Water Bill [Lords]

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Kevin Brennan: Is the hon. Gentleman aware that one company that is against water metering is Glas Cymru, which, to my knowledge, is the only water company in the UK that has been set up as a public interest company not to make a profit but to serve the interests of its consumers?

Norman Baker: I was not aware of that. I am grateful for the information, which is doubtless a fact to be considered. I do not pretend that these situations are black and white. But I am sure that the metering by stealth, which has been going on for 13 or 14 years, cannot be allowed to continue. We need a clear statement of Government policy, which my new clause is designed to elicit. There are arguments for and against.

We support metering despite the fact that it has downsides. I do not pretend that everything is rosy. There is a short-term transitional cost. There are infrastructure costs in implementing the system and installing meters but we believe that in the long term the effect of stemming the forecast growth in demand will benefit the consumer by keeping bills lower and benefit the environment by limiting the growth in abstraction. If water consumption can be capped, the need to invest in longer-term infrastructure such as new reservoirs is obviated.

Metering trials took place in the early 1990s. The final summary report from the national metering trials working group states:

    ''The Water Industry Act 1991 requires that water companies can no longer use rateable values as a basis for charging after 31st March 2000.''

That has been overtaken by events.

    ''The metering trials have shown that customers, by and large, accept the idea of paying by volume and that there can be a significant effect on demand.''

It is a given from the studies that took place that demand can be reduced by metering. Indeed, the study

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in the Isle of Wight, which was the most comprehensive of all the studies, showed a 21 per cent. reduction in demand for water. I am happy to accept that that may be to some extent an unreliable figure. For example, an attempt was made at the same time to introduce leakage controls. Nevertheless I am in doubt that water can be saved by metering.

Mr. Thomas: The hon. Gentleman has just mentioned the very point that I wanted him to address. Although his attempt to achieve greater water conservation is undoubtedly the right approach, about 18 per cent. of our water is still lost through leakage before it even gets to the customer. I wonder whether his new clause addresses the real problem in the industry, which is downstream from the customer.

Norman Baker: There are a number of problems with water. One is the failure of the public authorities to conserve it properly. We tried to deal with that this morning and only partly succeeded. There is the problem of technology and how one can design toilets that do not waste water. There is the problem of leakage in pipes and how one deals with householders' pipes, particularly the section from the tap to the main connection which is privately owned and where most of the leakage now takes place.

There is a whole range of problems relating to the loss of water. We are trying to address one of them. I have never pretended that it is the only issue, but it is one of them. If electricity were based on rateable value people might decide to keep the lights on, but as they pay for it people are more careful about how they use electricity. I want the same philosophy to apply to how people use water.

Richard Burden (Birmingham, Northfield): The national water metering trials in the early 1990s, which considered the impact of metering, came in for a lot of criticism on the grounds that the areas chosen were far from typical. One argument advanced then was that the Isle of Wight does not have many high-rise blocks of flats, which cause technical problems when introducing water metering. Has the hon. Gentleman thought about how reliable those metering trials were?

Norman Baker: Yes, I have. I discussed the matter at length with Southern Water, which is a local company. The Isle of Wight was the biggest area in which tests were carried out and probably produced the most reliable figures. I agree with the hon. Gentleman that it may be dangerous to extrapolate too widely from the results in the smaller areas. The Isle of Wight was a large test area and it is reasonable to draw conclusions from it.

The new clause addresses the issue of high-rise blocks. It recognises that there must be different arrangements for areas and premises in which individual households could not be metered, such as metering a block of flats and subdividing the bill, but that is not specified in the proposal. However, the new clause recognises that there is a problem in high-rise

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blocks and other buildings and contains a measure to deal with it.

The National Consumer Council report, ''Towards a Sustainable Water Charging Policy'', published in 2002, states that in New York 600,000 were converted to charging by volume between 1988 and 1998. As a consequence, the water company was able to postpone indefinitely a huge investment programme to develop further water supply resources. It is clear, first, that the installation of meters suppresses demand and, secondly, by doing so it obviates the need for long-term infrastructure investment, which means lower consumer bills in the longer term.

Diana Organ (Forest of Dean): I go along with the philosophy that we should be considering efficient ways of using water in the infrastructure. Is the hon. Gentleman aware that the most successful boys' urinals in new primary schools, such as Hopebrook in my constituency, are completely dry? As a Member of Parliament, the hon. Gentleman, like me, will have to visit many boys' urinals in primary schools. A new design is being used that does not need water, so it does not smell and is extremely efficient. We should consider every measure by which to cut down on the unnecessary use of water in new infrastructure.

Norman Baker: I am grateful for the hon. Lady's intervention. It shows another means of saving and conserving water. I am not over-familiar with boys' urinals but I take her point. [Interruption.] Not for a long time, anyway. I will bear in mind what she said the next time I am near a boys' urinal.

I return to my response to an intervention from the hon. Member for Ceredigion. A lot can be done generally to save water and the hon. Lady mentioned one means of doing so, but it is important, because it has got people who use water to consider how much they use, and whether they need to use it. I am in no doubt that water metering will suppress demand, obviate infrastructure investment and keep bills down. It is also fairer, by and large, that people pay for what they use rather than pay some notional amount based on 1973 rateable values, which is indefensible. I want someone to defend that position in a moment.

The arguments about water metering are not all for or against. The real issue is to ensure that any system that is introduced does not adversely affect the poorest people. That concern is probably why successive Governments have not pushed ahead with the proposal, and perhaps why, in 1997, the new Labour Government pulled back from the 1991 Act, which would have required universal metering.

The changes in subsections (5) and (6) of the new clause give water companies the power to require customers to install a meter and to be charged volumetrically, but they give the Secretary of State power to have regard to important factors such as the needs of low-income consumers and areas of water scarcity. The Secretary of State is given room for manoeuvre to deal with those groups and to take extensive consultation. The new clause provides that he must give particular consideration to vulnerable customers such as the poorest families and those with

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medical conditions requiring high usage. Those conditions must be satisfied and the matter sorted out before water metering can be introduced.

The Government recognise the need for vulnerable groups to be protected in respect of water metering in the regulations, but water companies and Water Voice have told us that those regulations do not work at present. There is little take-up, they are not understood, the forms are hugely complex and they do not help the target audience for which they were designed. Irrespective of anything else in the new clause, the Government need to review the regulations to ensure that they work.

Our overall intent is to balance the interests of the environment, consumers and water companies to provide a timetable for universal metering by 2018, to ensure that particular consideration is given to vulnerable customers in drafting the necessary regulations, and to charge substantially by volume. There should be rising tariffs which mean that the first use of water will be cheaper than later uses, although it is important not to penalise the essential use of water. We want to ensure that water companies are fully involved in the consultation process and to provide the Secretary of State with sufficient room to manoeuvre on the issue of vulnerable groups, taking into account the difficulty of metering properties. The concerns expressed in the amendment and the new clause are linked to our earlier amendment on water poverty. The Minister agreed that the regulations on vulnerable groups needed to be improved.

It is not practical or honest to proceed with the hybrid system of water metering by stealth. Some time in the future there will be universal metering. It will happen because water will become more scarce, especially in the south-east, for example; because as people move around, consumers who had water meters will choose that system for their new premises; and because there will be pressure from the water companies. If there is to be universal metering, it is better to manage the process properly. The Government should be open about it, have proper consultations with the affected groups and introduce a system that deals with the issue I have raised, ensuring that the vulnerable are properly protected. A system that is brought in by stealth would not do those things.

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