent, John Bellak, was described as having the courage of the previous Government's convictions. The company was very political in the way that it managed its affairs. I welcome the fact that the situation has now changed. The company is doing important environmental work and supporting our region. It is backing the Millennium Point project, which is so important for the entire west midlands area, as well as regeneration projects such as the West Midlands First campaign, which is designed to promote the area as a centre for manufacturing. Those projects are vital in reconnecting the water industry and water companies with the communities that they serve.
I welcome the quality improvements that have been made and I am also pleased about the dramatic change in the water companies' attitudes towards people who have difficulty paying their bills. The disconnection rate is down significantly. Severn Trent is one of the companies that have established a charitable trust to help those customers who have difficulty with bill payments. We must give credit where it is due: it is important to recognise that changes have occurred.
However, do we assume from those changes that there is no need to worry about and outlaw disconnections? I think that that would be the wrong response. Disconnection is a matter of principle. The British Medical Association, the Royal College of Nursing and the Chartered Institute of Environmental Health have made powerful cases--many of which have been mentioned tonight--outlining the real public health risks involved with disconnection. Those risks involve not just the householder or the person who, for whatever reason, has not paid his or her bill, but entire families, including elderly relatives and children. Many people may suffer health risks as a result of disconnection. Allowing the
disconnection of water supplies as a result of non-payment is no more acceptable or logical than responding to the non-payment of local taxes, such as council tax, by allowing rubbish to accumulate outside people's doors and removing their children from local schools. We are talking about a public service and the disconnection issue must be considered in that context.
Despite the changed attitudes of many water companies, they can still take a cavalier view of disconnection, especially in the short term. That was certainly the case in the debate that occurred prior to the High Court judgment regarding pre-payment meters, and I believe that a similar opinion crept into the speech of the hon. Member for North Thanet. We have been told that pre-payment meters are essentially a budgetary measure and that there is a consensus that no one should be cut off for non-payment of bills. However, the pre-payment meters introduced by Severn Trent and other water companies--which were said to be a budgeting aid designed to help people who had difficulty paying their bills--led to disconnections, which were later deemed to be illegal.
Although I welcome and support the initiatives taken by water companies and those promoted by my right hon. Friend the Minister for the Environment--including easy payment schemes, staged payments and electronic payments at post offices and so on--any device that is said to be a budgetary aid but is used to threaten people with disconnection or a restricted water flow is not acceptable, for the same reasons that formal disconnection is not acceptable.
If we are to outlaw disconnections--and I believe that we should--we have an obligation to ensure that there are other remedies in place in the event of a wilful refusal to pay. We owe it to our customers to ensure that they do not bear the brunt of bills arising from non-payment. It is vital to ensure that the court system works effectively and that garnishee orders and measures such as attachment of earnings work effectively.
I welcome the Bill's extension of the time limit on using rateable values as the basis of water charging. Finding the best and fairest system of charging for water is a complicated issue. We must balance equity for customers with some consideration of ability to pay. We must also bear in mind sustainability and promote the conservation of water as a vital resource. It is not easy to find the ideal system that meets all those tests--in fact, there is no consensus in this country about what that system should be.
In the past, there has been a headlong rush in some quarters towards metering as a panacea to those problems. When I sat on the Opposition Benches in the last Parliament, I had no doubt that the former Secretary of State, the right hon. Member for Suffolk, Coastal (Mr. Gummer), preferred metering as the norm for water charging--he made that absolutely clear in this Chamber and in meetings with my hon. Friend the Member for Hillsborough and with me.
Mr. Brake:
Does the hon. Gentleman concur with the view of the Consumers Association that the Government's current policy is one of creeping metering?
Mr. Burden:
The matter is not as simple as that. I shall deal later with the impact of metering on other aspects--an issue raised by the hon. Gentleman and others--but I do not agree with his analysis of creeping water metering.
There are powerful arguments against using metering as the norm and as the basis of a water charging system. Some years ago the Save the Children Fund conducted a study of the effect of metering on low-income families. Companies and many water analysts have drawn attention to the huge capital cost involved in making metering the norm--some estimates have put it at about £3 billion. Various hon. Members have pointed out at various times that many of the costs of the water industry are not specifically related to volume. In some cases, it has been estimated that 60 per cent. of the costs of the water industry are not related to volume.
There are problems in seeing metering as the panacea for the future, but there is no consensus about what the alternative should be. That is why I believe that, at this stage, extending the use of rateable values to buy us time to reach a consensus is a responsible way of proceeding. It should be made clear to consumers that there is no obligation on them to have or not to have a meter. Of course there would have to be exceptions, some of which are covered in the Bill, but the principle is sound.
I have some concerns about where we go from here. First, the Bill raises the question whether customers should have the right to have a meter installed free. I have no problem with the suggestion that customers who want a meter should not be charged at the time of installation. However, nothing is free in the water industry; there is a knock-on cost. I have heard it said, sometimes by supporters of metering, that in the water charging system there is an excessive bias towards the unmeasured customer. Having examined the system, I do not agree that that is the case, but I would be worried if, as a consequence of the Bill, a customer's right to have a meter free resulted in the cost of the meter being borne only by the unmetered customer, through the tariff basket.
The Government probably intend a balance to be achieved, rather than the entire cost falling on the unmeasured customer, but I hope that my right hon. Friend the Minister can clear that up tonight or in Committee. It is unlikely that there is any difference in principle on that, but some of the more gung-ho supporters of metering in various institutions that have some influence on the matter may interpret it in that restricted way.
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