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13 Jun 2006 : Column 181WH—continued
We should not forget that although we face the threat of below-average rainfall over a period of two years or more and the long-term challenge of climate change, we are also likely, with the incidence of drier, even hotter summers, to face increased flooding, because our weather patterns are changing. We are having longer, drier periods, and short periods of
intense rainfall. That is dangerous, because when the land dries out and bakes, its ability to soak up rainfall is undermined, particularly when it comes suddenly and in great amounts. As a result, in the summers—possibly this summer—there will be an increased incidence of flooding. That is a real possibility in London if we have storms through the summer during a prolonged period of overall dry weather. Weather patterns are confusing, and we must not allow ourselves to be lulled into thinking that just because we get rain every now and again, that is the solution. The problem is much more complex and long term.
The tone of the debate, which was set by my hon. Friend, has been constructive. There is great concern outside the House, and there is a large degree of anger in the south-east at the Government’s housing plans. Overall, people are very reasonable: they know that the weather is one of the few things that they cannot blame on the Government. However, the Government’s insistence on building millions more homes in areas that already suffer from water stress seems perverse to many people. No more new homes should be built until a proper assessment has been made of the availability of water. Indeed, such assessments should be made a condition of planning consent, and all new homes should have water-saving installations fitted as standard.
Many of my points have been touched on already in the debate. My hon. Friend the Member for Mid-Sussex (Mr. Soames) spoke powerfully and with great authority about the overwhelming numbers of new homes proposed for the Gatwick triangle. He is a formidable champion for his constituents, but he also spoke sensibly about a much wider problem which affects more people than just those in his community. He is absolutely right: the owners of those new homes, particularly if they are affordable homes, will not thank the Government if they find, when they move into them, that the area is subject to acute water pressures, stress and shortages, to say nothing of the other strains on social and physical infrastructure. I simply cannot understand why the Government have been so resistant to water companies becoming statutory consultees. I hope that the Minister will update us on that.
That is not just a problem in the Gatwick triangle: the Thames Gateway is one of the areas that is most prone to flooding, yet has one of the scarcest water supplies. That is a real conundrum for the Government to solve, and we look to the Minister for a more sophisticated answer than those that were forthcoming from the ODPM.
If I had to summarise the approach of Labour Governments to water since they came to office in 1997, the first thing that I would say is that they have had a lack of long-term strategic thinking. Water is not a laissez-faire industry: the private sector is dominant, but the Government are ultimately responsible for drawing up and having ownership of the 25-year plans, but we hear little of those plans, which are sketchy and underpowered. New as the Minister is to his job, I would like to hear more about his vision for the long-term direction of the UK water industry in those 25-year plans, and what personal input he will have into shaping those plans so that they are fit for the 21st century.
The second feature that has characterised the Government’s approach is a general lack of ambition to grip the complex problems. A few weeks ago, I had breakfast with the chief executive of Skanska, which is one of the UK’s largest engineering contracting firms. He told me that he was amazed that people are prepared to accept what the water companies say about their ability to make repairs and to progress with updating leakages. He said that it simply is not true that they can go only so far so fast, or that their best is the best that can be achieved. He talked about infrastructure building, in relation to cost, speed, the convenience with which works can be done and the disruption necessary to the public in built-up areas when renewing pipeworks and large infrastructure projects. He compared what his company does in the private sector for many of its clients, particularly in the gas and electricity sectors, with the relatively mundane progress that the water companies are making. What is the Minister going to do to stretch the water companies, challenge their assumptions and encourage them to go further and be more ambitious? What are those companies doing to introduce best practice in contracting and engineering to ensure that the solutions that they are implementing are the most effective for the 21st century?
The third element to the Government’s approach is a lack of national aspiration to match best practice in water consumption to patterns across the rest of Europe. As the hon. Member for Cheltenham (Martin Horwood) said in his thoughtful and sensible speech, a great deal of which I wholeheartedly agree with, water consumption has grown significantly, almost horrifically, in the past 20 years, particularly in the south-east. Our record compares poorly with developed economies elsewhere in Europe, particularly Germany, which has a much better record than we do for saving water. It uses approximately one third of the water per consumer that the UK uses. Why? The answer is that it has far better, much more effective and widespread rainwater harvesting, and widespread utilisation of practical measures such as dual-flush loos. That sounds a bit mundane, but lavatories account for about 25 per cent. of total household demand for water, certainly according to the figures that I have seen for 1997-98. I believe that the figures for the UK have grown since then.
In contrast, according to Ofwat, this year, privatised water companies are losing 3.6 billion litres a day, which is up to 500 pints per home. So, we are not encouraging householders to be more prudent with their water use; we are falling far behind what other countries are able to do with sensible, non-panic measures, and at the same time, the water companies are losing huge amounts of water. That sends a poor signal to the water user.
The German Government have also succeeded where we have failed in raising public awareness of using less water per se. Each person in the south of England uses, on average, 160 litres of water a day—an increase of almost 50 per cent. on 25 years ago and about 10 litres each above the national average for water use. Yet the south-east is the most water-stressed area of the country. We need to work out—and we look to the
Government to work out—a joined-up, broad-based water strategy. Those are the sorts of thing that should be happening and that we should be familiar with in a 25-year plan that attends both to the responsibilities of the water companies and to the education of consumers, so that we can begin to change consumer habits. I do not mean that that should happen in a panicky way or as a knee-jerk response, but that we should have a long-term plan to change consumer behaviour.
I shall discuss the issue of the private sector versus the public sector. At the time of the privatisation of the water industry, 15 or so years ago, there was some controversy—particularly in Parliament—but there was also, in the water industry generally, a great deal of excitement and the beginning of a new can-do attitude; it was shaking off the old, municipal public sector administrative ethos. That sense of excitement and expectation gave rise to a huge influx of new investment. Since privatisation more than £55 billion of private sector money has come in to fund large-scale projects. Yet the sense of excitement seems to have been lost. The Government accepted privatisation, but, rather than embracing the possibilities, they seem at ministerial, Government and public policy level grudgingly to have accepted the status quo. They display little ambition and few ideas about how the private sector can best be harnessed and utilised for the benefit of the consumer. I should like to hear from the Minister, as he is coming new to the job, about his vision of how the private sector and public policy can work more effectively hand in hand to grapple with the long-term challenges.
Other hon. Members have mentioned the excellent House of Lords Science and Technology Committee report, and I want to refer to two or three of its conclusions in particular. The Committee recommended:
“There should be wider stakeholder engagement, by means of new regional boards consisting of environmental and consumer interests as well as Ofwat representatives. These boards would determine how resource development, leakage reduction, network renewal and demand management could most appropriately be balanced in each area, with the resulting plans guiding Ofwat’s funding decisions.”
I think that, again, that reflects what I was saying about a lack of holistic, joined-up vision at the top of the water industry. I should be interested to know how the Minister proposes to respond to the first point made by the House of Lords Committee.
The Committee also recommended:
“Ofwat and the Environment Agency should take a realistic approach to the essential development of new resources.”
“To enable the water companies to undertake the necessary long-term planning for new resources, we call on Ofwat to agree indicative water prices for each company for up to 24 years into the future.”
The hon. Member for Cheltenham was right when he said that we must address the issue of Ofwat’s having put so much emphasis on keeping down the cost of water that it is perhaps jeopardising the long-term value of the water industry. We must be prepared to take a broader look at the costs of investment if the water industry is to be fit for purpose in the 21st century. I detect from this morning’s short debate
a great deal of consensus, which should make it easier for the Government to tackle difficult issues such as metering and the possibility of water bills increasing in the longer term, to fund investment. However, we shall not have confidence about companies pushing for increases if there is no strategy at the top of the water industry to which everyone can sign up.
Another point that the hon. Member for Cheltenham made was also dealt with in the House of Lords report, which stated:
“Ofwat and the Environment Agency must also work together to ensure that water companies maximise their promotion of water efficiency, and have the necessary resources to do so. We also recommend that the remits of the Energy Saving Trust and the Carbon Trust be extended to cover water efficiency.”
Like the hon. Gentleman, I question whether using those two agencies for water is the best way forward, but the idea that there should be a comparable model for the water industry, taking a holistic approach to consumer education, public information and private sector strategy, is extremely valuable. A water saving trust that could be the repository of grants, information and strategic thinking would be very welcome. That holistic approach is sorely lacking in the water industry.
Finally I discuss once again the issue of development, particularly in the south-east. However we discuss the water industry in the country and whatever reasonable, sensible, consensual discussion we try to have about the long-term challenges that face the industry and about the direction that the Government are taking, the public will never sign up to increases in their water charges or to the idea of getting used to using less water or taking more sensible measures in the home if they feel that the Government are turning a blind eye to the most important issue affecting water demand—massive house building in the south-east. It is essential that the Government not only listen, but demonstrate that they are listening to communities in the south-east who are desperately concerned about that.
Whether the development is on a small scale of a few hundred houses at parish, village or town level, or whether it is the much larger developments that the Deputy Prime Minister is championing in Milton Keynes, the Gatwick triangle or the Thames Gateway, it is essential that the Government should be able convincingly to demonstrate that they are listening to the water industry and environmentalists, and that the homes being built are sustainable not just in name but in nature. So far no one in Parliament has been convinced that the Government’s sustainable homes programme is anything but a good brand for a dodgy product. I look forward to hearing what the Minister has to say.
10.38 am
The Minister for Climate Change and the Environment (Ian Pearson): It is a pleasure to serve under your chairmanship today, Mrs. Humble—and to see it raining outside. I congratulate the hon. Member for Croydon, South (Richard Ottaway) on securing this Adjournment debate on water shortages, which is a matter of significant public concern, particularly in the south-east.
We can all agree on the importance of providing a sustainable water supply system capable of meeting the essential needs of consumers and industry now and in the future. That requirement has been highlighted by the current drought in the south-east, which the Environment Agency considers to be the worst for 30 years and which, if we have a hot, dry summer, could be the most severe for 100 years.
One of the Government’s earliest initiatives on coming to power in 1997 was to hold a water summit, which produced a 10-point plan for action. That plan included actions to reduce leakage, improve water conservation and efficiency and review the abstraction licensing system and drought management. It might help hon. Members if I were to go through some of the framework that has been established under the Water Act 2003. I think that that will answer some of the questions that have been raised in a helpful and constructive debate.
The 2003 Act has facilitated a number of important changes to further the sustainable use of water resources, promote water conservation, strengthen the voice of water consumers and increase the opportunity for competition in the supply of water. The Act makes the provision and maintenance of water company drought plans, which were previously prepared voluntarily, a statutory requirement, and legislation to bring that about was passed in October last year. Drought plans need to balance a water company’s duty to maintain public water supplies with the need to avoid or minimise any potential damage to the environment. They contain various actions that water companies may introduce, depending on the length and severity of the drought. Those actions range from hosepipe bans to drought orders to restrict non-essential uses of water during a drought. Before publishing their final plans, water companies are required to complete a public consultation on their draft plans and to respond to any representations that they receive.
In discussing drought plans, the hon. Member for Croydon, South asked several questions about potential anomalies with hosepipe bans. At the 1 June meeting between the water companies, the Consumer Council for Water, Ofwat and the Government, we jointly agreed to review the scope for hosepipe bans. I appreciate the difficulties that the hon. Gentleman faces, given that there are two different regimes in different parts of his constituency, but I am sure that he will appreciate that both the companies must respond to the different specific circumstances that they face.
In the south-east, most water companies are following their drought plans and have imposed hosepipe and sprinkler bans. As hon. Members will be aware, the Secretary of State has granted drought orders to Mid Kent Water, Southern Water and Sutton and East Surrey Water further to restrict non-essential uses of water. Thames Water has now announced that it is to apply for a drought order. As with the other drought order applications, the company’s case and any objections received will be given careful consideration before a decision is made.
Perhaps it would be appropriate to comment on some of the points that the hon. Member for Croydon, South made about Thames. Obviously, it is for Thames Water itself to decide whether it needs to apply for a
drought order. It needs to act on its plan in the light of its perception of water resource issues, and it has now judged that this is the right time to apply for a drought order. We have had several meetings with Thames in recent weeks to discuss its water supply situation.
The hon. Gentleman also asked about imposing fines on Thames Water for leakage. As he will be aware, it is for Ofwat, as the economic regulator, to take action if Thames fails to meet its leakage targets. I should just say, however, that Thames tells me that 3,000 of its 10,000 pipe miles in London date from before 1850, so it faces specific circumstances with regard to leakage. None the less, the company itself has admitted that its leakage rates are unacceptably high, and it is right that there should be a strong focus on its meeting its leakage targets.
Gregory Barker: I mentioned that I had met the chief executive of Skanska, who has huge experience of large-scale engineering and contracting projects. He was extremely critical of the rate of progress on the technology that Thames is deploying. What has the Minister done, apart from simply taking Thames at its word, to look at the other contracting and engineering options to test the case that Thames is making to him?
Ian Pearson: I would be interested to hear more about the discussions that the hon. Gentleman has had with Skanska. As the hon. Member for Croydon, South said, there is some quite good management across the water industry, but we need to continue to see whether there are new technologies. Ultimately, it is for the companies and the regulator to agree companies’ investment plans and the most efficient way of implementing them. However, if there is strong evidence that there are better and more effective ways of implementing companies’ resource plans, the Government will be interested to hear further details.
While hosepipe bans and restrictions on the non-essential use of water might be unwelcome, the cost to a water company, and ultimately to its customers, of avoiding the need to have such controls during a prolonged drought would be very high. It is far more cost-effective, and potentially less environmentally damaging, to manage demand and impose restrictions to conserve water through the use of hosepipe bans and occasional drought orders and permits. That is the basis on which the regime works.
During the current drought, it is particularly important that water companies are seen to be doing all that they can to reduce leakage. Leakage reduction is vital across the system, and most companies in England and Wales are operating at the leakage levels set by the economic regulator Ofwat.
Gregory Barker:
Before the Minister moves off the issue of hosepipe bans and drought orders, let me point out that there has been a great deal of comment in the press about the anomalies involved in the various hosepipe bans and drought orders and about people’s concerns at the various ridiculous rules and regulations, which simply do not seem fair and do not reflect the reality of how we live our lives in the
21st century. Does the Minister believe that there is now a strong case for examining all the complex rules and regulations involved in drought orders and hosepipe bans so that we can come up with a fair, simple set of up-to-date regulations that everyone can understand and sign up to?
Ian Pearson: I was coming to that very point, but let me first finish my point about leakage.
We will keep leakage rates under review and take account of costs, technology and best practice.
Martin Horwood: I cannot quote Water UK exactly, because I have handed its report to the Official Report, but it says that leakage trend rates, which have been increasing, as I said, for the past five or six years, indicate that the economic level of leakages has now been reached. That suggests that, in some ways, we have reached the end of that indicator’s useful life and that we need to go beyond it to look at the environmental importance of reducing leakages and reversing the upward trend. Does the Minister accept the need to reverse that trend?
Ian Pearson: My understanding is that leakage is projected to fall further. By 2010, the targets plan for a further reduction of 7.6 per cent., compared with 2004-05 levels, so there is pressure to reduce leakage rates. However, we will, as I said, want to keep leakage rates under review, taking into account costs, technology and international best practice.
I was going to comment on the current system of hosepipe bans and regulations, and, indeed, the hon. Member for Bexhill and Battle (Mr. Barker) encouraged me to do so. There is a case for looking at the system, because there are anomalies in it, some of which were highlighted by the hon. Member for Croydon, South. At our 1 June meeting with the water companies, we agreed that we would want to review the operation of hosepipe bans and the regime, and it is important that we continue that work for the long term so that the general public can feel confident that a fair system is in place.
I move on to the comments that the hon. Member for Croydon, South made about the construction of a national water grid. He will be aware that the idea has been examined and raised many times over the past 30 years, but it has pretty much always been decided that it would be nothing like economically sustainable. Water is a heavy liquid, and the cost of pumping it around the system is significant We should bear in mind that there have been substantial improvements in connectivity between water companies over the past few years, particularly in the south-east. Networks have improved, but not to the extent that the establishment of a national grid is feasible at the moment, and that is the overwhelming consensus of the water companies, the Consumer Council for Water, Ofwat and the Environment Agency.
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