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15 Dec 2009 : Column 864

Water is a significant feature of my constituency, and the old historic town of Northwich has a long history of flooding. In November 2000, we had floods in the town centre where the River Dane and the River Weaver come together. The measures in the Bill will make it more unlikely that we will be visited by floods in the future. I therefore welcome the provisions in the Bill to strengthen flood defences.

It is right that the Government have addressed the proposals brought forward by Sir Michael Pitt following his review of the 2007 floods. Of significant interest is the fact that the Environment Agency is to be given responsibility for developing a national flood and coastal erosion risk management strategy. Dovetailing with that, quite rightly, will be the Bill's requirement that unitary and county councils should take the lead in managing the risk of all locally caused floods, and again I welcome that requirement.

In my constituency, that means that Cheshire West and Chester unitary council and Halton borough council will perform that important task. That is a step in the right direction, and I am confident that Halton borough council will play a full role in developing plans to manage risk for all locally caused floods. I have a word of caution for hon. Members, however, about the new Cheshire West and Chester unitary authority. Sadly, that council has all too quickly developed a reputation for not doing much and not listening to what local people want. Its inaction over the redevelopment of Northwich town centre following the completion of the £35 million Government-funded town stabilisation project is a case in point. I hope, therefore, that the Bill will include measures to enable the Environment Agency and DEFRA to scrutinise the council's progress on its important role of managing floods.

I shall now turn to what has become known as the rain tax aspect of the Bill. I was glad that the hon. Member for Arundel and South Downs said in July that the Conservative party was calling for action on the issue, although I am sure that that was not a result of the ten-minute Bill that I introduced on 12 May. That Bill would have dealt with the problem by exempting places of worship, non-profit-making sports clubs and scout and guide groups from surface water and highway drainage charges, although I should apologise for an error in my drafting because community and village halls clearly should have been included in the Bill's scope as they, too, need to be exempt from the charges.

The introduction by United Utilities of surface area and highway drainage charges signalled a large increase in the water bills faced by scout and guide groups, places of worship, sports clubs, village halls and the like. The changes were introduced following the review by Ofwat of how water companies should charge for surface water drainage. It concluded that the fairest approach was to charge non-household customers based on the size of the site that they occupied, and that charge is called site area charging.

Astonishingly, Ofwat did not examine the impact of the change on voluntary community groups, although it warned water companies that surface area charging might have a negative impact on sensitive properties such as schools, hospitals and places of worship. In general, it warned that water companies would need to take account of the scale and speed of any changes to determine whether they were reasonable and acceptable
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to customers. United Utilities took Ofwat's advice by bringing in surface area charging, but it did not take any account of the scale and speed of the changes in charging, and whether they would be reasonable and acceptable to customers.

Following reports in the media of the impact of the changes, it was not long before I was visited by community groups such as churches, sports clubs and scout groups. They had also received representations from their parent organisations warning that the way in which United Utilities had approached the situation would mean that they would be faced with seriously high drainage charges. Before the charges were introduced, such organisations had been granted significant discounts on their water bills because of their charitable status. Their bills had been based on the rateable value of the properties that they occupied, which were either zero-rated or heavily discounted.

I have previously given the House two examples of what has happened, the first of which was that the 1st Halton scout group in my constituency saw its water bill increase by 424 per cent. A church organisation has also had a problem. St. Marks church and Bethesda church, which are part of the Hallwood ecumenical parish in Runcorn, are jointly billed for water. In 2007-08, they did not pay any water rates at all, but in 2008-09 they received a charge of £181.76. That charge was set to rise to approximately £2,000 in 2010-11. The Hallwood ecumenical parish could not afford such a massive increase, so I am pleased that there has been some movement in how the matter will be dealt with. Every pound that such organisations spend on surface water drainage is one pound less for them to spend on the services they provide for their parishioners and members, and the communities they serve. Hon. Members representing all parties have rightly criticised these charges on the Floor of the House. Even Ofwat has joined in the criticism-surprisingly, because it was the author of the change itself.

In early 2009, Ofwat announce that United Utilities had agreed to a one-year moratorium during which surface area charges would be frozen at 2008-09 levels for faith buildings, community sports clubs, scout groups and guide associations. At face value, that measure was greatly to be welcomed, but I was concerned at the time that a one-year moratorium would only delay the implementation of surface area charging and would not result in a change to the charging policy that would be both acceptable and fair to these organisations that serve their communities well.

I was concerned that Ofwat made it clear to United Utilities that it should use the one-year moratorium to work with customers, to communicate the need for the new charges, and to offer advice on how customers could implement environmental improvements that will help them to reduce their costs significantly. It also said that United Utilities would use the moratorium to create a new time frame for the implementation of surface area charging by spreading the remaining charge over a longer period to give customers time to put in place measures to offset future costs and benefit the environment.

On that basis, at the beginning of 2010-11, places of worship, community sports clubs, scout groups, Guide associations and village halls would have been faced with substantially larger bills for drainage. Simply altering
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the implementation date for surface area charging was not the solution that those organisations were looking for. They wanted a scheme that would put them back in their position prior to the change.

To complicate things-and to make matters worse-Ofwat made it clear to water companies that it would not approve any tariffs for surface area charging that involved cross-subsidies, that were based on rateable values or that involved exemptions. It also instructed all water companies that their tariffs for surface area charging would have to be approved by November 2009. Conversely, it did not say what types of charges, other than surface area charging, would be acceptable.

Throughout the whole exercise, the Government kept a close eye on proceedings. I pay particular tribute to the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Ogmore (Huw Irranca-Davies), who has dealt with the problem fantastically. I was also delighted when my right hon. Friend the Secretary of State announced in his party conference speech in late September that he would bring forward measures to address the problem. I therefore welcome the Government's decision to bring forward the Bill, which will give water companies the power to introduce concessionary schemes for surface area drainage charges for amateur sports clubs, scout groups, places of worship and other community groups.

Mr. Jamie Reed: Will my hon. Friend join me-and, I am sure, others in the Chamber-in sending a message to the water companies that if they do not take advantage of the discretion now, they will risk not only driving such organisations into the ground but reducing their customer base?

Mr. Hall: I am grateful for my hon. Friend's intervention. I am about to address his point about the water companies' introduction of the concessionary scheme.

I hope that confirmation will be put on record during the wind-ups that the Government envisage that the community groups covered by the Bill will include guide associations and village halls, because it is important that they are included in its provisions.

The Bill could end the unfair rain tax, but it will do so only if it contains a mandatory requirement for the water companies to provide concessionary schemes for surface area water charges for community groups. I understand that the powers on concessionary charging are permissive, not mandatory. I will be looking to the Government to bring forward measures, either by amending the Bill in Committee or through the guidance that will be issued with it, to make it compulsory for water companies to introduce concessionary tariffs for community groups if they want site area charging for surface and highway drainage.

Having established the principle of concessionary charging for surface water, I believe that the Bill will need to go further if it is to achieve its declared aim of getting rid of the rain tax. The Government need to define, either in the Bill or in guidance, what constitutes a fair and affordable charge for drainage so that the concessionary charges will be fair and affordable. The Bill will not achieve its aim of scrapping the rain tax if water companies are permitted to levy unreasonable charges on community groups for surface water drainage. To lock the concessionary scheme into place and ensure
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the compliance of the water companies in getting rid of the rain tax, I believe that Ofwat should be given statutory powers to oversee the implementation of the concessionary charging scheme. That would make Ofwat part of the solution, and stop it being part of the problem.

I want the Government to go one step further. Under the scheme that meant that water bills were calculated on rateable values, scouts and other groups benefited by receiving considerable discounts. I would like the water companies to be given the power once again to offer scouts, guides, places of worship, amateur sports clubs, village halls and other community groups discounts on their surface water drainage bills, over and above any concessionary tariffs that is charged.

This flexibility, which is being called for by the scouting organisations and others, would ensure that the rain tax would really become a thing of the past. Scouts, guides, places of worship, amateur sports clubs, village halls and other community groups would then be able to get on with their primary function of providing top-quality services for their members and the communities that they serve.

Finally, I want to pay tribute to Stella Creasy of the Scouts Association for the excellent work that she and her organisation have done on the important issue of putting an end to the inequitable rain tax.

I commend the measures to the House.

7.21 pm

Mr. Michael Jack (Fylde) (Con): This may well be the last speech that I make on a piece of environmental legislation before I retire at the next election. I have the honour of chairing the Environment, Food and Rural Affairs Committee, and we have done a number of reports on flooding and the implementation of the Pitt review. We have also been involved in the pre-legislative scrutiny of this Bill, so I felt it only right to make a final and modest contribution to this debate.

I am grateful for the kind words from the Secretary of State acknowledging the work that the Committee has done, and I should like to begin by putting on record my appreciation of the work done by the Committee's staff. The Clerks, the inquiry managers and our special advisers are the unsung heroes of parliamentary scrutiny work. They do not get the headlines or the opportunity to speak in debates like this, but pre-legislative scrutiny of the quality that we have been able to achieve would not take place without their efforts.

Perhaps controversially in the light of observations made in the debate so far, our report recommended a delay in introducing this legislation. That was not because we did not want the Environment Agency and others to take on an important co-ordinating role in developing a flood-risk strategy, especially given the failure of the surface water arrangements that was exposed in 2007. We want that strategy to come into force, but our report was a way of putting down a marker. As so many contributions have already suggested, the issue of water cannot easily be disaggregated into a lot of little bits and pieces. As the Secretary of State's own policy document, "Making space for water", acknowledges, all the functions have to be integrated.

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For example, we must take account of Anna Walker's review of how water should be paid for, and how we can optimise its use and minimise its waste. We must also heed the other work that has been done on competition in the water industry, and the question of who is responsible for what in any aspect of the management of water. That inevitably means that this is a big and complex matter-as witnessed by the fact that the original Bill had 269 clauses. In contrast, the Bill before us today has been reduced to 49 clauses and four annexes. That is a remarkable piece of editorial activity, and I congratulate the drafters on their achievement.

David Taylor (North-West Leicestershire) (Lab/Co-op) rose-

Mr. Jack: I will give way to my hon. Friend in just a moment. The other reason for the Committee's approach was to put down a marker that made it clear that whoever forms the next Government will have to undertake to return to this matter early in the new Parliament. By that time, the new Government will have had a chance to digest Anna Walker's findings in particular. They will also have had a chance to address the question of affordability, and to learn from debates like this about some of the many issues that have not been touched on.

I give way to my hon. Friend the Member for North-West Leicestershire (David Taylor), who is an honourable member of my Committee.

David Taylor: I thank my right hon. Friend, as I shall call him, for giving way. He has been an excellent Chair of the EFRA Committee. Like him, I am standing down at the election and the last few years on his Committee have been very rewarding indeed. Does he recall the visit that the Committee paid to Lyons to look at the integrated approach taken there to flood prevention and management? Is he concerned that one possible flaw in this welcome Bill is that the local authorities that will take on a great deal of the local responsibility for these matters will have inadequate resources, skills or knowledge to be able to do so effectively?

Mr. Jack: My hon. Friend brings me on to two points that I wanted to touch on. The first is that I think that all of us must be honest with ourselves and with the public about what can be afforded, and what cannot. The Secretary of State will no doubt remind the House when he winds up that the Government have increased spending on flood-prevention measures. I think that the total will be £1 billion by 2011, but the Association of British Insurers has suggested that expenditure should be as high has £1.5 billion. When the implementation of the Pitt proposals was costed, Pitt himself indicated that there was an inadequacy of funding.

We must be realistic. In the current circumstances, we cannot, for example, protect everything by means of hard-engineering solutions. One of the outcomes of the work to be done on risk assessment and the development of a strategy should be to fulfil the objective set out in clause 3, where it speaks of

for communities. Communities must be informed about the risks they face. More importantly, they must be informed about what risks can be dealt with-and, more importantly still, what risks cannot be dealt with.

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The subject of resilience has already made an appearance in this debate, and quite rightly so. I do not think that we spend enough time on that. One of the most impressive groups of witnesses to come before the Committee came from the National Flood Forum. The forum operates something like a British standard that delineates what equipment works and what does not, but it also has a great deal of experience in giving people in communities guidance on how to make things resilient.

The tragedies of Cumbria and Boscastle have made me wonder whether people in those communities were aware that there were risks that could not be engineered away. If they were so aware, could they, with adequate notice and advice, have prepared themselves better to protect their existing properties?

All that is notwithstanding the observations that have been made about building new properties above flood-risk areas. I very much agree with the observations that many hon. Members have made already about planning and building in flood plain areas. We need to be much harder with ourselves and work to stop increasing flood risk.

My hon. Friend the hon. Member for North-West Leicestershire made a very good point about our trip to Lyons. The city lies at the confluence of two of France's major rivers, and it is very interesting to see how the authorities there have integrated their flood defences both regionally and locally. They have built massive sustainable urban drainage schemes, and the integration of those SUDS with the protection of the built environment is very impressive. It provides some very important lessons for how we might do the same here.

However, when we look at how the Bill is drafted, there is a subtlety about clause 3 and the way that it integrates with clause 7. We as legislators must read the definition of "risk" with care, and I hope that the Committee that succeeds the one that I chair will examine carefully how all those tasked with developing the new strategies deal with that definition. We must make rigorously certain that "risk" incorporates all the things that have been mentioned in the debate so far, and that a response to those risk elements is part of the Environment Agency's strategy. If we do that then, with the right degree of scrutiny and pressure from parliamentarians, we can use the subtlety of the drafting to ensure that we can at least have the right shopping list, so to speak, of the things that must be responded to. Thereafter, we can examine critically way whether we have the resources and the wherewithal to deal with any problems that might arise.

One thing that worries me is whether we have, in sum total, the right degree of expertise, especially with regard to engineers skilled in the management of water. The Environment Agency has taken steps to address that issue, but it strikes me that those particular talents will be in very great demand, especially among the local authorities at county level that will be in charge of implementing some of these strategic matters.

Water does not recognise political boundaries. I hope the Committee will examine carefully whether, in developing strategies on political boundaries, we have the mechanisms for catchment areas to knit things together. One of the problems arising from the truncated Bill is that the flood risk management plans that are part of the EU floods directive implementation process are dealt with by statutory instrument outwith the scope of the Bill. I understand why, for legislative reasons, the Government are doing that, but the danger is that the legislation
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implementing the European directive remains outside the integrating function of the Bill. I seek reassurance from the Secretary of State in his winding-up speech that the gluing together of the parts will take place.

One of the things missing from the Bill is the requirement for the Environment Agency to prepare river maps showing who is responsible for what. That seems to me to be part of the requirements of the EU floods directive. We can immediately see the complexity and the problem of integrating all the parts so that the strategy developed by the Environment Agency will work in reality. I hope the Secretary of State will address the issue in his winding-up speech or when the Bill goes into Committee.

We have talked a great deal this evening about SUDS. Our Committee looked, for example, at highway drainage. When the 2007 events occurred, our highways became the drainage channels to rivers in such a way that the rivers could not accommodate the water running off so quickly. "Slow water" is a phrase that has been used in the debate this evening. Anything that slows things down is a good idea. The integration of sustainable urban drainage solutions for highways is jolly good but, as the Government said:

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