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4.30pm
In the growing spirit of cross-party solidarity, I welcome new clause 18. We have argued consistently for the reform of Ofwat's remit, particularly to reflect some of the issues that are addressed in the new clause, which include sustainability, water and energy efficiency, and leakage control not simply as a function of the economics of water companies, but as a desirable end in itself. That is a helpful amendment and again we are happy to support it.
On our amendment 22, I know that hon. Members in all parts of the House were concerned about the so-called rain tax afflicting groups such as churches and scout organisations, and that everybody wanted the problem resolved. The Bill has gone a long way towards that by introducing concessionary charging schemes for community groups. The discussion was helpful in raising the issue of social tariffs generally and making it clear that we could bring those into the Bill as a whole, but as the hon. Member for Vale of York said, it has highlighted an anomaly between two sets of clauses. In new clause 22, water companies must have regard to ministerial guidance, and subsection (5) subjects Ofwat to the same regime, yet in clause 43, which refers to the concessionary charging schemes for community organisations, there is no mention of Ofwat at all.
That has raised legitimate concerns from some of the organisations affected by the so-called rain tax issue. The Scout Association wrote to me:
"Ofwat is specified as having oversight of the process, but the Scouts believe that Ofwat needs clear guidance on the face of the bill from Government as to its oversight of concessionary schemes. Ofwat's track record in interpreting existing guidance, and its inability to conduct a regulatory impact assessment before recommending site-area charging, has engendered significant mistrust in their regulatory competence"-
the Scout Association's words, not mine. It goes on:
"Therefore, we believe that either through passing this amendment, or giving other assurances at Report Stage, the Government ought to let community groups know that Ofwat will be in charge of administering all concessionary schemes as a matter of course."
I note the Minister's comments. He said that there was a need for confidence in site area charging and that there was a clear responsibility on undertakers to pay attention to the need for concessionary schemes, but his comments still seem to fall short of an explicit reassurance that that will be part and parcel of Ofwat's role, and that we will not find that ministerial guidance is not quite explicit enough, and that water companies try to introduce a concessionary scheme explicitly to address the needs of community groups but find Ofwat quibbling about it or standing in their way. We are close to having that assurance, and I am sure the Minister can find a form of words that might satisfy us. We will take his word on it-I am tempted to use the phrase, "Scout's honour." If he finds the right form of words, we will not press amendment 22 to a Division.
Mr. Drew: I am delighted to speak to new clauses 16 and 17. In the spirit prevailing in the House today, I commend my hon. Friend the Minister on a near-exemplary performance and his willingness to listen, respond and improve the Bill. The House heard it from me first.
I do not intend to spend long dealing with new clause 22-or, indeed, amendment 22-but I would like to point out that the new clause exemplifies the Minister's willingness to engage in debate. Some of us were tempted by the Liberal Democrat amendment moved in Committee, but common sense prevailed and we did not have a vote; the Minister was tasked to go away and think about how to introduce individual social tariffs as well as collective ones for voluntary organisations and so forth. That was the nub of the problem. It was not possible to say that we would treat fairly organisations such as the scouts, important though they are, but have no willingness to understand the problems of individual customers. We are talking about some form of cross-subsidisation. As I said in Committee, we have to separate out those who cannot pay from those who will not pay-a growing problem in this industry.
I hear what the hon. Member for Cheltenham (Martin Horwood) says about amendment 22, and I am pleased that he is not going to press it to a vote, but I seek further clarification of whether there has been some narrowing of the methodology that Ofwat will be asked to operate in dealing with cases referred to it where organisations feel that the water company they are paying is being unduly harsh in the charges imposed on them.
I hope that the Minister will clarify the position in his summing-up as we have to nail this issue. He has done invaluable work on a thorny problem, but I hope that we can now move on and be absolutely clear that there is a mechanism whereby if a particular community group feels that it is being unfairly treated, it will have the wherewithal to go to Ofwat, complain and get some action against the relevant water company, particularly given the strong differential between different water companies, as I mentioned in Committee. If the Severn Trent model had been more widely followed, for example, some of the problems that we saw with United Utilities could have been overcome far more quickly.
Although they have tabled at this time, new clauses 16 and 17 in no way move away from our discussions in Committee. However, new clause 16 lays down clearly a duty on the industry to provide skills and training for those who work in it. If I remember correctly, I heard the Minister rightly say that the water industry is not as advanced as the energy or other utility industries in respect of what it already does in that regard. New clause 16 is effectively designed to inform the regulator that water companies will have to demonstrate in detail how they are investing in the training and development of their employees.
Mr. Roger Williams (Brecon and Radnorshire) (LD): I am very much in favour of the hon. Gentleman's argument, but if we take Welsh Water, for instance, which I believe has a good structure, it has hardly any employees at all, as nearly all its work is contracted out. How will his proposals work out for an organisation like Welsh Water?
Mr. Drew:
That is a particular problem. We have seen contractualisation in all manner of industries, and I always think that the greatest loss is the human capital. What training is going on, who is responsible for it and, if it is not going on, what can be done about it, are issues that are not easy to determine. Given that I am unlikely to push the new clauses to a vote, I hope the
Minister has noted that we want clarification of how the arrangements will work in practice. The water industry is a people-oriented industry, and we shall all be the losers if we do not invest in the people who will keep the water flowing.
I should like the water companies to give the regulator details of their total annual investment in the training and development of their employees, details of compulsory employee training and development plans for each successive five-year regulatory period-clearly a long period will be involved-and details of consultation and negotiation between the undertaker and employee representatives on training and work force development strategies. I make no apology for saying that those proposals are a result of my links with Unison, the major trade union involved in the industry. Let me pass on Unison's thanks to the Minister, who met its representatives, allayed their fear that the Bill would make no provision for training and another opportunity would be lost in an area that had been sadly neglected, and agreed that we must be much clearer about the skills and development programmes that we intend to provide.
Government, the water industry, the employees and the regulator must sing from the same song sheet if we are to have an industry that is fit for the 21st century rather than one that is somewhat historic, both in terms of the infrastructure that we are trying to upgrade and in terms of its failure to invest in people.
New clause 17 also concerns skills training. I was a wee bit disappointed that the hon. Member for Vale of York (Miss McIntosh) felt that her new clause was so superior to mine that I ought to fall on my sword and accept failure. However, I tabled my new clause for a specific reason. I have been talking to the Environmental Industries Commission. As well as containing some nice words about sustainability and the need for a programmed approach to our ability to organise the industry, the new clause has a specific bite to which I want the Minister to respond.
There happens to be an ABB plant in my constituency which produces flow meters. For many years, those at the plant have been telling me that the problem with the water industry and its five-year plans-the beloved "AMP": no one has yet been able to explain to me what that acronym stands for, but I am sure that it stands for something meaningful-is that we may end up with feast and famine or, dare I say, boom and bust.
During the years in which the industry has agreement on the new expenditure programmes, the supplier companies will be incredibly busy and have to break every record in responding to the demand that they find so difficult to meet. Towards the end of the five-year period, such will be the pace at which the industry has had to proceed that everyone will start waiting for the next five-year structured approach by Ofwat, and there will be very little work to go around.
The aim of new clause 17 is to try to level out some of the activity, given that it is so unbalanced and leads to all manner of problems. As anyone who knows about the water industry will agree, that is entirely counter-productive in the long run. Therefore, I am looking for some assurances from my hon. Friend the Minister. We must consider how we can begin to deal with the problems of the vicious cycle of boom and bust to ensure that the industry can invest over the longer term.
It should not think in terms of shorter five-year periods, which is, dare I say it, a drop in the ocean when we consider the history of how we have provided for the supply of water.
We should consider how we can level out investment patterns to ensure that investment is not entirely dependent on the encouragement of the regulatory system; that we get proper operational efficiency within the idea of sustainability, which is where we link in with employee training and development; and that we make the best use of those assets. We will have situations where not just the supply chain but the industry itself will have surplus assets because they have worked so hard to get ahead of the game, but those will not necessarily be employed in the most purposeful way.
4.45 pm
I hope that the Minister hears what I say. There is a problem in the industry and we need to rectify it. I hope that we can use the Bill at least to have a debate on that matter. We may not need to have such a measure in primary legislation, but we need to recognise the problem and try to do something about it.
Mr. Redwood: I rise to discuss Government new clause 22. As I have said in interventions, we all feel well disposed and warm towards the aim of more affordable water for people on lower incomes, but I find it difficult to welcome the way in which the Government propose to do that, as we need some indication of the detail that needs to follow to make this a sensible and workable scheme.
The best way to make water more affordable for those on low incomes and for those on any kind of income is to introduce competition and get the costs of producing the water down. I believe that it would probably cut the cost by about a fifth if we introduced comprehensive water competition and used the pipe network as a common carrier. It is easy to do. It has already been done in the case of gas and other fluids requiring access to pipelines. There is no natural monopoly in the provision of water, the collection of water or the delivery of water. If there is any monopoly element in the provision of pipes, it can be dealt with quite easily by a proper common-carrier regulated system.
However, those who are introducing the new clause need to give us more indication of how poor people have to be to qualify under it. It seems to be a cross-subsidy scheme. As the Minister has been gracious enough to accept, if the very poor are beneficiaries, everyone else could be losers. The Liberal Democrat spokesman suggests that it will not mean much of a loss for people on fairly low incomes because not many people would be helped by the scheme. That may be true.
Martin Horwood: I am sure that the right hon. Gentleman was listening carefully, but that is not what I said. I said that, because the subsidy was going to be spread across a very large number of people-in Thames Water's proposed scheme, the suggestion is that 95 per cent. would be subsidising and only 5 per cent. benefiting, although that might be a bit niggardly-that would mean a terribly small increase for everyone else. That is what I meant-that the moderately poor would have hardly any increase at all.
Mr. Redwood: I think that that is what I said in slightly different language. I said that not many people would benefit. The hon. Gentleman is saying that only a very small percentage of people would benefit. However, I think that he will find that quite a lot of people think that their water bills are too high. It is not just the people on the lowest 5 per cent. of incomes who think that their water bills are too high. I suspect that perhaps half the people think that their water bills are too high and a lot of them will be very disappointed, so we need to send the right signals if we are really talking about only 5 per cent.
While the hon. Gentleman is right that, on the numbers, the increase for the other 95 per cent. will not be huge, there will none the less be some increase for people who are clearly really quite poor as they are in the bottom 6 or 7 per cent. of the income scale-because, on the hon. Gentleman's numbers, they will be excluded. We therefore need to have a better feel for the numbers before we can come to a fair conclusion on this; we need to know how big the increase will be, how many people will be paying it, and how many will benefit. I still think it would be much better to find a way of reducing the bills generally, as that would alleviate problems for the many people who find the water bill difficult to afford and feel that it has increased too much in recent years with no improvement in the service.
I also wish to make a few remarks on new clause 18, tabled by my Front-Bench colleagues. It may be sensible, but both the Government and Opposition Front-Bench teams need to help me a little by explaining what they mean by sustainable water management. It is one of those phrases that people trot out; they say, "Wouldn't it be a good idea to have sustainable water management?" It is very difficult to say, "No, we don't want that," as nobody wants unsustainable water management, but we have to unpack this common jargon and explore what it means. If it means we are going to have some common sense on the provision of clean water in adequate quantities at all times of the year and in all years to my constituents, I would welcome that. If it means that the water companies will do rather better in handling the disposal of foul water than at present, which would also matter a great deal to my constituents, I would welcome that very much, too.
Let me offer one of quite a few possible examples of poor water service in my constituency from the main monopoly provider. There is an area of nice housing where there has been over-building on floodplain land. That has led to too much surface water, which the drainage system cannot handle, so the surface water rushes through the housing area, hits and knocks out the pumps that are meant to take the foul water safely underground, and the foul water then swells up from underground and mixes with the surface water already running around in this low-lying housing area. As a result, people have very unpleasant things coming into their drawing rooms and kitchens, and they then cannot live in their houses for the next year while they are being cleaned out, dried out, re-plastered and so forth. That is totally unsatisfactory in 2010 in the United Kingdom, which is meant to be a rich and caring country with lifestyles of a sensible level.
If having sustainable water management means stopping such things happening, and saying to companies that allow them to happen, "You have some responsibility
and you need to come up with solutions more urgently out of your rather generous cash flows and large capital programmes," I am all for having sustainable water management. I suspect that this is what a lot of Members would find that their constituents want. They want more than the sensible and fine words in these various new clauses; rather, they want to know that something will actually happen. That is why I say this could be a very good idea, and I welcome what my Front-Bench colleagues are trying to do, but it can work only if the Minister both agrees that it is a sensible idea and then puts the detailed provisions into the regulations, so that monopoly local providers are under an obligation to deal with the obvious offences that we see in the service they are delivering.
The water industry as a whole has all the characteristics of a monopoly provider. Were we to have three dry and hot summers in a row-oh, blessed memory, when we had such things-I am sure that we would run out of water very quickly and be told we had to kill all our plants in our nice gardens because we could not afford to water them any more. That should not happen. These companies should be able to handle such weather conditions. Above all, however, they should be able to handle conditions in which we have quite a bit of rainfall. This country has had a lot of rainfall over many years; we seem to be having a succession of wet and damp winters and summers at present. Companies should be made to organise things so that they are able to handle such eventualities, because if customers cannot switch to another company that will do the job properly, it is terribly important that there is a regulator in place that will take the necessary action. I therefore hope that if we are in favour of sustainable water management, that means we are in favour of tackling these problems vigorously and thereby reassuring my constituents that they will not be flooded in future.
Linda Gilroy: I welcome the work that other Members have done in Committee and it is good to see the Bill back to complete its remaining stages so early, as that bodes well for its passing through the other place and into legislation. I particularly welcome the addition of clause 44, which fulfils the request made by a number of Members on Second Reading, including myself, for an examination of the debt issue. I shall move on swiftly, before I am told that this is not a Third Reading debate.
I welcome the product of another discussion in Committee-the one on social tariffs-and the work that the hon. Member for Cheltenham (Martin Horwood) has done, alongside Labour Members, in promoting new clause 22. I understand that new clause 22 is modest in its extent-it certainly is as far as fulfilling the Walker review and meeting the challenges in the south-west are concerned-but it is more welcome than the somewhat curmudgeonly comments made by Conservative Members. It gives clarity to something for which there is a great deal of pressure. Legislation needs to provide the regulator, at an early stage, with the ability to allow water undertakers to introduce some of the novel ways that they have been trying out, so as to ensure that there are methods that allow customers in vulnerable situations and those under great pressure in paying their water bills to get back into payment habits, to stop building up debt and to contribute at a level that is possible for them.
So I welcome the work done in Committee, but I wish to seek an assurance from the Minister because this provision is modest. If my understanding is correct, it is simply an intra-regional arrangement, rather than an inter-regional one such as would be needed to fulfil some of the recommendations of the Walker review. I hope that its welcome inclusion in the Bill in no way diminishes the Government's commitment to examining the full range of measures that could assist in tackling affordability problems, which are nowhere more acute than in the south-west region, in which I live. The Walker report put on the record for the first time the fact that the extent of the under-investment in the region's sewerage at the time of privatisation in the 1980s was £650 million. This new clause will in no way begin to address that. I thus seek an assurance from the Minister, because I was slightly apprehensive about his comment that it could be another two years before we have this opportunity again.
I welcome what the Minister said about the necessity for a review of Ofwat and its powers, and the way in which Walker envisages new charging and metering arrangements working would certainly bring that in its train. Indeed, I met the regulator earlier today to discuss how she is progressing with the Minister's welcome request for her to proceed with the examination of those aspects of the Walker review and the options that it set out for addressing the pressing affordability problems in the south-west. I am more convinced than ever that we will need a range of regulatory and Government measures, and not just the narrow ones envisaged in new clause 22, to put right the 20-year pain that we have been experiencing.
I support the new clause, but I seek the Minister's reassurance that it does not diminish the Government's appetite for introducing further early proposals to implement other necessary aspects of the review.
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