Draft Water and Sewerage Services (Northern Ireland) Order 2006

[back to previous text]

Mr. Skinner: You recommended three candidates for local leadership and they all fell by the wayside.
The Chairman: Order.
Lembit Öpik: It is difficult to participate in a debate when the hon. Member for Bolsover is unable to contain himself, but I shall continue.
This is relevant, because the assurances that the Minister gives now, that the order will not be used to privatise the water system, fall on stony ground given the record of Northern Ireland Office Ministers on other matters, including student fees.
I wish to make two specific points. Consumers are listening with great concern to this extraordinarily extensive order, partly because the Government have tried to make a false comparison between what households pay in Northern Ireland and in the rest of Great Britain. They say that the average English household pays so much more for their water. What they do not say is that this is for privatised water. The Government spent millions of pounds of taxpayer funds upgrading that system before selling it off to the highest bidders. They have ignored the fact that household income in Northern Ireland is 19 per cent. below the UK average and that nearly twice as many Northern Ireland households rely on benefits than in the rest of the UK—21 per cent. compared with 12 per cent.—and that Northern Ireland households also pay 26 per cent. more for fuel, light and power than those in the rest of the UK. Ministers are forging ahead to introduce this additional tax and not taking account of the effect of the additional taxes that are already paid by Northern Ireland households.
We accept the need for improved water and sewage services; I think that everybody does. However, the rate payers in Northern Ireland are not to blame for the historic under-investment. Home owners have paid their rates. It would be a cruel injustice if they were expected to pay twice—first, through the regional rate contribution and, secondly, through new charges for these essential services. The present proposals are completely unfair and need to be resisted for that reason.
As for the Minister’s repeated assurances that this is not the gateway to privatisation, he knows as well as I do, and as well as every Northern Ireland politician in this room, that this is the pathway to and paving legislation for privatisation, as the hon. Member for North Down said. We have no faith in assurances given verbally in this Committee that the order will not be used to advance a dogmatic privatisation policy—obviously the policy of new Labour—and we have no faith that it will not be used experimentally in comparable legislation with regard to other aspects of the public sector.
It is a matter of great regret that, in a two and a half hour debate, we have had neither the opportunity to profoundly explore the details of the proposed legislation, nor to amend it. However, given that the Minister has only 12 minutes to respond, I should say that he himself is now falling victim to the very process that ministerial colleagues have promised to amend. I look forward to hearing what the Minister has to say, but barring a miracle, it seems unavoidable that I must resist this statutory instrument.
6.48 pm
David Cairns: This has been an interesting, at times lively and, occasionally, an informed debate on an important, serious topic. Let me begin by saying something on which we would all agree. This is not the ideal process. I would rather that the Assembly was doing this. I am a devolutionist. I campaigned for—[Interruption.] The hon. Member for Foyle is goading me; I am looking forward to dealing with his comments in a moment. I campaigned for devolution in my home country and I believe staunchly in devolution. These matters should be dealt with in the local Assembly. Local politicians should get back into the Assembly and commit to serving in it and making devolution work. I am sure that we all agree that it would be far better if this issue were dealt with there. There is no disagreement on that.
I share the feeling of the hon. Members for North Down and for Montgomeryshire, and of all hon. Members who have spoken, who have said that we would much rather do this differently. Of course, we would. However, we are in this entirely unsatisfactory period of direct rule. I am a Minister in three Departments in Northern Ireland. With the best will in the world, there are not enough hours in the day to do the job satisfactorily—two days a week, frankly, because that is the number of days that we are in Northern Ireland. There is no disagreement between any of us on that issue. I wanted to clarify that at the start.
I shall go through some of the key points that have been raised. We have only two and a half hours—I wish it were longer, but this is the process that we have got. In the 10 minutes that I have got left let me deal with those issues. The hon. Member for Tewkesbury asked some sensible, intelligent, well-informed and proper questions. Indeed, I found it hard to disagree with the thrust of his concerns. He asked what happens to the investment if the proposal does not go through. It is hard to see where the money will come from if it does not because by investing £300 million to make the water and sewerage services self-financing, that money will not have to come out of the rest of the budget. So if we do not do this, we will lose that £300 million.
We could increase the rates, which the hon. Member for Foyle recognised was a possibility if we tried to raise the money through the rates. Let us not forget that if we paid water and sewerage services entirely from the regional rate, it would take up 80 per cent. of it, which would not leave an awful lot for anything else. So we would have to put up the regional rates. That is one way of doing it.
The other reason, however, that the proposal is a better system is that because of Treasury borrowing rules, with which we are all familiar, the model that we are establishing, which is not of a privatised company, allows access to borrowing that will increase further investment. That is why the Committee could of course reject the order. However, we are already into next year’s budget allowing for about £85 million of income to come in. The first order of business for any Assembly back on 26 March would be to find a cut from the budget in the order of £85 million to £90 million. I do not think that cutting out that money would be a tremendously stable start for the incoming Assembly.
The point raised by the Member for Tewkesbury is entirely valid. However, I do not think that it would give us sustained investment. At the moment, we are putting in £1 billion—£1 million a day—opening water and sewerage treatment works all over Northern Ireland and making good the backlog of under-investment, which was not just in Northern Ireland. When money has been given out, water and sewerage has always been at the back of the queue. That has been true in England, including London—my hon. Friend the Member for Tooting is nodding. There has been under-investment in London’s water and sewerage. I used to be a London councillor and can tell the hon. Member for Tewkesbury that there has been under-investment there, as well as in Scotland. I accept that there has been under-investment. We need the investment that we are putting in now, but we need also to sustain it, and not just in one or two years of boom and bust. I can say honestly to him that I cannot see how we could do otherwise.
The hon. Gentleman spoke about the loss of disposable income from the economy if the charges come in. He is right; there would be. However, let us keep it in context. We are talking about less than £1 a day. I am not dismissing that, but it would be less than £1 a day on average. Some people will pay the average, some much more and some less, but it will be capped. At the extreme end, when the cap cuts in, we are talking about £2 a day, for people in a house worth £400,000 or more. That is not insignificant, but I think that we can keep it in context. The growth in the Northern Ireland economy is perfectly capable of absorbing that charge.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): According to my rudimentary knowledge of economics, that money will actually be recycled into investment in the water and sewerage system, which will help local industry and create new jobs. It will be recycled in that way.
David Cairns: My hon. Friend makes his point very well.
The Member for Tewkesbury raised the issue of the £650, or thereabouts, that people in Northern Ireland are paying in domestic rates against the £1,300-plus in England. It is true that by charging people £300 on average we narrow the gap—we do not close it. I am not saying that the gap would be closed because the rating is revenue-neutral. But he also made the point that, even after water charges are brought in, households in Northern Ireland will still be paying less than my and his constituents—some of them significantly less thanks to the affordability tariff. He raised a good point and I hope that I have answered his question.
The hon. Member for Foyle said that the money could be paid through the rates, which might mean increasing them, but he suggested that that was the only method under consultation. I refer him to the public consultation document issued by the Executive when he was Deputy First Minister. I shall quote it briefly:
“If, following consultation, it is agreed by the Executive and the Assembly to move towards the introduction of water charges, this could be treated either as a direct income to Water Service or a distinct component of a new or amended rating system.”
It was not just about amending the ratings system. It was not just about amending the ratings system. The option of treating the charge as a direct payment to Water Service was on the table. In fact, the paper went further stating that the options could be
“a uniform contribution or flat rate per household ... a linkage to property valuation such as: Net Annual Value (as in England); Capital Value (as in Scotland)” .... a combination of these.”
That is what the hon. Gentleman said when he was Deputy First Minister and part of this Executive. We have chosen the latter option. We are putting forward something that was under active consideration in 2002, which brings me to a point that I neglected to mention to the hon. Gentleman.
Mark Durkan: Will the Minister give way?
David Cairns: No. I accepted in my speech that the capital value of a house is not an absolute guarantee that the person living in it has a high income. It is a proxy, but I must say to the hon. Member for Tewkesbury that it is the same proxy that his party chose when it brought in the council tax.
It is a proxy, but we are putting extra safeguards: the metering safeguards for older people and the affordability tariff, whereby a pensioner who has a very small income and who lives in a large house will be eligible for the affordability tariff, and will not be clobbered with a big bill because they live in a big house. I hope that provides comfort on that point.
The hon. Member for South Antrim spoke about the judicial review. We are not seeking to hide this matter. We have put it in the Libraries of both Houses and put it in front of everybody here. I was trying to put it into the broader context of the fact that attempts were made to stop this going forward. The hon. Member for Foyle asked why we could not wait until 1 April. I think that I have addressed that point. The budgetary implications of this kick in on 1 April and we are looking to get an income in the first year. If that does not happen, we will have to find that money from elsewhere in the budget.
As some of my hon. Friends pointed out, the hon. Gentleman was fierce in his denunciation in Opposition but when challenged as to whether or not he would continue that opposition once back in the Assembly he sensibly chose to remain silent. He knows that if we want to get the investment in, the money must come from somewhere. It can come either from this method, which was under active consideration by the Executive before the suspension—
Mark Durkan: It was a matter of public consultation.
David Cairns: The hon. Gentleman never even mentioned in his speech that it was under consultation. He would not have mentioned it unless I had pointed it out.
Mark Durkan: On a point of order, Mr. Caton. Hansard will show that I did refer to consultation.
David Cairns: The hon. Gentleman did refer to consultation, but he said that all that was being consulted on was making this a component of the rates.
Mark Durkan: I am sorry, but I did not say that.
David Cairns: Hansard will be the judge of this. I understand why local politicians are opposing this measure. No one will go back to their constituencies saying, “Guess what guys, I voted to put £300 on to your domestic bills so that you can pay for water.” However, how can my hon. Friends go back to Tooting, to Livingston or to Thurrock saying, “I voted for a situation where you have to pay £270 to £300 water charges, but we are not having people in Northern Ireland paying it. Guess what, the gap will be made up by your taxes, because Northern Ireland is funded by the taxpayer to a higher degree than anywhere in Scotland, even after security costs have been taken into consideration.”
Mark Durkan: Will the Minister give way?
David Cairns: No.
I will not say to my constituents, who are significantly poorer and who have significantly lower life expectancy and wage rates than those in almost any seat in Northern Ireland, that it is all right for them to pay water charges but not for the people in Northern Ireland to do so. That is simply not fair.
The hon. Member for Montgomeryshire focused on the privatised water companies in England and Wales. When directly challenged by my hon. Friend the Member for Glasgow, North to make a comparison with Scottish Water, he simply ignored her question. The fact of the matter is that under the system involving Scottish Water, which is administered by a Liberal Democrat, people in Scotland are still paying £275 for their water charges. That is not a charge that is being levied in Northern Ireland.
There was a lot of proper talk about an environmental protection agency, which I sincerely hope we will get sooner rather than later. I know that my hon. Friend the Member for Thurrock said that we have heard that before, but we are on track to it. The hon. Member for North Down also properly sought environmental assurances. I think that they are included: removing Crown immunity by having a GoCo removes the protection that the Government can throw over bits of land and property that they own and which means they are not subject to the full scrutiny of environmental regulation. This will expose what happens in our water and sewerage system to the full glare of environmental regulation.
At the heart of this issue, we all accept that there is a need to get more money into the water and sewerage system in Northern Ireland. The question is: how do we do that? The answer is that people should have to pay their fair share.
Question put:—
The Committee divided: Ayes 12, Noes 4.
Previous Contents Continue
House of Commons 
home page Parliament home page House of 
Lords home page search page enquiries ordering index

©Parliamentary copyright 2006
Prepared 29 November 2006