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10 Feb 2010 : Column 937

Points of Order

1.59 pm

Mrs. Caroline Spelman (Meriden) (Con): On a point of order, Mr. Deputy Speaker. The Government have just released a written ministerial statement on the vexed subject of local government restructuring, which is going to force expensive and undemocratic restructuring on local government in Devon and Norfolk, and cast uncertainty over the future of the status of Suffolk. It represents a Government U-turn, reversing the position of the previous Secretary of State, and it ignores the advice of the Boundary Commission and introduces a wholly new concept of county constitutional conventions. Given the significant legal and financial implications of this statement, should it not have been an oral statement, so that Members on both sides of the House whose constituents are directly affected could properly debate the issue? The timing also raises serious questions about the probity of civil service activity so close to a general election. Do you not agree, Mr. Deputy Speaker, that this statement should have been the subject of a debate, and that to issue a statement of such significance in written form just hours before the House rises does this House a grave disservice?

Mr. Hugo Swire (East Devon) (Con): Further to that point of order, Mr. Deputy Speaker. This is the most naked form of opportunism I have ever witnessed in this place. The fact is that the Government have now ignored the criteria by which they originally judged the issue. They have overturned a decision taken in principle-

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. That is not a point of order. I think I have grasped the heart of the point of order of the hon. Member for Meriden (Mrs. Spelman), and I do not think we should go down the debating route. The hon. Lady will understand that she cannot draw me into giving an opinion as to how a particular matter should be presented to the House. She will know that it is open to Ministers to decide how they will inform the House of a particular matter. I do not believe that it is an immutable, or necessarily a common, practice that local government
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boundary changes will always be announced by an oral statement, and there will be further opportunities for the House to debate the matter the hon. Lady raises. On the timing, again it is not for me to comment, except, perhaps, to say that we are all concerned when something comes out on the eve of a recess, which means there is a delay before it can be further considered, but, again, the timing is not a matter for the Chair. The hon. Lady has made her protest about this, and I am sure there will be other ways in which she can pursue the substance of the matter once the House resumes.

Mr. Gary Streeter (South-West Devon) (Con): On a point of order, Mr. Deputy Speaker. Have you had any indication that the Secretary of State for Culture, Media and Sport wishes to come to the Chamber to make a statement from the Dispatch Box crowing about the decision to make Exeter a unitary authority, because that is all about trying to save one Labour seat, rather than doing the right thing for the people of Devon?

Mr. Deputy Speaker: I am disappointed that the hon. Gentleman chose to try to take that comment down the route of a point of order, because I thought I had already explained to his colleague that we cannot have a debate on this matter. The Chair realises that this is of serious concern to Members representing the affected areas, but I am afraid that we cannot debate it now, whatever the feelings of hon. Members on the subject. That feeling has been registered, however.

Bill Presented

Department for Work and Pensions (Electronic File Retention) Bill

Presentation and First Reading (Standing Order No. 57)

Bill read the First time; to be read a Second time on Friday 5 March, and to be printed (Bill 6 6 ).

10 Feb 2010 : Column 939

Water Tariffs Bill

Motion for leave to bring in a Bill (Standing Order No. 23)

2.3 pm

Nick Harvey (North Devon) (LD): I beg to move,

I make no apology for returning yet again to the long-standing subject of water prices, which have risen by 42 per cent. in real terms since 1989. An enormous amount of time has passed, and water tariff payers, particularly in the south-west of England, have waited a long time for the matter to be addressed. I and colleagues from the south-west have raised this matter in the House on many occasions, and time is running out for the Government to address this crippling injustice before the election, which will be held soon.

The population of the south-west will be all too familiar with the following figures, but let me remind the House of them once again. South West Water customers pay the highest water bills in the country: they are almost 50 per cent. higher than the national average bills. Part of the reason for that is the manner in which the industry was privatised in 1989. At the time, the water infrastructure in the south-west was in a dire state, but the Government did not provide any mechanism by which SWW would be assisted in meeting the costs of bringing it into a better condition. Instead, they allowed the company to pass on to customers all the costs of updating the infrastructure. As a result, the huge burden of cleaning up the coastline has, very unfairly, fallen on water customers in our region, with 3 per cent. of the population paying for the clean sweep of more than 30 per cent. of the UK's coastline.

The south-west population is probably the least able of any region to shoulder this burden. Residents of Devon and Cornwall have the lowest incomes in England, and they are considerably lower than the UK average. Furthermore, more than 22 per cent. of the south-west's population are pensioners living on fixed incomes, which is a higher proportion than anywhere else in England. All too often in the spring, any increase in state pension is immediately counteracted by increases in water bills or council tax. The need for reform is clear, therefore.

SWW operates the WaterSure social tariff scheme, for which it received 6,782 applications in 2008-09, despite the fact that the eligibility requirements are quite stringent. One of the requirements is that the customer must have a meter, which can be difficult in practice, particularly in blocks of flats, where the logistics are challenging. Nevertheless, SWW has received twice as many applications for such a tariff as any other water company.

As I have said, this problem dates back 20 years to privatisation, and I am very pleased that the Government commissioned a report on water charges, conducted and published by Anna Walker. That is clearly a step in the right direction. The report came up with some sensible solutions: greater use of social tariffs; the possibility of a contribution to SWW from the Treasury to recognise
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the extra costs it has faced; or a levy on other regional water companies to help meet SWW's extra costs-which is the idea my Bill pursues. Some of the report's other proposals are more controversial, such as moving to universal water metering, or putting a levy on holidaymakers' hotel bills. The Government have had sufficient time to consider the report, and the time has now come for some decisions and actions.

My Bill places on Ofwat a duty to set exactly the same water tariffs across the entire country. Bills must be equalised at the current average across the country as a whole, rather than SWW's level of bills being inflicted on everybody else. That would be the fairest system, and we should be steering towards it. My Bill also calls on the Government to recognise a new measure of water poverty, along the lines of the well-established fuel poverty principle, and it imposes on all water companies a duty to provide a social tariff to everybody who falls under this threshold-and not to have as many exemptions in place as, for example, the SWW scheme that I have just mentioned.

The Chartered Institute of Environmental Health has defined water poverty as being when a household's water bill equates to more than 3 per cent. of its income after tax. There are winter fuel payments, but there is no similar assistance in respect of water poverty. More widely available social tariffs must be provided, and water poverty must become as widely accepted a concept as fuel poverty. We need to overcome the current obstacles to achieving those goals.

If the same tariff were to be set in every part of the country, the impact on different companies would vary sharply. If those companies were ordered off their current tariff level and on to a common tariff level, that would have widely differing impacts on their ability to fulfil their various regulatory requirements. Some would find that they had a cash bonanza and others would find that they had a shortfall in trying to meet their obligations. The purpose of an investment fund is to provide a mechanism through which the abilities to meet their obligations could also be equalised in way that would mirror the equalisation of the water tariff. Ofwat would determine what each water company should pay into the investment fund and allocate the resources from the fund to enable each of the different companies to fulfil the obligations that fall on them.

One has to recognise that there have been significant developments in the south-west in the years since privatisation. The "Clean Sweep" programme for the coastline has been a great success but the infrastructure that has been put in place needs ongoing capital maintenance. Of course, more requirements are being put on all the water companies about the quality of their drinking water, action to tackle leaks and all their other duties. There is no perfect mechanism, but if we established a central fund into which the companies made a contribution, depending on the level of profitability that the new equalised tariff gave them, those who were going to suffer a shortfall could draw the money out of it. Of course, if the Government were to consider further Anna Walker's recommendation that Treasury funds should be part of the equation, the central fund would also be a mechanism through which that could be done. However, it is beyond the scope of a private Member's Bill to propose that such a thing should be forthcoming from the Treasury.

10 Feb 2010 : Column 941

This has been a long-running sore and it is not going to go away. When we take those with the lowest incomes in the country-those with very low disposable incomes-and place on them bills that cripple their household budgets, and when they realise that the cost of a bath in the south-west is vastly greater than that in other parts of the country, it prompts a simple question of fairness that has yet to be properly addressed.

The south-west has great assets that people from the whole country enjoy when they come on holiday. Among those assets are the clean beaches. It seems to me that everybody throughout the country needs to make a contribution to that. When we come to London, for example, and enjoy the benefits available for visitors, the central taxpayer has made a considerable contribution to those great attractions. It is simply a question of fairness. Twenty years after privatisation, there has been no progress at all. For the first time, Anna Walker's report makes it clear in an independent study commissioned by Government that there is a real issue to address. It is not a question of the south-west whinging; it can be seen objectively that an injustice exists and a variety of measures have been proposed to put that right.

This has gone on too long. The time for action has come and my Bill would be a means by which that action could be taken.

Question put and agreed to.


That Nick Harvey, Dan Rogerson, Mr. Colin Breed, Richard Younger-Ross, Mr. Adrian Sanders, Andrew George, Julia Goldsworthy, Linda Gilroy and Alison Seabeck present the Bill.

Nick Harvey accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 26 March , and to be printed (Bill 67).

10 Feb 2010 : Column 942

Section 5 of the European Communities (Amendment) Act 1993

Mr. Deputy Speaker (Sir Alan Haselhurst): I must announce to the House that Mr. Speaker has selected the amendment that appears on the Order Paper.

2.14 pm

The Economic Secretary to the Treasury (Ian Pearson): I beg to move,

I welcome the opportunity to debate the information provided to the European Commission under section 5 of the European Communities (Amendment) Act 1993. Each year, the Government report to the Commission on the UK's economic and budgetary position and our main economic policy measures, in line with our commitments under the stability and growth pact, by formally sharing information from the pre-Budget report.

A year ago, as the world economy faced crisis, the European Council agreed a European economic recovery plan, which rightly called for a fiscal stimulus from member states equivalent to about 1.5 per cent. of gross domestic product. The Council encouraged member states to allow borrowing to rise to support the economy, acknowledging that this would lead to a deepening of deficits in the short-term and that the stability and growth pact should be applied in a manner that reflects the current exceptional circumstances.

We welcome the publication of the European economic recovery plan, which showed that the Government were right to take bold action in the 2008 PBR to support the economy through a fiscal stimulus and to provide further support for actions to front-load public expenditure and assist small and medium-sized businesses.

Last year, the global economy is forecast to have had the longest period of sustained negative growth in 60 years. It was against that backdrop that the pre-Budget report was delivered last year. That PBR is reported on in this document to the Commission.

Mr. William Cash (Stone) (Con): Does the Minister accept that, having regard to the crisis in Greece and in the eurozone as a whole, as has been widely reported, the reality is that the stability and growth pact is simply not working and that the words contained in the pre-Budget report indicate that all the Government are doing is shunting on the whole issue on the basis of wishful thinking?

Ian Pearson: I do not agree with the hon. Gentleman. We have gone through exceptional times in the global economy and that has affected all European economies. As he will be aware, according to the figures, 20 countries are in what would be called the excessive deficit procedure-that is, they have a deficit of above 3 per cent. of GDP. There are good reasons for that. The matter has been debated extensively at the European Council and there is a commitment across Europe to co-ordinate economic policies and to ensure sustainable public finances in all member states over the medium term. Everybody in Europe has recognised, however, that we have had to do some pretty exceptional things and that has affected all our economies.

10 Feb 2010 : Column 943

Mr. Shailesh Vara (North-West Cambridgeshire) (Con): Notwithstanding what the Minister has just said, will he confirm that Britain has a higher budget deficit than that of Greece?

Ian Pearson: The hon. Gentleman will know the figures well. It is true that the budget deficit in the UK has increased-it has increased in pretty much every member state. Later in my speech, I shall talk more about it.

It is widely recognised by most commentators that Government action has helped to limit the impact of the recession. Indeed, the initial figures released last month show that the economy posted growth of 0.1 per cent. in the final quarter of 2009, reflecting my right hon. Friend the Chancellor's forecast in the PBR that growth would return at the end of the year. As hon. Members will be aware from the pre-Budget report, growth is expected to pick up progressively to 1.25 per cent. in 2010 and 3.5 per cent. in 2011-12. I believe that that will be supported by net exports and investment, with the adjustment of the UK's flexible labour markets helping to bring spare capacity back into use.

It is also clear that the Government have been right to be cautious about the prospects for the economy, and it is right that we should continue to support it. The shocks that this economy and economies around the world faced were entirely unprecedented. Withdrawing support that has helped us to get to this point would be exactly the wrong policy. I believe that we now face two challenges: securing the recovery and promoting long-term growth. They will both be essential in ensuring sound public finances, which will be necessary for the investment that we need in the future.

My right hon. Friend the Chancellor announced in the PBR a plan for reducing the deficit by half within four years. As world economic prospects are still fragile, however, the PBR also announced the maintenance of support until recovery is secured. We have had this debate many times in the Chamber, and it is a matter of judgment when action should be taken to cut the deficit. We have always maintained that failing to offer support to the economy would risk the recovery and would damage the economy in the long term. That is why we have offered support to business to ease problems with cash flow and with access to bank lending, and that is why we have deferred tax rises and extended tax allowances. That includes the time to pay scheme, which has helped businesses to spread £4.8 billion-worth of tax payments over a timetable that they can afford. That is why we have frozen small companies' tax rates next year to help 850,000 businesses.

We announced in the PBR that support for mortgage interest would provide cover for mortgage interest payments for those who have lost their jobs. That has been extended for a further six months. To date, the scheme has helped more than 220,000 people. It is important that families receive the help that they need through the tax and benefit system, and through the downturn, tax credits have provided extra help to 400,000 families whose income has fallen.

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