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10.33 pm

Mr. Elliot Morley (Scunthorpe) (Lab): I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing this debate. I pay tribute to her for her role in the inquiry and as the former chair of the all-party water group, in which she was held in very high esteem, and I include the long campaign that she has fought in robustly defending the interests of the people of the south-west.

I want to make a number of short points. First, I echo the point made about affordability. One of the reasons why I strongly support the conclusions on water meters is not only in respect of resource management, important though that is, but in trying to find a more imaginative way to put in place price structures. Various forms of tariff structures could provide an opportunity to assist those people who are on low incomes.

I strongly echo the point made about the pilot scheme in the south-west, with eaga identifying people who could also claim benefits. There is strong link between water and fuel poverty, and my hon. Friend made that point very clearly.

I should also like to mention the part of the report that dealt with innovation. As my hon. Friend says, there is great scope for innovation as regards the possibility of saving heat when heating water, and in relation to the way water is treated; I am thinking of grey water systems and the recycling of water. There are some very good examples, but a great deal more could be done. There is an issue with research and development on the part of industry.

My final point is linked to resource management. The report focused strongly on the fact that there can be environmental gain from resource management,
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through upland catchment management, which has been pioneered in trials such as the SCAMP—Sustainable Catchment Management Programme—project, and through the extension of sustainable urban drainage, which has a great deal of unfulfilled potential. I acknowledge that the Department for Environment, Food and Rural Affairs consultation put forward the idea of a planning permission system for those who want to pave over gardens and do away with porous paving. That was a good example of innovation and how to encourage sustainable water management. A great deal more could be done.

One of the report’s conclusions is that water has been taken for granted for far too long in this country. It is an important resource and its importance needs to be taken more seriously. It is a valuable resource, and that has to be reflected in the way it is managed and in what we are charged for it. I know all the arguments about the need for profits and investment, but at a time of extremely robust profits for the companies, consumers are facing a significant increase in prices, and we need to have a thought for the most vulnerable.

10.36 pm

The Minister for the Environment (Mr. Phil Woolas): I congratulate my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) on securing the debate and putting forward a strategy for water that successfully builds a consensus for radical change. I also congratulate my right hon. Friend the Member for Scunthorpe (Mr. Morley). The issue of how we regulate, manage and charge for our water resources and sewerage services is extremely important, and I am grateful for the opportunity to set out the Government’s policy.

2008 is an important year for water policy. In February we published a new water strategy for England. We called it “Future Water”. It set out the Government’s long-term vision for the water sector. I am keen on having a long-term strategy—a 25 year-plus approach to the sector. The policy sets out a coherent framework underpinning water management commitments and outlines the Government’s priorities for the sector. The timing of the debate is therefore fortunate.

The policy sets out a vision of what the sector should look like by 2030 and the steps that we believe will get us there. It looks at the water cycle as a whole, from precipitation, rain and drainage through to treatment and discharge by the water companies. It is founded on the understanding, based on scientific advice, that every action that affects one part of the water environment can potentially have an impact elsewhere. We have a genuinely holistic water policy.

Of course the challenges for sustainable delivery of secure water supplies are significant. Combined with that is the challenge of securing continued improvements to our water environment. As if that were not enough, projections of the impact of climate change and other pressures are now business as usual for the sector. It was therefore a great pleasure to welcome the report from the all-party group on water, which was a timely and powerful contribution to the debate. It rightly emphasises the importance of communicating the value of water to consumers—a point that my right hon. Friend the Member for
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Scunthorpe repeated tonight. That is a central theme of “Future Water”. Because of our need to adapt to climate change, and because we use more water through having more water-intensive lifestyles as economic prosperity rises as a result of successful economic policies and hard work by the British people, we need to consider using water more efficiently and, more importantly, more sustainably.

The way in which we pump, treat and clean water has been mentioned. The way we heat water has implications for energy use. I am determined that our water strategy should dovetail with our energy efficiency strategy, lowering heating bills as well as water bills. We have an opportunity to do that.

I want to move faster on metering. If it is done properly with social tariffs and other schemes to ensure that we use less water, metering can reduce water use in a fair way. Questions exist about the timing of implementation, the technology, the pace of the roll-out and the impact on customers. I shall return to those topics if time allows.

Andrew George: Although I do not imagine that the Government will address the fundamental problem of the privatisation of the water industry, which is clobbering customers in my area and in the area of the hon. Member for Plymouth, Sutton (Linda Gilroy), if the Minister follows his policy through, he will recognise that in an area like mine with a large number of second homes, those customers clearly benefit a great deal from having water meters, rather than paying by other means. Is he not concerned that not only is there a severe problem of water poverty, but metering is a way of rewarding people who should be paying more?

Mr. Woolas: I commend the hon. Gentleman. The Members of Parliament for the region have done a great job of highlighting the issue. He is right. We have passed the tipping point. Generally—one can only generalise, as it is not possible to be specific about individual households—people not on meters are subsidising people who are on meters. That is especially true in his region and that of my hon. Friend, but it is true around the country. One of the reasons why I look forward to the findings of the independent review that we announced is getting the figures from the research to give us a better understanding of that point.

The all-party group, which my right hon. Friend the Member for Scunthorpe and others have led, has given us important evidence on that point. There are other issues that the report has raised. I particularly want to mention the work on catchment-sensitive farming, which the report examined. It also raised the issue of surface water drainage and the slow take-up of sustainable urban drainage systems. One aim of the consultation on improved surface water drainage that was also part of the “Future Water” strategy was to clarify responsibilities for adoption and management of SUDS, on which my right hon. Friend has been leading the charge for many months and years. The report also welcomed the independent review of competition and innovation in the water industry.

The reviews were not undertaken because we do not know where we are going. They were designed to tell us
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how to get to where we want to be. The most important issue, which my hon. Friend the Member for Plymouth, Sutton has continued to champion, is charging for water and sewerage services. Only 30 per cent. of households in England have meters. That means that in the majority of cases, charging for water is based on the 1970s rateable value of homes. That does not bear any relation to the amount of water used.

Metering is the usual method of charging for water in most other European countries—and, indeed, beyond European boundaries. It encourages water efficiency, exposes leaks on the domestic side of the supply pipes and reduces overall household water consumption by 10 per cent. That could be reduced further with the right tariff. In England, metering is increasing at about 2 per cent. a year; obviously, at the moment that happens predominantly through customers’ own choices. There is a clear case for meters in areas of serious water stress, and we will need meters to be near-universal in such areas by 2030, if not before. Outside such areas, the case for meters is also strong, on the basis of equity. I look forward to the review’s findings and to seeing whether the policy will be confirmed.

Metering and innovative tariffs are an important weapon in our armoury. However, that is not enough to satisfy my hon. Friend the Member for Plymouth, Sutton. She is looking for other solutions, particularly for the vulnerable and those on low incomes. As more and more householders switch to meters because they might save money, there are transitional problems for those left behind who do not switch. I am thinking particularly of large families on low incomes. I look to the independent review that we have commissioned to provide answers and options in respect of that policy area as well. That will look beyond the current charging framework and advise on changes that could create fair and cost-reflective charges with protection for those vulnerable households. I plan to get the review under way shortly. Its findings will herald the most significant changes in charging since privatisation.

I also want to mention the periodic review of water price limits—or PR09, as it is known. That process, led by Ofwat, is well under way. Draft business plans are expected from companies in August. As part of the process, last year I published a statement of obligations for companies and regulators to bring together and describe the environmental and drinking water legislation applying to the water industry over the PR09 period. Other influences include “Future Water”, which I have already mentioned. It sets out not only the Government’s plans for 2030, but the statutory social and environmental guidance to Ofwat on the areas of social and environmental policy to which the Government expect Ofwat to contribute.

All such considerations have to be placed in a long-term agenda. That is why I particularly welcome the addition by Ofwat of a 25-year strategic direction statement. Furthermore, water companies are planning water resources over a 25-year horizon. Combined with robust business planning through the price review process, that should ensure that companies are prepared for the future. I look to Ofwat to ensure that price limits are as high as they need to be—but no higher—to enable companies to finance their functions.
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Affordability continues to be a key concern for the Government; I appreciate the particular problem with affordability in south-west England. Customers there have to pay more for their water and sewerage services than do customers of other regions. As has been said, that situation developed out of privatisation, which required each customer to pay for the costs incurred by their water company. What is to be done? My hon. Friend will be aware of the pilot study that considered ways to target and assess the effectiveness of water affordability assistance in the form of benefit entitlement checks, meter installation and water efficiency devices and advice to low-income households in the south-west. I am pleased that, as my hon. Friend reported, South West Water is taking those measures further and is seeking to provide such a service to 7,500 of its customers.

I am also considering the issue of bad debt. Of course I understand that there are those who cannot pay, but I am not prepared to accept the situation whereby those who will not pay are putting up the bills for the rest of my hon. Friend’s constituents.

Linda Gilroy: I am not sure if my hon. Friend is going to cover my point about data sharing, but does
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he recognise that that would help companies to distinguish between the two categories?

Mr. Woolas: My hon. Friend predicts my next statement. I do indeed recognise the importance of data sharing. It is wrong that companies cannot identify tenants through access to information from landlords. I am examining the situation to deal with not only those who cannot pay but those who will not pay and are abusing the system and putting up the bills of my hon. Friend’s hard-working, law-abiding constituents as a result. I have talked to the water companies, including South West Water, to see how we can incorporate that. I refer my hon. Friend to the draft Queen’s Speech, which included a proposal for legislation on water and flooding. I make no specific pledges on the point that she made; suffice to say that I think she can draw her own conclusions. I congratulate her on her campaign, as well as other hon. Members across the party divide.

Question put and agreed to.

Adjourned accordingly at nine minutes to Eleven o’clock.

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