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As I said, I believe that there is a role for Government. I have recently met unions such as GMB, Unison and others, and of course EU Skills, the sector skills council. There is merit in asking whether the guidance should cover the Government's expectations for the training and development of the work force in the water sector. I can tell the House that I intend to meet my hon. Friend the Minister for Further Education, Skills, Apprenticeships and Consumer Affairs, a near neighbour of mine in
south Wales, to discuss the matter and consider what further steps we might take to address the skills gap in the water sector.
Lembit Öpik: I thank the Minister for his generosity in giving way; it just so happens that the three key points that I want to make are on this group .
The Minister rightly talked about the importance of having a holistic or strategic approach to sustainability and water management. It is clear to me that in Montgomeryshire, where the source of the River Severn lies, there is an interrelation between Ofwat's responsibilities and those of the Environment Agency, and sometimes there can be a conflict. For example, the level of water needed in the reservoirs to ensure that we do not get a drought in the summer can cause overflow in the winter. Does the Minister have a perspective on that, or would he like to write to me to explain how the Bill will ensure that there is a holistic approach to the potentially conflicting interests and needs of Ofwat and the Environment Agency?
Huw Irranca-Davies: I do not think I need to write to the hon. Gentleman, because I can happily confirm that one of the prime aims behind the Bill is the clarification of responsibilities, both for the EA as the strategic national lead and for upper-tier or unitary local authorities, working hand in hand with internal drainage boards and those on the ground in lower-tier authorities, so that they can deliver local leadership and accountability on flood risk management. Those organisations have duties to work with each other and with all the other authorities-duties that are embedded as a prominent part of the Bill.
Amendment 22 to clause 43, on concessionary schemes for surface water drainage charges for community groups, would require an undertaker's charges scheme to be overseen by Ofwat. The Water Industry Act 1991 already requires water and sewerage undertakers in England and Wales to submit their annual charges schemes to Ofwat for its approval, and that holds true regardless of whether they include a concessionary scheme for community groups. Including a provision in clause 43 stating that the charges scheme must be overseen by Ofwat would simply add ambiguity, as it is not exactly clear what Ofwat is being asked to oversee, or how that would differ from the power that Ofwat already has to approve undertakers' charges schemes.
That said, I appreciate that hon. Members of all parties want to be confident that community groups will not face unaffordable water bills as a result of site area charging for surface water drainage. I also recognise that there is a clear role and responsibility for Ofwat in ensuring that that is the case. The issue will therefore be addressed in the Secretary of State's guidance to undertakers.
Clause 43(6) empowers the Secretary of State and Welsh Ministers to issue guidance to undertakers, to which they would be required to have regard. A draft of that guidance, which will be subject to full public consultation, was made available in Committee. It set out in quite some detail the Government's thinking on issues such as the need for concessionary schemes, which groups should benefit and what counts as an affordable charge for community groups. I bring to hon. Members' attention paragraph 3.1 of the draft guidance, which states:
"The Government is clear that it does not want to see community groups facing unaffordable increases in their water bills as a result
of site area charging for surface water drainage. We expect undertakers to ensure that this is the case and Ofwat will ensure that undertakers have had regard to this guidance in its approval of individual charges schemes."
That makes clear the important role that Ofwat will have both in approving individual charges schemes, as it does now, and in policing the Government's guidance to ensure that community groups will not face unaffordable surface water drainage charges.
Mike Penning (Hemel Hempstead) (Con): May I be assured, from what the Minister has said, that groups in my constituency are safe, particularly scout groups, which are very worried about whether they can survive when the charges go up?
Huw Irranca-Davies: Yes, the hon. Gentleman absolutely can have that assurance. We hoped that we would be able to ensure that without legislation, because we already had some guidance in place, but the Bill will provide clarity that schemes need to be worked up across the consumer base. I had an interesting discussion with Church groups about whether we should protect churches to the extent that parishioners come in and say, "Thanks very much, but my bill's just gone up £10 or £20 to save you." We need to get the balance right, but the joy of the scheme is that it will have proper local consultation, with proper input from the Consumer Council for Water, local groups and others, so that it is applicable to the local environment. That is a clear responsibility.
Hon. Members can take that assurance back to the churches, scout groups, community halls and others, and tell those organisations to look at the guidance, which is out for consultation, and get their feedback to the Government. I am confident that that sets the way forward so that such groups, which often live hand to mouth, do not use their money and fundraising to pay for surface water charging rather than other things, such as taking scouts on a trip.
To sum up, the objectives of new clauses 16, 17 and 18 can clearly already be achieved within the existing framework. Given the clear commitments I have made, I hope hon. Members will not press them to a Division. I also hope that the hon. Member for Cheltenham will not press amendment 22 to a Division, given that Ofwat already has the power to approve charges schemes, and in view of the proposals in the Secretary of State's draft guidance on concessionary schemes for community groups.
Miss Anne McIntosh (Vale of York) (Con): I echo the Minister's comments-I am delighted to be at the remaining stages of the Bill, and I hope we can reflect the co-operation and good humour that was enjoyed in Committee.
New clause 18 is consequential on a number of amendments to which we will speak later. We had some sympathy with new clause 17, in the name of the hon. Member for Stroud (Mr. Drew), which is similar to our proposal, but we believe that our expression and script is clearer.
Mr. David Drew (Stroud) (Lab/Co-op): Surely not!
Miss McIntosh: I hope the hon. Gentleman agrees.
Basically, as the Minister said, the Select Committee on Environment, Food and Rural Affairs said in its report that we would need to revisit the regulatory framework for a number of issues that arose in Committee. In new clause 18, we are seeking to add a number of responsibilities that we believe should be specified in the Water Industry Act 1991 to reflect the changes that the Bill makes. Currently, those responsibilities are omitted from the Bill and the Act. I hope that the Minister and the House look favourably on those remarks.
The Minister said that Government new clause 22 was an opportunity to give Ofwat a role in approving or rejecting the charging scheme, and ensuring that decisions are commensurate with the guidance to which he referred-I should state that that guidance was drawn to the Committee's attention on the penultimate day of our proceedings. What consultation has there been on that guidance? Previous guidance was heavily consulted on. Will he ensure that decisions will be taken with that guidance in mind? What direct consultation has there been with Ofwat?
My hon. Friend the Member for Arundel and South Downs (Nick Herbert), the shadow Secretary of State, and I have mentioned on a number of occasions on public platforms that we have serious concerns about affordability. We believe that regard should be had to the Walker report. If it is the wish of the British people that there should be a Conservative Government, we would be committed to introducing a White Paper, as the Minister is aware, to consider both the Walker report and the Cave review in the round-particularly the former-as regards metering and affordability.
We are a little dismayed that the Government have lifted one specific concern about social tariffs and affordability-we recognise that it is a very real concern-because it looks suspiciously like a piecemeal approach. Affordability is best seen in the context of areas such as the south-west, where 40 per cent. of water consumers are on low incomes, spending more than 3 per cent. of their disposable income on water, which is the general classification for water poverty. We wish to be as vigilant about water poverty as we are about fuel and energy poverty. I remind the Minister that while the Energy Bill includes social tariffs, with which we also have some sympathy, the energy sector had a two-year consultation under a proper framework set out in legislation. It was transparent and equitable, and all parties were fully consulted.
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We are also interested in the position of the Liberal Democrats, because they have flatly stated that they are against any form of stealth tax, and we are also on the record as opposing stealth taxes. However, new clause 22 will leave open the possibility of, for example, a hotel tax that is a real blight on hotels, especially in the south-west, which has the greatest problems of affordability.
I wish to press the Minister on why the Government have picked on this aspect of social tariffs when there are many others. They had the opportunity to introduce a fuller water Bill. Indeed, it was not until the Opposition pressed the issue that the Government said that they would introduce a broader Bill, but they have taken many aspects of the draft Bill out at this stage. The Select Committee clearly concluded that they were right to do so, because, as we have said, we need to see a
White Paper and a water Bill, along the same lines as the previous Conservative Government's legislation, which set the framework for the next 20 years. What are the Government thinking and why have they cherry-picked this issue out of the Walker report, the Cave report and the price review 2009? The Select Committee's conclusions also considered a broader role for Ofwat. Our concern is that this could lead to a bad law, the impact of which has not been properly assessed.
Mr. Redwood: Has my hon. Friend considered how the introduction of proper competition into the water industry, for retail as well as for large customers, would solve many of the problems and probably bring prices down without a Bill?
Miss McIntosh: I am grateful to my right hon. Friend for that comment. We are doing some serious work in that regard. We have had some meaningful discussions with the authors of the two reports. We need to take a longer-term view, and that would be part and parcel of the White Paper, but it certainly could have a positive impact on bills.
New clause 22(2) clearly states that subsection (1)
"includes schemes which have the effect of subsidisation by other persons."
We know that that has the particular legal meaning of "person" and means companies as opposed to individuals and households. Why has the Minister excluded reference to households? He clearly set out that the Government intend a form of cross-subsidisation, but why open that only to companies? What level of advanced consultation has he had with companies about the fact that businesses might be seen to be subsidising individual households having difficulties paying? If the new clause had retained the reference to individuals as opposed to legal persons, the domestic households sector would have been restricted in that regard.
Under new clause 22, as drafted, businesses will be caught by the proposals to subsidise individuals having difficulty paying their bills. As I mentioned, that might be viewed as a stealth tax on business-it could be so used-and, in the current economic climate, could lead to a financial burden on business. What were the Government's considerations in that regard? Is the Minister really considering doing what other European Union countries have done-imposing an eco-tax on hotels? What is their thinking on that?
As I mentioned, we would have been more persuaded had the Minister gone down the route of the Energy Bill, which gives enabling powers to allow suppliers to provide social price support. Those proposals have been extensively researched and developed over time, and I understand that significant consultations with the parties involved have taken place and that the proposals in the Energy Bill have broad support across the sector. However, my concern is that, in introducing new clause 22 at this stage-perhaps pre-empting a subsequent White Paper and a broader water Bill-the necessary consultations have not taken place. I understand that we are positioned between two extremes, but would he be good enough to tell us the Government's thinking on that.
I want to press the Minister further. There are significant differences-more than innuendoes-between new clause 22 and the language in clause 43 on community groups. In new clause 22(3), Ofwat is given specific duties to allow concessionary schemes for domestic properties. Clause 43
does not do that, and instead leaves it to guidance for Ofwat to be given specific authority. There seems to be a difference there. Will he explain his thinking behind that? New clause 22(4) states that Ministers must issue guidance relative to subsections (1) and (2), whereas clause 43 states that only undertakers
"shall have regard to any guidance issued by"
Ministers, which appears to remove any compulsion for guidance to be produced. Is that an intended difference? Will he explain the Government's intention in that regard? Finally, new clause 22(5) states that undertakers and the authority "shall have regard to" the guidance, whereas in clause 43, only undertakers, and not Ofwat, are told to have regard to the guidance. Having achieved what we have achieved in clause 43, we would like to be satisfied that new clause 22 will not result in any consequential differences.
I hope that the Minister and the House will look favourably on new clause 18, because we believe that it is appropriate to set out what the primary duties on the Secretary of State and Ofwat should be. As I said, there are significant consequences for later amendments. We have sympathy with the Government's new clause 22, but obviously we would like some satisfaction regarding our concerns. In the current credit crunch and economic crisis, the issue of affordability needs to be addressed. However, we would be interested to know why the particular issue in new clause 22 has been lifted from the other significant issues-my right hon. Friend the Member for Wokingham (Mr. Redwood) identified them-that were taken out of the earlier draft Bill.
Martin Horwood (Cheltenham) (LD): I start by echoing the remarks of the Minister and the hon. Member for Vale of York (Miss McIntosh) about the positive atmosphere that prevailed in Committee. I share their desire to ensure that that positive and co-operative attitude continues.
New clause 22 is certainly a positive place to start and is broadly based on the ideas behind our new clause 1 in Committee. We have been pleased to add our names to new clause 22 from the Liberal Democrat Benches, in that it seeks to do what we intended with our new clause. At a time of recession, when variable energy prices, potentially rising council tax bills and other things are hitting some of the most vulnerable and poorest citizens in our communities, it is only right that we should pay attention to their needs. We should also pay heed to the fact that the impact assessment on the adoption of private drains has suggested that water bills will have to rise. The Walker review highlighted the issue of metering and the disproportionate impact that it could have on some of our poorest citizens, who are the poorest water customers. It is therefore urgent that the matter be put beyond doubt, because it is possible that the numbers in so-called water poverty will rise.
Water companies have struggled to introduce social tariffs, and that includes even Dwr Cymru and Thames Water, which have tried to do so over many years. The kindest interpretation of Ofwat's response to many of their approaches to try to introduce social tariffs is that it has struggled with the terms of its remit-I will put it no stronger than that. In answer to the question that the hon. Member for Vale of York asked, the reason why we need the proposal in legislation, and why it is a little special compared with the broad range of recommendations
in the Walker review, is that not that many of Anna Walker's recommendations require primary legislation in quite the same way.
There is clearly a problem, and it is one that is perceived to be connected with the general remit under which Ofwat operates. We heard in our evidence session about the need that had been identified to put the matter beyond doubt in primary legislation. There are not that many recommendations in the Walker review that require primary legislation, and there is certainly not general support for that primary legislation should it derail the Bill before a general election. We also share a desire to get the Bill through before the general election, and new clause 22 seems a good opportunity to tackle the issue in a way that will have general support.
New clause 22 puts the legality of social tariffs beyond doubt. The Secretary of State has drawn the new clause widely. It is not prescriptive and does not pre-empt the consultation that will result from the Walker review, but it does address Walker's call for social tariffs to be permitted. The Conservative Front-Bench team did not feel able to support our amendment in Committee to allow, in effect, lower water bills for the poorest customers, and the hon. Member for Vale of York has made some slightly grudging comments this afternoon. I do not think that social tariffs for poor water customers are likely to be confused with stealth taxes. I hope that she will feel able to allow the Conservative party to go a little further this evening and support this important new clause. The central issue is fairness to some of our most vulnerable citizens, and in particular for elderly citizens on fixed incomes for whom such bills are unavoidable, who find it difficult to respond to rising bills.
Mr. Redwood: The issue is the level of income, because I cannot persuade my fairly poor constituents to have a big increase in order to pay for somebody else.
Martin Horwood: The right hon. Gentleman makes a fair point. Some of the figures put forward by Thames Water, which I can share with him another time, suggest that the number affected is a small percentage of the overall total. That means that if the money was to be recovered through other people's water bills, the increase for everybody else would be miniscule in practice, so the slightly poor would not have to pay an undue amount in order to subsidise the very poor. However, he makes a fair point. The key issue with new clause 22 is the need to put the legality of social tariffs beyond doubt. While we have the Bill before us-what the Minister said is quite true: we might not see another water Bill for some years-new clause 22 is a timely amendment.
New clauses 16 and 17 cover issues that we discussed in Committee and on which the hon. Member for Stroud (Mr. Drew) had Liberal Democrat support. The new clauses would ensure that the management of flood risk and water management are sustainable not only in environmental terms, but in social and economic terms, and that we have the skill sets to maintain the duties that we are creating in the Bill.
These and many other amendments have dealt with Ofwat's remit. I note and welcome the Minister's acknowledgement that Ofwat's remit needs comprehensive re-examination. That view is shared by all political parties. Whatever the outcome of the general election, it
will be an important issue for the new Government to address. Time is not on our side, so while we have the Bill before us, it seems sensible to make these amendments. I hope the Government will accept them, despite the Minister's comments so far.
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