House of Commons Hansard Debates for 7 Dec 1998 (pt 24)

8.11 pm

Mrs. Teresa Gorman (Billericay): As my hon. Friend the Member for Witney (Mr. Woodward) said, it is hard to understand why we need the Bill. As I read the briefing material from the industry, it welcomes almost all the proposals. It is obvious that the great majority of the Bill's objectives could easily have been achieved by negotiation between the Government and the industry, which is naturally anxious to have good relations with the Government and with consumers. It is monitored by a number of bodies, including the Office of Water Services, which are directly answerable to the Government.

Conservative Members wonder why we are taking up time to introduce the Bill. The answer was given us by the hon. Member for Sheffield, Hillsborough (Helen Jackson), who told us of the fun that Labour had condemning the water industry, and what she described as its fat cats, in the run-up to the election. She painted a picture of an industry that had been privatised by the Conservative Government and was exploiting its customers and cutting off water supplies, and a picture of hysteria, which she freely admitted assisted Labour in winning the election.

In a way, the Bill has arisen out of that hysteria. It is part of the Labour party's policy of suggesting to the public that the services that have been passed to the private sector--and which are almost universally admitted to be a success, because they have led to lower charges--are still a problem and that the water industry represents that problem.

The Minister for the Environment painted a picture of what he called vulnerable types who needed the protection of our benevolent Government. Despite its being pointed out to him that Ofwat has defined the criteria on which people may or may not be disconnected; despite the fact that that is backed up by a number of regional customer service commissions, which monitor all proposals for disconnection before they are allowed to go ahead; and despite Ofwat's statement that the disconnections are not of vulnerable people, but are valid--that is backed up by the fact that two thirds of people who are disconnected are reconnected by the simple device of paying the bill within 24 hours of the disconnection--he persisted in painting such a picture, as if half the households of this country were having their water supply disconnected.

There are 20 million households in this country; about 640 had short-term disconnection for wilful refusal to pay for the water that they had consumed. There is no acknowledgement of the fact that someone else has to pay the bill when people behave badly, and try it on and push authorities to the limit. Labour Members never mention all those respectable people on modest incomes who pay their way and pay their bills. As Ofwat has pointed out, people who are bad managers can get the Department of Social Security direct payments scheme to help them to meet their water bills by passing amounts from their benefit payments directly to the water companies--budgeted over the year, so that they do not get themselves into debt.

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Several Labour Members have linked charges to ability to pay. That is not how an industry functions. We can tell that from Ofwat's briefing, which says that we must achieve

"a better relationship between charges and consumption."

People are asked to pay for their water because someone has to, and there should be a relationship between the amount of water consumed and charges borne. If the Government of the day require that certain people--those with large families or the elderly who live in certain types of accommodation--are given special help, that is the Government's job, not that of the industry. The industry's role is to fulfil the obligation placed on it with privatisation: to bring a derelict industry, which had been neglected for decades, up to modern standards. To achieve that, it must have resources. It is charged with raising those resources from its consumer base, and that is exactly what it does.

In the early days after privatisation, it was inevitable that water charges would rise, for the simple reason that the industry was so run down under public management, and its infrastructure so antique, that a massive amount of water was lost into the environment or into the soil. All those issues had to be dealt with quickly.

The industry was also charged not only with improving the quality of our water--which in many areas had become a lot less than safe--but with cleaning up our rivers, so that wildlife could flourish and we could have more fish swimming in our rivers. It also had to clean up our beaches and coastal waters, which had become highly polluted under public sector management and were unhealthy for bathing.

The industry had to reduce or eliminate the dumping of sewage sludge into the sea in pipes that were barely beyond the tidal level of the sea. Sewage was being washed back on to our beaches. The industry was given all those tasks, to improve the quality of water. Under public management, it had walked away from its responsibilities. They were tasked to the new industry, which has been doing its very best.

A few directors, whose incomes were profit-linked and linked to improvements that they produced, received relatively high salaries. The Labour party leapt on that and made it an enormous political issue--so we are debating a Bill that is largely unnecessary and could have been dealt with by negotiation between the industry and the Government.

Hon. Members have mentioned the prohibition of disconnection in particular. It has been pointed out time and again that the number of people being disconnected is going down rapidly. The message is getting through that these disconnections are bad news: they are bad news for the industry, the Government do not like them, politicians do not like them and they result in a bad reputation. Gradually, that problem is being overcome. We have gone from tens of thousands of disconnections under public ownership to practically none--about 600 cases this year, and that may be better still by next year--but the industry said in The Daily Telegraph that it is rightly concerned that

"this move will give a green light to people who simply don't want to pay."

There are always people who do not want to pay. They do not want to pay for gas or electricity and sometimes they do not want to pay in Marks and Spencer, so they pick up a

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few things and try to walk out of the store without paying. Nobody says that people should be allowed to get away with that, however poor and vulnerable they may be. The water industry is no different.

We keep hearing about how the precious commodity of water is in short supply. If Britain is blessed with anything, it is with a more than ample supply of water. The hon. Member for Ceredigion (Mr. Dafis) has made that clear. The water companies are tasked with ensuring that that adequate water supply is properly managed so that we do not have droughts. Droughts are less a product of our climate than a result of the mismanagement of the industry over the years. The Government should not paint a picture of an industry that is careless of the interests of its clients, which it is not, and that overcharges, which it does not--the rate of increase in water charges dropped dramatically after the first period. If, as I expect, the industry follows the example of the other privatised utilities, water charges will start to come down in real terms. The Government would have served the industry better by leaving it alone--it is monitored by several agencies--to fulfil its task.

Dr. Norman A. Godman (Greenock and Inverclyde): Many of my constituents will welcome the provisions in part II of the Bill, which establishes a water industry commissioner for Scotland. That will be a welcome change in Scotland to the legislation introduced by the hon. Lady's Government in 1994.

Mrs. Gorman: I am glad that the hon. Gentleman's constituents will be pleased. I am not au fait with the details for Scotland, because I expect the issue to be dealt with by the new Scottish Parliament. Three agencies--the Environment Agency, the drinking water inspectorate and Ofwat--already monitor the activities of the industry. It is very well managed and controlled. [Interruption.] The Government Whip is pointing to his watch and asking me to sit down. I have sat through the whole debate. I am fascinated by the subject and I intend to say what I came here to say.

Far from receiving brickbats from the Labour party, the water companies should be congratulated on the tremendous improvements that they have produced in the industry. We should not discourage them by adding to their costs with the provisions on metering. The enormous increase in the costs to the industry will be borne by the respectable customers who pay their bills. We should trust the industry, monitored as it is, to get on with its job. We shall go through the motions of the Bill, but we should remember that most of it has nothing to do with the needs of the industry and everything to do with the Labour party's rhetoric in the run-up to the general election.

8.24 pm

Mrs. Linda Gilroy (Plymouth, Sutton): I congratulate my right hon. Friend the Minister for the Environment on the robust and effective way in which he and his colleagues at the Department of the Environment, Transport and the Regions have addressed so many water quality and cost issues in their first 18 months in government, as well as some key associated environmental concerns. Significant steps have been taken to meet our manifesto commitment to pursue

"tough, efficient regulation in the interests of customers and, in the case of water, in the interests of the environment as well".

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Many of my constituents, who face the highest water bills in the country, will welcome the Bill. By removing the water companies' power to disconnect the water supply to private dwellings, by prohibiting them from using devices to reduce the amount of water available for use to enforce bill payment and by introducing the power to make regulations in respect of charging schemes, the Bill will give important new protection to vulnerable customers.

The Bill will go a long way towards achieving a fair and affordable water supply for vulnerable customers and offers an increase in customer control and choice over how water is provided to them and how they pay for it. That will offer substantial help to many people, particularly in the south-west, where water bills are the highest. According to the report produced by the House of Commons Library as a background to the Bill, the average bill in the south-west for 1998-99 is £354, compared with the average for all water companies in England and Wales of £242.

In the Labour party's document "In Trust for Tomorrow" we said that we would

"outlaw disconnection for residential properties and ban compulsory water metering".

The Bill implements that policy clearly and unequivocally.

Balancing price and quality and taking into account environmental considerations is difficult without causing undue tension for one of the key stakeholders. Nowhere has that proved more true than in the south-west over water. The average bill of £354 is 10 per cent. of the income of many less-well-off households. Many pensioners and younger people in my constituency live on incomes of between £2,000 and £4,000. It is little wonder that, faced with such a situation and the many other competing needs for food, warmth and clothing, some of them have problems with payment. I can say with confidence that the measures proposed in the Bill will help many of my constituents.

That is why I have taken a particular interest in the way our policies to regulate the utilities, particularly water pricing, have developed since the election. I am astonished that not a single Member from the Opposition parties representing Devon or Cornwall is present for this important debate. The Liberal Democrats, who have been vociferous on water issues, are conspicuous by their absence. I understand that they intend to oppose the Bill because it represents the creeping advance of metering. Many elderly people in Devon and Cornwall would like to be better able to assess whether water meters would be of value to them and would be interested to know that that is the Liberal Democrats' policy. I shall ensure that they do know about it.

I know that my right hon. Friend the Minister for the Environment shares my concerns about water charges, about the substantial increases since privatisation and about the burden that they place on my constituents. Water companies with long coastlines have passed on to customers the consequences of the environmental programme that goes with their responsibility for treating waste water and sewerage. The uneven distribution between companies of responsibilities for the coastline and the beaches causes fundamental social and economic concerns.

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My right hon. Friend the Secretary of State for the Environment, Transport and the Regions, in the guidelines "Raising the Quality", published the environmental and quality objectives to be achieved by the industry in the period 2000-05. They offer the prospect of an ambitious programme to improve water and environmental quality coupled with widespread real reductions in water and sewerage bills for the first time since the companies were privatised in 1989. Reductions in water bills of 10 per cent. and possibly more are a real prospect.