Draft Water and Sewerage Services (Northern Ireland) Order 2006


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David Cairns: I am not in any sense being cavalier about that. I have said that it was a serious matter and that I will take it seriously, but I have put it in context. I say to my hon. Friend the Member for Foyle that I am advised by those who were present at the final remedy hearing that the Consumer Council continued to ask for an injunction during the proceedings, even up to and including that hearing. I am afraid that the hon. Gentleman has been misinformed that it dropped its opposition when the judge did not give an injunction in the first instance. I repeat again the simple fact that if the courts had found against me on 15 counts, we would not be here today. I would not have proceeded. It is because we were not found to be in contravention of the requirement on the great big substantive issue of the consultation period, the statutory obligation on the Government, that we are here today.
Lady Hermon: On a point of order, Mr. Caton. I seek guidance from you. I have been in the House for five years and I have never seen a High Court declaration specifically saying:
“The Court has issued this declaration to draw the above matters to the attention of Parliament and so that Parliament might determine as it sees fit the appropriate action to take in relation to the processing of the draft order under the Affirmative Resolution procedure.”
I ask for guidance for the Committee. Is it not appropriate that Parliament might
“determine as it sees fit”
and be given that opportunity?
The Chairman: I was made aware that this issue might well be raised as a point of order and I have taken advice. There is no procedural reason why the Committee should not debate the instrument that it was nominated to consider at the appointed time. The court decision is not a matter for the Chair, although it is quite rightly a matter for debate and for Members to bring up in the next two hours or so. We can continue to consider the order.
David Cairns: Thank you, Mr. Caton. I am grateful for that clarification. I point out to the hon. Lady that she read:
“The Court has issued this declaration...so that Parliament might determine as it sees fit the appropriate action to take in relation to the processing of the draft Order under the Affirmative Resolution procedure.”
That is what we are doing. This is the affirmative resolution procedure. The court has issued this for this Committee. I am going to make some progress now as I know that other hon. Members will wish to speak on this.
Mr. Dennis Skinner (Bolsover) (Lab): My hon. Friend has said two or three times that if the High Court judge had made a decision the other way we would not have been here. There is another reason why we would not have been here. If those people in Northern Ireland actually worked for the money that they get paid, even though they have not turned up for work for four years, we would not be here either because they would take the decision on this matter. My hon. Friend the Member for Thurrock says that he has not been put on the Committee by the Whips. I have not been either, but one thing that astonishes me is that when I worked at the pit if we did not go to work we did not get paid. These people in Northern Ireland of all hues and descriptions have been able to swan around for four years picking up topside £30,000 a year for not going to work. And then they come here moaning that there is an order that has been placed before me and all my hon. Friends here. The top and bottom of it is that these people who are moaning want to have their cake and eat it and to have the money in their pocket as well.
David Cairns: I entirely agree with everything that my hon. Friend says. I would rather that this issue was being debated by a restored Assembly. I would rather that the Assembly debated these issue. In fact, the process, and the recognition of the way in which water had to be paid for, began under the Assembly. If, as we all hope and pray, we get restoration of the Assembly on 26 March, this matter will pass back to it. My hon. Friend is right. When the Secretary of State had the inspired idea of threatening the loss of salaries if people did not get their act together, it prompted quicker actions. [Interruption.] I will not give way again. I have barely begun my speech. I will give way later on if I get the opportunity.
As I was saying, water is not free. It costs hundreds of millions of pounds each year to deliver water to our homes and to treat waste water. Billions are needed to provide the investment to sustain and improve these services. The draft order provides the framework for domestic charges which will be set out in detail in a charges scheme produced by the company appointed to deliver water and sewerage services.
As was set out in 2004 by my predecessor, my right hon. Friend the Member for Warley (Mr. Spellar), charges will be based on a standing charge and a variable element based on capital values. The Government accept that the use of capital values provides only an approximate correlation to the cost of service provision but it does direct higher charges to more affluent areas. This is mitigated by a cap on the highest charges and the uniform standing charge.
There is no direct link between the regional rate and the cost of providing water and sewerage services and the fact which must be faced is that the average household contribution for services in Northern Ireland is roughly half that made by households in Great Britain. It is simply the case, utterly fair, not draconian and not in any sense a tremendously radical imposition to say that households in Northern Ireland households need to make a greater contribution, just as households in Scotland, England and Wales already do.
Some have argued that funds should be raised through the rates. That approach would deny funds to other essential public services. We would need to use 80 per cent. of the income from the regional rate to run water and sewerage services. It has also been argued that there is a legacy of under-investment that should be rectified before contemplating the introduction of charges and that something like this happened in England. That disregards the fact that over £1 billion has been invested to upgrade the water and sewerage infrastructure in the last five years. We are spending around £1 million a day in investment in water and sewerage.
Many respondents to the consultation raised questions about protection for those on low incomes. We take protecting people on low incomes extremely seriously. Our proposal for an affordability tariff will mean graduated charges of £90 to £180 per annum for households in receipt of housing benefit, rate rebate and the new rate relief. Initially, these charges will be lower. They will be between £30 and £60 next year, rising over the three year phasing-in period. These measures will assist as many as 200,000 households. It will be funded centrally, not by other charge payers, and will deliver the Government’s commitment to introduce charges that are fair and affordable. At the risk of provoking my hon. Friends, the affordability tariff that we are introducing in Northern Ireland is far more generous than any such scheme in England and far more generous even than the 25 per cent. council tax related discount that exists in Scotland.
The poorest 200,000 households in Northern Ireland will pay bills that are reduced below the levels that my constituents pay. My constituency is one of the poorest in the country and has a very high level of unemployment. Life expectancy in my constituency is much lower than in Northern Ireland and deprivation and poverty is also much higher. My constituents have to pay this sum and I do not see why constituents in Northern Ireland should not pay it. If they do not pay it, my constituents will have to pay more in taxes to subsidise the non-payment policy in Northern Ireland. This is a matter of equity. It is a matter of fairness. We are not doing anything draconian. We are not doing anything unfair. Some of the scaremongering that has been put about is reprehensible.
Lady Hermon: The Minister has just waxed lyrical about the affordability tariff. I have read the 307 articles and the 13 schedules. Could he point to the article in the order that guarantees the affordability schedule that he has just outlined?
David Cairns: As the hon. Lady knows, the Bill takes powers to introduce a scheme of charges that we shall consult on separately. I think we are going out to consult on that next week or very soon thereafter. That is where the detail will be contained. That will be a matter for consultation. I hope that that answers her question.
There was concern that charges would rise dramatically in 2010 once the Government’s commitment that charges would not exceed England and Wales averages during the first three years expired. From that point on, the setting of charges passes over to the independent regulator, just as in England and Wales, and the need for investment and infrastructure will have to be balanced with efficiency savings by the company and consumer tariffs. I fully accept that when a new charge is being introduced how it will work needs to be made clear. I recognise that we have a job to do to explain to people in an awareness campaign how the new charges will work, because there has been some scaremongering about it, and to explain how people can get the assistance that they need if they are entitled to it.
Many consultees welcomed the Government’s decision to enable pensioner households to be metered, but felt that metering should be extended to all homes as that represents the fairest basis on which to level charges. We are committed to a long-term and planned introduction of meters, but for logistical and other reasons we cannot move from having very few meters to having everybody metered, so we will phase it in beginning with new homes and allowing pensioners, if they choose, to switch to metering.
Andrew Mackinlay: Is the Minister saying that people cannot volunteer for metering at an early stage? Will it be done geographically, moving through the Province, or will there be opportunities for people who do not fit into the category of retired people to flag up that they want it in advance?
David Cairns: We are still deciding exactly how we will move forward on the phasing in of metering. In the first instance the priority, as I am sure my hon. Friend would agree, is to allow pensioners and new builds the opportunity. There is clearly no point in allowing new houses to be built without meters. After that we—and the Assembly, hopefully—will bring forward further ways in which metering will be phased in across the rest of Northern Ireland.
I want to turn briefly to the business model that the draft order establishes for the delivery of water and sewerage services, what is inelegantly referred to as the GoCo. Obviously, it will not be called the GoCo but Northern Ireland Water Ltd. The legislation allows for flexibility so that water and sewerage services can be delivered in the most efficient and cost-effective way possible. It is in the interests of all concerned, particularly consumers, that that should be so. Of course, any change in the future status of the company under devolution will be subject to a triple lock. The Minister responsible would have to decide that he wanted to change the status of the company, and would then have to convince the Executive that they wanted to do so. There would then have to be an Assembly vote—in such matters, that would have to be a cross-community Assembly vote. That is a triple lock in moving forward and changing the status of the company.
The GoCo will be placed under robust regulatory scrutiny and we will set that out in a licence appointing the GoCo, which will be issued for consultation shortly. The Northern Ireland Authority for Utility Regulation will oversee delivery of what will, by anybody’s yardstick, be an extremely challenging programme of efficiency improvements so that charges are no higher than they have to be. The regulator will have to balance costs to the consumer against investment needs, as with any industry, but the draft order provides appropriate controls.
I know that the precise nature of the regulatory regime has excited some comment, and rightly so. It is a key, important and complex area. That is why we made a number of changes to the draft legislation as a result of the representations, which included representations from the General Consumer Council, among others. I said at the outset that I have worked closely with it and I welcome that close working. I am not remotely dismissive of the important and positive contribution that it has made, even if the actions of the past few weeks have been somewhat abnormal in terms of the relationship between the Government and the consumer council. We made a number of changes to the draft legislation as a result of the representations to reinforce the role of the consumer council in dealing with customer complaints: in respect of statutory requirements to consult the consumer council, in connection with procedural matters that concern the submission of the council’s plans and its ability to issue advice, and in respect of removing some departmental powers to direct the regulator.
It is my belief that the draft order provides a robust system of regulation that reflects best practice and up-to-date utility regulation. Frankly, it is beyond all comparison with the status quo where I am responsible for everything that goes on and for ministerial oversight of the operations of the water service, and where the water and sewerage service is regulated by no one.
I should also emphasise that the draft order introduces a step change in the rights of consumers, who will have guaranteed rights concerning the services that they can expect, which they do not have at present. There will be rights to water and sewerage services, guaranteed standards on issues such as pressure, and schemes will be allowed to be made that will compensate consumers if those standards are not met.
 
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Prepared 29 November 2006