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Mr. Oliver Letwin (West Dorset): I have been listening to the hon. Gentleman's thoughtful speech with
considerable interest. Does he believe that if all the categories of metered water customers are added together--those who apply for the free meter who are low-use customers and will therefore benefit and keep the meter, those who are high-use customers who use their sprinklers in summer and will be forced to take meters, those who buy houses that do not have rateable values, and those who buy houses in which a meter has been installed more than 12 months previously--there will be a vast increase in the proportion of metering, on a cumulative basis?
Mr. Burden: The hon. Gentleman is right to say that there will be an increase. My right hon. Friend said that the chances are that there will be an increase. We shall have to wait and see whether it will be vast. Already about 14 per cent. of households have a meter. If there is an incentive such as free installation, the chances are that more households will have meters. If those customers save money on their bills as a result, there will be some kind of knock-on.
The conclusion that I draw is that, in the absence of a consensus, it would be ridiculous to go headlong into trying to invent rateable values for all houses, whether they were built recently or not, or to go headlong for council tax charging, irrespective of the impact that that could have on low-income families if it were introduced without restructuring the council tax bands, or to go headlong for metering. A precipitate move down any of those roads would be wrong. That is why the Bill is right. We must be creative and examine different charging systems in different regions. We must accept that the objective is to develop a consensus that does not yet exist among Government or Opposition Members.
As I have made clear for many years, my preference is for an unmeasured system to be the basis of charging. The capital cost of metering is so high that that is not the most attractive basis for charging for water in the future. Through an unmeasured system it is possible to create a charging system more closely related to ability to pay, but it is not a simple equation.
There are powerful environmental arguments for metering. I have suggested that, as an alternative to metering, we should do more about leakage, and I have welcomed the efforts made so far by my right hon. and hon. Friends to deal with leakage. However, it was suggested to me last weekend that, if we move too far down the road of leakage control, that would involve an environmental cost in terms of landscape and so on. It is not a simple situation, but we must tackle it.
If, after discussion and debate, we decide that we want metering to play a substantial role in our water charging systems, we must be far more rigorous in finding ways of relating a metered system to the ability to pay. The initiatives in the Bill to protect vulnerable groups are welcome and long overdue. That could have been done by the previous Government, but was not.
To say that water charging should be based on average usage is a start, but average usage is not the same thing as ability to pay. We should commission research and try to find ways of relating a metered system not just to concepts of average usage, but to ability to pay. Only in that way will we be able to protect low-income customers effectively.
I welcome the Bill. It is precisely what we should be doing at this stage, in the absence of a national consensus. It contains important initiatives, from the extension of
rateable value to the protection of vulnerable groups. I am particularly pleased that we finally say what a civilised society should say: that domestic water disconnections should have no place in the water industry.
Mr. Shaun Woodward (Witney):
The hon. Member for Birmingham, Northfield (Mr. Burden) has put his finger on it. What is wrong with the Bill is that there is no consensus in the industry about whether this is the right way to proceed, and there is no consensus among those worried about vulnerable groups. The genuinely vulnerable are not the 640 who have been disconnected, but those who will pay more for their water as a result of the Bill.
The Bill is not particularly bad--its motives are good--but it is not a good Bill. It should have provided guidance for the water industry on how to charge for water in the years ahead. Instead, it has prolonged the uncertainty of the present system and failed to address many of the crucial issues, such as the environmental impact of the use of water.
As my hon. Friend the Member for West Chelmsford (Mr. Burns) said, the Bill does nothing to enhance competition within the industry, which is the most effective way to drive down the cost of water. It has little impact on the environment, provides little guidance for the long term and creates greater uncertainty. It is against that background of uncertainty that we must consider the Bill.
We have heard the rhetoric of Labour Members--they have expended much energy talking about what the Bill will do for the vulnerable and how it will protect people from being disconnected. However, the truly vulnerable are no longer being disconnected. In the past few years, there has been a decline in the number of people who have been disconnected. We must put the number of disconnections in context, and consider whether the Bill has been thought through, has logic and relates to some of the other essential utilities, such as electricity and gas.
We have no idea whether the system of rateable values will continue in the long term. The Bill does not say whether it will continue until 2005 or 2010. Without a final date for changing the system, there is no incentive for the industry, the Government or the regulator to find an acceptable, fair and modern method of delivering water to the consumer. Without that long-term solution, everyone is left with uncertainty.
The water industry will bear the cost of providing the meters. It may spend hundreds of millions of pounds for no purpose, because, in a few years' time, the Minister could present a new Bill that changed the system of charging. The water industry has spent several hundred million pounds on disconnections. If all those 640 people who have been disconnected this year for whatever reason were highly vulnerable--most of them were not--they could have done with the money that will be wasted by the industry.
It is crucial to separate the principles of charging and of disconnection. The Bill is required to sort out the long-term interests of water for the consumer and for the industry. However, we must be careful to put disconnections in context. The Bill puts into legislation what the industry already does very well voluntarily. The number of disconnections last year was one tenth the number in the last year of nationalised ownership of the water industry. Public ownership is not a guarantee that people will not be disconnected. Labour opposed privatisation, but few people are now disconnected, because in the private sector the industry has listened to important criticisms that have rightly been made about vulnerable people needing to be protected. It has responded to those criticisms: it has not always got it right but, by and large, the trend is down, and this year the number of disconnections is in three figures.
It is worth noting that, of those disconnections, two thirds are reconnected within 48 hours. I accept that those 48 hours may be miserable, but I am not sure that the Bill approaches the problem in the right way. The industry is concerned about the effect of the Bill on the cost of water, and on customer debt. It believes that customer debt will rise sharply, because the burden will be placed on the customers who pay their bills. We will end up with a water tax as well.
The downward trend in disconnections should have given the Government a better sense of how to proceed other than by legislation. The Minister said that the Bill will help millions of people. I am not sure who those millions of people are. We know that 640 people were disconnected because they did not pay their bills, but who are the millions who will be helped?
Mr. Lawrie Quinn (Scarborough and Whitby):
You have several times referred to those 640 people. It is my understanding that you are--
Mr. Deputy Speaker (Mr. Michael Lord):
Order. The hon. Gentleman must use the correct parliamentary language. He must remember that he should address the Chair.
Mr. Quinn:
I apologise, Mr. Deputy Speaker. Should not the hon. Gentleman refer to 640 households rather than to 640 people? Does he not diminish the problem by that reference?
Mr. Woodward:
The hon. Gentleman makes a fair point, and I do not want to quibble about whether the figure represents individuals or households, some of which may have one or two people. We are comparing like with like, so if there were 15,000 disconnections 10 years ago and the number for April to September this year is 640, those are the two figures that we should compare. If the hon. Gentleman wants to double this year's figure to 1,200, we should double the figure for 10 years ago to 30,000 to make a comparison. I am not sure that the hon. Gentleman's point is firmly made.
Who are the millions of people who will be helped by the Bill? It will certainly not be the millions who will have to pay more for their water. The Bill will fall heaviest on the people at the bottom of the pile--the honest people with little spare cash who pay their bills because they believe that that is the right thing to do. It would be interesting if the Minister were to tell us who those millions of people are.
Does the Minister believe that more or fewer people will refuse to pay as a result of the Bill? The number of people who refuse to pay their bills is declining. Will the Bill lead to a further decline, or will the number increase? If the Minister believes that it will increase, does he also accept that, if more people refuse to pay their bills, there will be more court work and more bureaucracy? One of the dangers of the Bill is that it will lead to more expensive water, more court work and more bureaucracy, yet not one drop of water will be delivered more efficiently.
The Bill does not address the problems of improvement in the service and of leakages. Those issues worry consumers of water. The Bill fails to deal with crucial matters that we know consumers care about.
My hon. Friend the Member for West Chelmsford rightly asked the Minister whether a business impact assessment had been made of the effects of the Bill on water companies. Everyone must fear that the cost of forcing companies to supply free meters will be enormous. One water company in my constituency, Hyder, estimates that the cost of providing meters for a company with more than 1 million customers would result in an increase of about £25 a year in the average water bill.
When Labour was in opposition, it made much of its claim that it would take £50 from the average water bill of every consumer in the country. All that the Water Industry Bill will do is increase the bill of every consumer. Nothing in the legislation suggests that Labour will honour the commitment that it made to consumers to reduce their bills; but there is everything to suggest that it will bring about more bureaucracy in the industry, and will do nothing to address the problems of leakage, nothing to improve the service and nothing to force the price of water down. It appears that it will merely force the price of water up.
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