The Committee consisted of the following Members:
John-Paul Flaherty, Committee Clerk
† attended the Committee
‘After section 110I of the Water Industry Act 1991 (as inserted by section 9) there is inserted—
“Provision of sewerage services by sewerage licensees etc
110J Provision by sewerage licensee
‘(1) The owner or occupier of any premises may serve a notice on a sewerage undertaker—
(a) informing the undertaker that sewerage services to the premises are to be provided by a sewerage licensee, and
(b) specifying the time after which the undertaker will no longer be required to provide sewerage services to the premises.
(2) Where the charges for the sewerage services provided by the undertaker are, under Chapter 1 of Part 5 of this Act, fixed in relation to the premises by reference to volume, the time specified in the notice is to fall at least two working days after the notice is served.
(3) In this section a reference to two working days is a reference to a period of 48 hours calculated after disregarding any time falling on—
(a) a Saturday or Sunday, or
(b) Christmas Day, Good Friday or any day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.
110K Interim duty: sewerage undertakers and sewerage licensees
‘(1) This section applies where—
(a) a sewerage licensee (“the previous licensee”) ceases to provide sewerage services to any premises, and
(b) the owner or occupier of the premises has not notified the sewerage undertaker in whose area the premises are that—
(i) he has made arrangements for the continuation of the provision of sewerage services to the premises, or
(ii) he intends any provision of sewerage services to the premises to cease.
(2) It is to be the duty of the sewerage undertaker to continue to provide the sewerage services to the premises which were provided by the previous licensee.
(3) But the Authority may give a direction to an eligible sewerage licensee (“an interim licensee”) providing that it is to be the duty of that licensee to provide the sewerage services instead.
(4) An “eligible sewerage licensee” is a sewerage licensee with a retail authorisation who has elected to be an eligible sewerage licensee for the purposes of this section in accordance with the code issued under section 110N.
(5) If the Authority proposes to give a direction under subsection (3) to an eligible sewerage licensee—
(a) the Authority must give notice of the proposed direction to the licensee, and
(b) the licensee may, in accordance with the code issued under section 110N, temporarily suspend the election made by the licensee as mentioned in subsection (4), so that the proposed direction cannot be given to the licensee.
(6) Where sewerage services are provided by an undertaker under subsection (2)—
(a) the charges payable in respect of the provision of the services are to be fixed from time to time by a charges scheme under section 143, and
(b) the services are to be provided until—
(i) services are provided by an interim licensee by virtue of a direction under subsection (3), or
(ii) services are provided by a sewerage licensee following the service of a notice under section 110J,
whichever is the earlier.
(7) Where sewerage services are provided by an interim licensee by virtue of a direction given under subsection (3)—
(a) the provision of services by the interim licensee is to be treated as having begun on the date on which the previous licensee ceased to provide services to the premises,
(b) the terms and conditions in accordance with which the services are to be provided are to be—
(i) those provided for by a scheme made under section 110M, or
(ii) such other terms and conditions as may be agreed between the interim licensee and the owner or occupier of the premises, and
(c) the services are to be provided until they are discontinued in accordance with the terms and conditions mentioned in paragraph (b).
(8) Subsections (9) and (10) apply if, within a period of three months beginning with the date on which the previous licensee ceased to provide sewerage services to the premises, the owner or occupier of the premises serves notice—
(a) under section 110J, on the sewerage undertaker continuing the provision of services under subsection (2), or
(b) in accordance with the terms and conditions mentioned in subsection (7)(b), on the interim licensee continuing the provision of services by virtue of a direction given under subsection (3),
that instead another sewerage licensee (“the new licensee”) is to continue the provision of the services to the premises which were provided by the previous licensee.
(9) The notice must—
(a) specify the time from which the new licensee is to continue the provision of the services in question, and
(b) be served in accordance with the code issued under section 110N.
(10) In the case of a notice served as mentioned in subsection (8)(a), the provision of services by the new licensee is to be treated as having begun on the date on which the previous licensee ceased to provide services to the premises.
110L Interim duty: supplementary
‘(1) Where a duty is imposed by section 110K(2), or by virtue of a direction given under section 110K(3), in respect of any premises, any breach of the duty which causes the owner or occupier of the premises to sustain loss or damage is actionable at the suit of that owner or occupier.
(2) But in any proceedings brought against a sewerage undertaker or sewerage licensee in pursuance of subsection (1), it is a defence for the undertaker or licensee to show that the undertaker or, as the case may be, the licensee took all reasonable steps and exercised all due diligence to avoid the breach.
110M Interim licensees: schemes for terms and conditions
‘(1) A person who is an eligible sewerage licensee for the purposes of section 110K must make, and from time to time revise, a scheme containing the terms and conditions which, in the absence of agreed terms and conditions, are to apply to the provision of sewerage services by the licensee by virtue of a direction given under section 110K(3).
(2) A scheme under this section may make different provision for different purposes, or for different areas.
(3) As soon as practicable after a sewerage licensee makes or revises a scheme under this section the licensee is to—
(a) publish the scheme, or revised scheme, on the licensee’s website, and
(b) send a copy of the scheme, or revised scheme, to the Authority.
(4) The Authority may give a direction that terms and conditions applying to the provision of sewerage services in accordance with a scheme under this section must be modified as specified in the direction.
(5) A direction under subsection (4) may apply—
(a) generally to terms and conditions applying in accordance with a scheme under this section, or
(b) to terms and conditions so applying in any particular case.
(6) It is the duty of a sewerage licensee to comply with a direction under subsection (4), and this duty is enforceable under section 18.
110N Interim duty: code
‘(1) The Authority must issue a code in relation to—
(a) the provision of sewerage services under section 110K, and
(b) its power of direction under section 110K(3) (power to direct that eligible sewerage licensee provides interim sewerage services).
(2) The code may, in particular, make provision about—
(a) the procedure for electing to be an eligible sewerage licensee for the purposes of section 110K;
(b) the procedure for temporarily suspending such an election under section 110K(5)(b);
(c) the circumstances in which the Authority’s power of direction under section 110K(3) or 110M(4) may or may not be exercised;
(d) how the Authority will determine the date on which a sewerage licensee ceased to provide sewerage services to premises for the purposes of section 110K;
(e) terms and conditions contained in schemes made under section 110M;
(f) eligible sewerage licensees informing owners or occupiers of premises of their schemes for terms and conditions made under section 110M, before agreeing any terms and conditions as mentioned in section 110K(7)(b)(ii);
(g) the giving of notices as mentioned in section 110K(8) (that a new licensee is to continue the provision of the sewerage services provided by the previous licensee) including, in particular, provision about—
(i) the earliest time that a notice may specify as the time from which a new licensee is to continue the provision of the sewerage services provided by a previous licensee;
(ii) the procedure for serving a notice.
(3) If the Authority considers that a sewerage licensee is not acting as required by provision contained in a code as mentioned in subsection (2)(e) or (f), the Authority may give the licensee a direction to do, or not to do, a particular thing specified in the direction.
(4) It is the duty of a sewerage licensee to comply with a direction under subsection (3), and this duty is enforceable under section 18.
(5) The Authority must from time to time review the code and, if appropriate, issue a revised code.
(6) References in section 110K to the code issued under this section are to the code issued under this section that has effect at the time in question.”’.—(Dan Rogerson.)
‘The Secretary of State may by regulations make provision to limit the liability in nuisance for a riparian owner when the Environment Agency or relevant authority withdraws from maintenance of flood defences.’.—(Roger Williams.)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I draw to the Committee’s attention my entry in the Register of Members’ Financial Interests, which includes some landholdings, but no flood defences to my knowledge.
The new clause would introduce a provision to limit the liability in nuisance for a riparian owner when the Environment Agency or relevant authority withdraws from the maintenance of flood defences. When the Environment Agency or other relevant authority withdraws funding for long-established flood defences, the new clause would allow a riparian owner to satisfy any liability in private nuisance from an affected third-party landowner if he invites such a party to enter his property in order to carry out the necessary upkeep of existing formal flood defences. I stress that the new clause is not an attempt to get riparian owners off the hook, but merely to redress the balance between all parties affected in a fairer way.
Thomas Docherty (Dunfermline and West Fife) (Lab): I will not detain the Committee for long. For the benefit of the other place, which will be discussing the Bill in the new year, will the hon. Gentleman mind spending thirty seconds outlining what he means by “riparian”?
Anne Marie Morris (Newton Abbot) (Con): My hon. Friend’s point is pertinent and relevant. There is an unresolved dispute in my constituency that has been ongoing for nine months between the relevant parties about a disused pipe that caused damage. A constituent now has almost no foundations under his house. This is exactly the sort of solution we need.
Roger Williams: I thank my hon. Friend for that. I am sure that many hon. Members will have constituency examples of disputes that remain difficult to resolve. I may disappoint her by telling her that I do not intend to
If a riparian owner has material economic interest, such as a farmhouse or farm buildings, in the continued maintenance of a flood defence, it is only right to expect him to join in with other property owners in sharing the expense of maintaining flood-defence structures. As a result of funding pressures and flood risk policy, the Environment Agency and other relevant authorities are withdrawing from long-standing flood defence commitments, which may have been in place for decades, if not for hundreds of years. That places owners of land adjoining rivers in an impossible position. If they fail to take responsibility for maintaining the defences, which could run to millions of pounds, they potentially face legal claims in private nuisance from adjoining landowners and home owners who suffer loss through flooding. Even basic work on earth flood banks costs in the region of £1,000 a metre. There is growing evidence that this is becoming more of a problem—as withdrawal continues to accelerate, so will the problem.
In this age of litigation, it is almost inevitable that individuals and insurance companies will seek redress through private nuisance. Common law does not fairly address the problem, because a riparian owner could be unfairly forced to contribute to the upkeep of defences because of the threat of an undefined liability resulting from a potential insurance claim. The nature of nuisance means that it is not possible to define with precision what actions will ensure that a landowner has acted reasonably in any given case. Even if a riparian owner did not want to continue to protect their own property, it is likely that they would need to invite their neighbour or neighbours on to their land to enable them to carry out repairs to the flood defence. To secure their position against the possibility of a future claim, it is likely that they would feel required to offer a financial contribution above the top limit of what a court might consider to be reasonable in the circumstances of the case.
Neil Parish (Tiverton and Honiton) (Con): I support my hon. Friend, because I believe there could be unlimited liability for some landowners and other property owners. We have to be very careful about how we deal with this. It may be that some of it can be dealt with through liability insurance, but getting such insurance could be one of the problems—the problem is not only cost. If private landowners need to ensure that the defences are put in place, will we stipulate, through the Environment Agency and others, a very expensive and all-embracing scheme? Sometimes, a much more cost-effective scheme could be done on a local basis. It could be afforded and paid for and be effective in stopping flooding.
As my hon. Friend has said, the trouble is that, if we are not careful, much of the problem will land up being a legal matter to be sorted out in the courts, which is one place where we do not want it to land up. In the end, money spent on legal action ends up in the hands of the great lawyers and could be much better spent on a flood defence scheme. There is no lack of lawyers in the House, but this point of legislation could land up
Thomas Docherty: It is a pleasure to serve under your chairmanship, as ever, Mrs Riordan. I will be brief. The Opposition welcome the probing new clause—it is a good way to kick off the debate. We have heard two thoughtful but short contributions. We very much welcome the debate and will seek the assurances that the problem, which perhaps is overlooked normally, is dealt with. Subject to reassurances, we would not seek to divide the Committee at this time, but obviously we would think about dividing the other place if the Minister is unable to give us a full response.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson): It is a pleasure to welcome you back to the Chair this afternoon, Mrs Riordan. The new clause tabled by my hon. Friend the Member for Brecon and Radnorshire raises some complex issues that the Department for Environment, Food and Rural Affairs is currently discussing with the Country Land and Business Association, a fact of which he is probably well aware. I know that the CLA is concerned that people who own riparian land could be subject to legal action if they do not maintain flood defences that were previously maintained by the Environment Agency and a third party is flooded.
The CLA has already written to the Secretary of State asking that a provision be added to the Bill to remove liability from a riparian landowner where authorities have withdrawn funding for flood defences and the landowner has invited an affected third-party landowner to carry out the necessary maintenance works. The effect of the new clause would be that others who benefit from works on a riparian flood defence on an owner’s land could not seek any claim against the owner if there were any failure of the defence. The new clause would give powers to the Secretary of State to make regulations limiting the liability for a riparian owner when the Environment Agency or relevant authority has withdrawn from maintaining flood defences.
I appreciate that the Environment Agency’s intention to withdraw from maintaining some flood management assets is causing some landowners concern, but I should like to make it clear that it will only consider such action where maintenance is no longer economically justifiable in terms of protecting people and property from flooding. I recognise that that can create a challenging situation for landowners, residents and others who are affected. Therefore, the agency is committed to working with landowners and other affected parties to discuss the reasons for withdrawal and to support them in exploring alternative options.
Thomas Docherty: I am listening to the Minister. He has given assurances that he is seeking to make progress, but will he update the Committee on whether he anticipates those discussions being concluded prior to the matter being discussed in the other place, or whether a longer-term discussion needs to take place?
Dan Rogerson: If I can make some progress in my response to my hon. Friend’s proposal, the Government’s approach will become apparent. I welcome the hon. Gentleman’s asking for clarification on that point.
I understand that my hon. Friend is concerned that riparian landowners may be liable in cases of flooding and is looking to give them more certainty on the actions they would need to take to meet their duty of care to their neighbours. I have not seen evidence suggesting that the courts have reached perverse or unreasonable decisions that have imposed disproportionate burdens on landowners or others. Landowners are expected to undertake only those works that readily lie within their capability and means. A landowner may, for example, be able to take a few simple steps in such circumstances, at limited cost, to limit any potential flood impact on neighbouring lands or buildings.
Neil Parish: The Minister says that the landowner could take a few simple steps to stop flooding, but who will decide what those simple steps are? Will all that be taken to court? What he says sounds lovely, but the problem is whether it will work in practice.
Dan Rogerson: I am grateful for my hon. Friend’s intervention. I am rarely accused of being lovely, but it is kind of him to say so. [Hon. Members: “Aah.”] Is it not nice to have such sympathy from Committee members, Mrs Riordan? His point is on proportionality. The key point in that regard is the process of disengagement with the Environment Agency, when the discussion of what is acceptable occurs. In some parts of the country, we have internal drainage boards, which do such work collectively. In other cases, the work could expand or IDBs could come into being if there is a big catchment area. What is crucial is the process of discussion with the Environment Agency as it withdraws.
Neil Parish: It is a question of whether the Environment Agency will allow that to happen. That is one of the problems. Very often, it specifies an expensive scheme and there does not seem to be any way around it. It all very well to say, “No, there will be negotiation,” but who will negotiate?
Dan Rogerson: I understand what my hon. Friend is saying. He says, “very often”, but I am yet to be persuaded that there is enough of a case that we would need to legislate—that is not to say that the matter will not be dealt with in future. That was the point of the intervention by the hon. Member for Dunfermline and West Fife, and the ongoing discussions with the body that represents landowners.
The Environment Agency has a protocol for the maintenance of flood and coastal risk management assets and, using that, should ensure that all parties that have an interest in the future management of a particular structure have the opportunity to engage in the process. I strongly encourage the development of partnerships and working arrangements between local parties to guarantee future maintenance where appropriate, which would prevent such a problem arising. I am saying to my hon. Friends the Member for Tiverton and Honiton and for Brecon and Radnorshire, who proposed the new clause, that we have to be sure that, in legislating,
The Government believe the courts should continue to consider the facts of a particular case and the extent to which neighbours owe a duty to each other, rather than us using regulations to limit the liability if owners breach that duty and cause their neighbours harm. A wide range of circumstances could occur, ranging from a garden becoming waterlogged to the flooding of many buildings and loss of life. There may also be complications to resolve when, for example, the defence is owned by one or more landowners or there are a number of different beneficiaries.
I must emphasise that many river defences have been in place for a long time. The Environment Agency and its predecessors have used public money to maintain defences, and may have done so for some considerable time. Nevertheless, the role of the riparian or defence owner has not changed, and the fact that they have benefited from the actions of the Environment Agency in the past does not mean they will continue indefinitely.
The Department will continue to talk with the CLA about its concerns that underlie the new clause. However, I do not consider that a case has yet been made for legislation and therefore urge my hon. Friend to withdraw his new clause.
Roger Williams: I have listened carefully to the Minister and I am pleased that he and his Department are engaging with representatives of land-owning interests. I look forward to those negotiations continuing and, if possible, to legislation coming forward to ensure greater certainty. I would welcome that, because as my hon. Friend the Member for Tiverton and Honiton has said, the last thing wanted is to end up in court, with money being wasted on legal issues rather than flood defences. I beg to ask leave to withdraw the motion.
‘(1) The Water Industry Act 1991 is amended as follows.
(2) After section 207 (Provision of false information) there is inserted—
“Provision of information to water companies: landlords
Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.’.—(Thomas Docherty.)
Good afternoon, Mrs Riordan, it is a pleasure to serve under your chairmanship. We have just had an interesting, productive and useful debate. One thing that struck me in the Minister’s thoughtful remarks—the Christmas spirit is overtaking me—is that he cited the need for a proportionate and evidence-based response.
I think the Minister would concur with the following figures. On average, £15 is added to everyone’s bill as a result of other people not paying their water bills. Water supply differs from other utilities, in that someone cannot be cut off if they do not pay the bill—that recourse is not available. I think the Minister shares my view that we should not consider going down that path—I suspect that one or two members of the Committee do not share that view, based on previous Select Committee discussions. However, if we do not disconnect people, that will regrettably add a cost burden on to those who do pay their bills. As I have said, the average in England and Wales is £15, but it should be noted that in Scotland, as ever, it is significantly lower. We will perhaps come to that when we discuss new clause 47.
Thames Water representatives gave evidence to the Select Committee when it was examining the White Paper and the draft Bill. It will probably be easier for the Committee if I do not go through the whole process, but they said that those who can but do not pay their bills are, in effect, stealing from honest householders. This is not a new problem that has suddenly crept up on the coalition; it was recognised by the previous Government. In the Flood and Water Management Act 2010, provision was made to try to tackle it. The evidence from Ofwat is that 80%—four out of five—bad debtors are in the rented household sector. There are various reasons for that. One reason, of course, is that that is the group of people who move around most often and who tend not to make a long-term commitment to a property. There are obvious exceptions to that, particularly those in local authority and housing association properties, but private lets tend to have a much shorter occupancy period. It is much easier for such people to move on.
This is one of those genuinely bipartisan debates—there is nothing political about the issue, and I do not think we could get a wedge between the two sides. There is no clear blue water—pardon the pun—between the two sides of the House on this problem. The Labour Government at the time made provision in the 2010 Act such that landlords could be required to hand over a list of their tenants to the water companies, so that they could check whether a customer had moved, track them down and recover the non-payment. An unusual coalition of people supports that provision—I will come to that in a second. The trigger was not pulled in 2010, as the Minister will recall—I think he supported the decision at the time—because it was hoped that a voluntary scheme might encourage greater take-up. I will address that more thoroughly later in our proceedings, but although there has been some progress, it is fair to say that it has been unsatisfactory.
We now find an unlikely coalition of organisations and individuals calling for the implementation of new clause 46—it is unlikely in the sense that anyone who has listened to our deliberations over the past few days will be surprised by some of the names of those I am about to cite as being on our side on the issue. Some names will not surprise Government Members: the Consumer Council for Water, Ofwat, the Environment, Food and Rural Affairs Committee and the Opposition
The Committee will probably be aware that I will not always go along with something just because Water UK has suggested it, but the Opposition feel that there is compelling evidence that, after three and a half years, insufficient progress has been made. That is not just our conclusion, but the conclusion of the Select Committee of which the Minister was a member, along with the hon. Member for Tiverton and Honiton, when it published both of the relevant reports.
“It is simply unacceptable that, at a time when so many are struggling to afford their water bills, customers face the additional burden of subsidising those who refuse to pay what they owe. Legislation already exists that would make it easier for water companies to recover bad debt and the Minister”—
“acknowledged that money recovered from debtors would be ‘money in the pocket’ for those who do pay their bills. We urge the Department to implement the relevant provisions of the Flood and Water Management Act without further delay.”
“We remain of the view that it is unacceptable for honest customers to be forced to subsidise those who refuse to pay their water bills. We reiterate our previous recommendation that Defra should implement the provisions of the Flood and Water Management Act 2010 on bad debt without further delay.”
We fully concur with the Select Committee. We agree with the industry, with the regulator and with consumer bodies: enough is enough. After three and a half years, we are not making enough progress. It is time to help those hard-pressed, honest customers.
Dan Rogerson: I thank the hon. Gentleman for tabling his new clause. He is obviously aware that the provision to do what he set out already exists on the statute book. Having said that, following extensive consultation with the industry and landlords’ organisations, the Government took the decision that a voluntary approach is the most suitable one. More regulation is not always the answer, especially when that regulation has the greatest impact on small businesses that are not themselves the cause of the problem. Requiring landlords to provide information on request creates the same problems. The Government are always mindful of the burden that additional regulation could place on business. In this case, we have particular concerns about the imposition of additional costs on small businesses and micro-businesses, the category to which the vast majority of landlords belong.
We are strongly committed to driving change in the water industry so that companies improve their customer service and become much more sharply focused on the needs of their customers. Although there is some excellent debt collection practice among water companies, which the hon. Gentleman has already mentioned, that good practice is not applied consistently across the sector. That is demonstrated by the significant regional variations in performance on bad debt. We expect the industry to up its game and ensure that all companies match the performance of the best.
The Committee has had a number of discussions on affordability. We should remember that, as the hon. Gentleman said, debt problems can be linked to customers’ ability to pay. Support for struggling households, such as social tariffs, may help to reduce levels of bad debt. I welcome the tariffs that companies have introduced, in addition to the tariffs that are already in place. Ofwat has changed its methodology for the 2014 price review to place a much stronger emphasis on the companies’ responsibility to manage debt effectively. The price review sets a much more stringent benchmark against which the companies must demonstrate that bad debt has accrued for reasons “beyond their control” before seeking to increase the bills of paying customers.
We have decided not to regulate to require landlords to provide information to water companies. We remain committed, however, to the voluntary approach that is being advanced by Water UK, in partnership with a number of landlords’ organisations. Together, they have developed a new database that will make it easier for landlords to provide information about their tenants to water companies. In fact, the voluntary approach will go further than the new clause would, with landlords automatically updating the information on their tenants rather than waiting to be asked by the water company. The new database will launch in March 2014.
Thomas Docherty: I can see that the Minister is approaching his final points. Before he closes, we have a genuine concern. He has mentioned the potential cost or burden, but will he provide the Department’s estimate of the cost to small businesses if they had to provide the information?
Dan Rogerson: I am happy to share that information with the Committee, but I do not have it to hand. The Government made an assessment of the correct approach following the discussion with the industry. It is important to give the voluntary approach time to work. The database, which is being launched in March, has not even arrived yet, but the hon. Gentleman is saying that it has failed and that we must move to a different system.
Thomas Docherty: I am sure that the Minister does not intentionally seek to misrepresent my position. This is a cross-party issue, but the Government have had three and a half years and we are not seeing progress. How long does he intend to give the voluntary approach? If it does not work, will he pull the trigger on a mandatory approach?
Dan Rogerson: As the provision is already on the statute book, it is within the power of this Government, or a future Government, to introduce regulations to do so. However, we are still committed to the voluntary approach, and we want to give it time to work. Landlords and the water industry working together is a constructive example of how things can be done, and we want to give the voluntary approach time to work. For that reason, I urge the hon. Gentleman to withdraw his new clause.
Thomas Docherty: I will not keep the Committee long. I am disappointed on one level, but I am not surprised that the Government are not listening to the evidence before them. The Minister seeks to suggest that we are trying to oppose a voluntary mechanism,
Dan Rogerson: We have to see whether the voluntary approach works, and we have to monitor the situation. We do not need to specify a time now for introducing the regulations. To do so artificially would prejudge the system before the database had even come into operation.
Thomas Docherty: I am most disappointed. We have also asked for the figures this afternoon. I am genuinely surprised that the Minister could not get inspiration, having said that there was a bureaucratic cost. One would have expected inspiration to be forthcoming that would not just make an assertion, but be able to back it up. I regret having to seek a Division on this, and I probably need to advise the Minister that when the Bill goes to the other place, this is exactly the kind of issue that will require greater scrutiny. It is unfair on good, hard-working customers not to ask those who can pay, to pay.
‘(1) The Secretary of State, or the Authority, may prohibit losses to a water company due to non-payment of bills from being recovered through charges on customers.
(2) This section comes into force on the day after the Secretary of State has laid before Parliament a report setting out how water companies have failed to take action on these matters.’.—(Thomas Docherty.)
Again, I will not keep the Committee too long. Perhaps with hindsight the Minister and I should have grouped these two new clauses together. I have already touched on the problem that bad debt forces on to good
Dan Rogerson: As I have said on several occasions, we need to be careful about comparisons with the set-up in Scotland, where the collection mechanism is somewhat different from that used in England and Wales.
Thomas Docherty: I am reluctant to head down the path of explaining why that is a flaw in the system that the Conservative Government set up in 1989—they could have seen that one coming. The point is that it is simply unacceptable that not only do we have people who can pay not paying, but in effect there is no incentive for the water companies to go and collect the money. They know that they can simply pass on that bad debt to their other customers.
Again, it is worth pointing out—because we are approaching the end of the Bill and because I like to give the appearance of being even handed to water companies—that some water companies have voluntarily taken steps to bring down their bad debt provision. We spoke before about £15 being the average, but some water companies—including, in your area, Mrs Riordan, Yorkshire Water—have taken steps to reduce that figure. On average, they are passing on £7 or £8 in bad-debt provision to their customers. Although I am sure that figure is too high for many of your constituents in Halifax, Mrs Riordan, it is significantly better than some of the worst offenders.
We believe, as the Minister said only three minutes ago—I am sure he will not U-turn on his position—that it is unacceptable for water companies simply to shrug their shoulders and say, “It doesn’t matter if we don’t collect the money, because we’ll get the customer to pay for it anyway.” We believe that if a water company does not adequately collect debt, the company, not the customer, should pay for it. I can think of no other industry in which the failure to follow good practice is actually rewarded by the system.
So that there is no misinterpretation of our position, we are not saying that the prohibition would be automatic. Water companies that take steps with which the Secretary of State is satisfied would be able to add a small surcharge. However, we want to prevent companies that do not follow the good example of companies such as Yorkshire Water, which actively engages with its struggling customers, from passing on £20-plus of debt. The new clause is part of a package of amendments that we tabled to make water more affordable for people who are struggling. We also tabled amendments to make water more affordable for all customers.
However, we believe that rights come with responsibilities. Customers who can pay but continually refuse to do so should be chased, and companies that choose not to
Dan Rogerson: I am always happy to be reminded of my comments. I can get a little absent-minded as the day draws on, but I can remember a few minutes ago. The hon. Gentleman and I are roughly the same age, so he might find that we are afflicted by similar problems.
Some companies perform better than others, and we want companies that are doing less well to up their game to achieve far better results. The hon. Gentleman and I have a shared objective in wanting to minimise the impact on customers’ bills. New clause 47 would create a new power to allow the Secretary of State and Ofwat to disallow companies from recovering the costs of unpaid bills from their paying customers. I am working on the assumption that the hon. Gentleman’s intention is not to prohibit water companies from recovering charges from their debtors, but to incentivise them to improve their debt collection performance. I support that objective, but—the hon. Gentleman may be surprised to hear this—not the proposed approach.
We have had a number of debates in Committee about the correct division of responsibility between the Government and the regulator. The hon. Gentleman will not be surprised to hear that I am firmly of the view that it is for the regulator, not the Government, to make detailed decisions about charges. The proposed power for a future Secretary of State to intervene in the setting and recovery of charges is exactly the kind of political interference that most concerns investors. The hon. Gentleman has heard me say before that the stability of the regulatory regime is vital to keeping the cost of borrowing low. That is why I was not convinced by his proposal to have an annual price review process. An increase in that cost would have the direct result of putting up customer bills. I do not agree that the Secretary of State should have that power.
I am happy to say that Ofwat already has the ability to decide through the price review which costs can be recovered. It is already using the price review process to bear down on the cost of bad debt, and requires companies to demonstrate high performance on debt collection and show that any increase of bad debt is genuinely beyond their control before it is included in customer charges. I favour the approach of giving the regulator the tools to get on with the job. The regulator is far more challenging to the industry on its debt collection and collection strategies to minimise the impact on customer bills.
Thomas Docherty: The Minister and I obviously disagree on the philosophy of the Secretary of State doing something. However, for the benefit of clarity, is the Minister saying that he would be happy for the Opposition to table an amendment in the other place to say firmly that Ofwat should discount those companies which are not making sufficient progress? Would he be minded to support such an amendment?
Dan Rogerson: No, because that would be to do exactly what I have just said we should not do. I said it should be up to the regulator to take action. If we pass legislation that forces the regulator to act in a particular
Thomas Docherty: I will respond in more detail, but could the Minister say on how many occasions the regulator has refused to let water companies claw back bad debt from their other customers in the 24 years it has had that power?
Dan Rogerson: Well, the regulator does not consider one-off problems in isolation. Ofwat sets the price that water companies can charge their customers based on a range of factors. Bad debt is just one it must take into account. It is now taking that into account to a greater degree. It is being far more explicit in what it says to water companies on how the charge that other customers pay is made up, and what the elements are of the overall operating costs of the company. On that basis, I urge the hon. Gentleman to withdraw his new clause, even though I understand his aspirations for bearing down on bad debt, which are shared on both sides of the Committee.
Thomas Docherty: I am grateful for the chance to respond very briefly. I suspect that there is not a great deal of difference between the two sides. I hope our peers examine the issue very closely. The Opposition are very clear that we believe that those who can pay, should pay, but many water companies are simply not doing enough to collect. Not all water companies, but many of them, are not doing enough to collect from those who can pay but who refuse to pay.
The Minister deftly avoided answering my question about how many times in 24 years Ofwat had used its powers. The answer is that Ofwat has not once used those powers. Indeed, Ofwat made representations to the Environment, Food and Rural Affairs Committee that there is currently a significant problem. Therefore, because the Minister will not give us a guarantee that he will beef up Ofwat’s powers to pull the trigger, we will press the new clause to a vote. We hope that, if we are unsuccessful, the other place will look very seriously at this genuine problem.
The Chair: We now come to new clause 48. We had a debate on exit from the market on 5 December. I will not allow a repeat of that debate, and I request that Members’ speeches are limited to the differences between this new clause and new clause 36.
‘(1) A company appointed to be a water undertaker under section 6 of the Water Industry Act 1991, prior to Royal Assent of this Act, may choose to provide to—
(a) the retail market; or
(b) the wholesale market
(2) Any choice by a water company to only provide to one type of market under subsection (1) is subject to the approval of the Secretary of State.’.—(Thomas Docherty.)
I will see whether I can set a new record for how short I can keep the debate, despite the disappointment that will cause on the Government Benches. The new clause would make a technical change. New clause 48(2) would make it clear in the Bill, unlike new clause 36, which was a paving amendment, that action could be taken only with the express permission of the Secretary of State. I do not need to say anything else.
Thomas Docherty: On a point of order, Mrs Riordan. I heard you say clearly that we are not allowed to repeat the exit argument. I was allowed to refer only to the specific differences between new clause 48 and the previous points that were made. Is that correct?
Dan Rogerson: I suspect we will have the opportunity to explore things a little further if not on Report, then in the other place. I will resist the temptation to move out of order and have you haul me back into order, Mrs Riordan. The Government’s position has been clear throughout, so I urge the hon. Gentleman to withdraw his new clause.
‘The Secretary of State shall, within 12 months of this Act coming into force, publish a review into the costs and benefits of amending section 57 of the Water Industry Act 1991 to require the water undertaker to supply water to new properties in order to facilitate the fitting of sprinklers for fire prevention.’.—(Thomas Docherty.)
I rise for the last substantive discussion we will have this afternoon. [ Interruption. ] I hear the hon. Member for Tiverton and Honiton say, “Shame.” I am more than happy, with his permission, to continue for some time if that is helpful to him.
We tabled the new clause on behalf of the all-party group on fire safety and rescue. The issue is genuinely bi-partisan. When we were thinking about the order in which we tabled our amendments, we thought it best to finish with an opportunity to be consensual.
This is a time of year when there are more fire deaths, for a variety of reasons—I will not detain the Committee by discussing them. Every death caused by a fire is a tragedy that can and should be avoided. The all-party group has done an excellent piece of work over the past 18 months or so, highlighting how, if we installed sprinklers in every new build home, we would dramatically bring down the number of deaths from fires. If we extended that to the business sector, we could hugely reduce the number of businesses that go out of business through fire.
There is obviously a cost to the home builders and home owners to have such a supply fitted. We seek a report to be carried out. It is vital to gather sufficient evidence before making a decision on regulation changes. We ask the Minister to enter into fresh dialogue with the all-party group. The hon. Member for Brecon and
We want to see those deaths brought to an end. The Government should work with their colleagues in the Department for Communities and Local Government, the fire brigades and house builders to tackle those tragedies. I urge them to look at our proposal seriously.
Dan Rogerson: I am grateful to the hon. Gentleman for tabling his new clause. He has made a good case for exploring the matter and it is important that we have things set out correctly. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) has been an assiduous campaigner, which, given his previous profession, is understandable.
The new clause would require the Government to undertake a review into the costs and benefits of amending section 57 of the Water Industry Act 1991 to require the water undertaker to supply water to new properties to facilitate the fitting of sprinklers for fire prevention. We believe that the new clause seeks to address the issues that occur between customers and water companies when connections for fire sprinkler systems are required. In particular, concerns include undertakers requiring meters to be installed on the connections; smaller connection sizes than would be ideal for the fire sprinkler system; and internal storage. The possible change to section 57 envisaged by the new clause would not address those concerns, because they relate to practical points as opposed to facilitating the fitting of sprinklers. A requirement to fit a water meter, for example, does not prevent the fitting of a sprinkler system.
The water liaison group has just completed a review of the voluntary protocol. In updating that document, it worked with both the water industry and the fire sprinkler industry. Both supported, and agreed to accept, the document’s principles. As that document has only just been finalised, we hope to give it time to be put into practice.
Mrs Mary Glindon (North Tyneside) (Lab): I am also member of the all-party group. One reason for that is that the Findus food factory in Longbenton in my constituency had a really bad fire. Compartments burned, despite there being a fire alarm and shutters to close off the burning material. According to the report, smoke damage would have been prevented if sprinklers had been installed. Some 420 people lost their jobs and that factory is still not back in operation. We lost one of the country’s few producers of crispy pancakes—whatever they are—which students tend to like. On a serious point, surely the new clause would help to stop people losing their jobs and their lives.
Dan Rogerson: I thank the hon. Lady for her intervention. I hear voices from across the Committee jumping to the defence of Findus crispy pancakes—something in which I have indulged. The point that she and the hon. Member for Dunfermline and West Fife seek to make is on removing any such barriers to the installation of sprinkler systems. The document worked on between the sectors has just been finalised, but I am happy to meet representatives from the all-party group, should it wish
Thomas Docherty: I am grateful for the Minister’s response. This has been a productive debate and I thank my hon. Friend the Member for North Tyneside not only for drawing attention to the Minister’s culinary delight preferences, but for raising a serious point in the process.
I welcome the Minister’s offer to meet with and representatives from the all-party group and me. If he can give me the assurance that that meeting will take place before the Bill reaches the other place, then I would be happy on that basis to withdraw the new clause—the proposal could be considered there if we do not make sufficient progress.
Thomas Docherty: I assure the Minister that I can always find time for him. We will certainly do everything that we can to facilitate that, and I will take him at his word. He will be aware that, if we did not make progress, we would of course return to the proposal. On that basis, I beg to ask leave to withdraw new clause 49.
1 In relation to the sections and Schedules listed in the first column of this table, the appropriate authority for the purposes of section 56(3) is as listed in the second column (see paragraph 3 as regards interpretation of terms used in the table)—
2 A statutory instrument containing an order to be made by the Welsh Ministers under section 56(3) in relation to section 5 and Schedule 5 may not be made unless a draft has been laid before and approved by a resolution of the National Assembly for Wales.
3 In the table in paragraph 1—
(a) “wholly or mainly English water undertakers” means water undertakers whose areas are wholly or mainly in England;
(b) “wholly or mainly English sewerage undertakers” means sewerage undertakers whose areas are wholly or mainly in England;
(c) “wholly or mainly English undertakers” means undertakers falling within paragraph (a) or (b);
(d) “wholly or mainly English water supply licensees” means water supply licensees using the supply systems of water undertakers whose areas are wholly or mainly in England;
(e) “wholly or mainly English sewerage licensees” means sewerage licensees using the sewerage systems of sewerage undertakers whose areas are wholly or mainly in England;
(f) “wholly or mainly English licensees” means licensees falling within paragraph (d) or (e);
(g) “wholly or mainly Welsh water undertakers” means water undertakers whose areas are wholly or mainly in Wales;
(h) “wholly or mainly Welsh sewerage undertakers” means sewerage undertakers whose areas are wholly or mainly in Wales;
(i) “wholly or mainly Welsh undertakers” means undertakers falling within paragraph (g) or (h);
(j) “wholly or mainly Welsh water supply licensees” means water supply licensees using the supply systems of water undertakers whose areas are wholly or mainly in Wales;
(k) “wholly or mainly Welsh sewerage licensees” means sewerage licensees using the sewerage systems of sewerage undertakers whose areas are wholly or mainly in Wales;
(l) “wholly or mainly Welsh licensees” means licensees falling within paragraph (j) or (k).
4 In paragraph 3—
(a) references to water undertakers’ supply systems are to be construed in accordance with section 17B of the Water Industry Act 1991 (as amended by section 2 of this Act);
(b) references to sewerage undertakers’ sewerage systems are to be construed in accordance with section 17BA(7) of the Water Industry Act 1991 (as inserted by section 4 of this Act).’.—(Dan Rogerson.)
Dan Rogerson: On a point of order, Mrs Riordan. I hope it is in order for me to note my thanks for the way in which you and Mr Gray have presided over debates, and the way in which all members of the Committee have participated, particularly the hon. Member for Dunfermline and West Fife, who has done a fair amount of speaking from the Opposition Front Bench. The hon. Member for Houghton and Sunderland South and my hon. Friend the Member for Weston-super-Mare for Weston-super-Mare have ensured that the Bill has flowed through the usual channels—an appropriately watery metaphor.
I also place on the record my grateful thanks to all the officials who worked on the Bill in providing information to the Committee very swiftly in the form of inspiration, and in further matters. I also thank those who gave evidence to the Committee in our earliest sessions and who have submitted written evidence. They have enabled us to base our deliberations on as much evidence as possible. On that basis, I wish you a merry Christmas, Mrs Riordan.
Thomas Docherty: Further to that point of order, Mrs Riordan. On behalf of the Opposition, I add our thanks to those offered by the Minister. I particularly thank John-Paul Flaherty and all those others who work tirelessly in the House for our benefit—Hansard, the Doorkeepers and everyone else. I wish you, Mrs Riordan, and all the Committee, a very peaceful and merry Christmas. I suspect we will see the Minister on 6 January for remaining stages.