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Baroness Miller of Chilthorne Domer: I support the spirit of the amendment. It seeks to draw into the circle of organisations which should be consulted—particularly in regard to future housing requirements—the democratically accountable county councils, metropolitan authorities and regional assemblies, or whatever other organisation we may end up with.

Baroness Young of Old Scone: The sentiment behind the amendment is important. A major gap exists at the moment in terms of the statutory consultee status of the water companies and the Environment Agency, which is not a statutory consultee for the purposes of water resources.

The issue addressed by the amendment is important. In view of the large amount of development—particularly housing development—planned for water-stressed areas, both sides of the equation face a major issue. The planning authorities and the water companies need to engage with each other on this. Not only should the water companies consult with the local authorities but a positive duty should be placed on the local authorities to consult with the water companies.

Lord Whitty: I agree with all noble Lords. We need to write into the Bill a necessity to consult local authorities and the planning authorities. My only serious quibble is that it would be better if proposed new Section 37B(3) of the Water Industry Act was amended rather than proposed new Section 37A(8). I accept the principle of the amendment and I will come back to it at Report stage.

Lord Dixon-Smith: I am grateful to the Minister for that reply. He said that we will come back to the amendment at Report stage. Is he saying that he will do the work for us? There is a much greater chance of an amendment being tabled in the correct form if he does so.

Lord Whitty: I will consider the issue further and, if necessary, I will come back with an amendment at Report stage.

Lord Dixon-Smith: I am grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 59 agreed to.

[Amendment No. 171B not moved.]

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Baroness O'Cathain moved Amendment No. 171C:

    After Clause 59, insert the following new clause—

In section 144B of the WIA (restriction on undertakers' power to require fixing of charges by reference to volume), in subsection (1)(c), after "prescribed" insert "by the Secretary of State following an application by the Environment Agency"."

The noble Baroness said: The amendment looks short but it actually contains a lot of meat. By way of explanation I could say that it is a metering amendment although the word does not actually appear in it, but mainly it is a water conservation and, indeed, a water efficiency amendment.

Certain areas of this country are water scarce. At the moment one way of dealing with that situation is to have compulsory metering. I know all the arguments against compulsory metering but I say in its favour that the only way you can apply demand management in a scarce water area is through compulsory metering. Optional metering is extremely expensive as under that system meters may be situated only in every third or 10th house.

Some water companies have selective metering. They ask people if they have sprinklers. People who have sprinklers have to have a meter. There are other ways of having selective metering. For example, in the case of a new housing development an arrangement can be drawn up between the water company and the construction or development company involved to install new meters in every house. One has to bear in mind that the installation of meters does not necessarily mean that people have to use them. They can be removed.

The situation is a mishmash which is not conducive to having an overall plan to enable an area which has severe water shortages at certain times of the year or, indeed, in certain years within a decade, to manage its water resources correctly, which is the aim of the Bill. Although in some areas there has in effect been compulsory metering, or an onus has been put on certain bodies to install meters, particularly as regards new housing developments, that has not impacted on demand, as was previously assumed. Currently, free meters are offered but that is ineffective as a demand management tool. Further compulsory metering would be more economical than either optional or selective metering.

At the moment water companies can carry out compulsory metering only where the area concerned is designated an area of water scarcity under the water industry regulations of 1999. Only the Secretary of State can designate an area as an area of water scarcity following an application from a water company. This amendment in effect suggests that on the recommendation of the Environment Agency the Secretary of State would designate an area of water scarcity and thereby allow compulsory metering. I hope that I have explained the amendment sufficiently. I beg to move.

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Baroness Miller of Chilthorne Domer: The amendment raises some very important issues concerning when compulsory metering should be introduced and the whole question of demand management. Research shows that demand is not so greatly affected by metering as by income. As income rises, so does demand for water. That is common sense as people with higher incomes tend to acquire washing machines and dishwashers and use them more often. They also tend to have power showers as opposed to normal showers and so on.

The principles raised in the amendment are important. The Government have a considerable amount of work to do in considering whether water charging is carried out in the right way in England and Wales at the moment. Levying water charges according to the value of a property is not satisfactory. I do not wish to repeat my remarks about vulnerable groups but the provision made for people who are unable to pay water charges, whether fixed charges or meter charges, is simply not satisfactory. That is indicated by the fact that only 1 per cent of those eligible for that help take it up. I shall be interested to hear the Minister's reply. The Government will need to address this whole issue.

Baroness Byford: Before the Minister responds, I say to my noble friend Lady O'Cathain that I am grateful to her for tabling this difficult amendment. The amendment itself is not difficult but the thrust behind it is. I think that all of us throughout the Committee stage have been aware of the need to try to conserve and use water efficiently. I have a tiny property with a meter as it is situated in a water scarce area and another property that is not in such an area. My noble friend rightly explained that in certain areas metering would be of enormous benefit.

If I understood my noble friend correctly, she said that part of the difficulty arose from the higher cost of installing meters in every 10th house in an area as opposed to installing them in every house in a new development.

I believe that I raised my next point at an earlier stage in our discussions but the days are beginning to run into each other and my brain is becoming more and more addled. I understand that the installation of meters in new housing is not compulsory but that it is encouraged. Perhaps it would be possible to include a measure in the Bill to encourage that encouragement even further if the Minister finds that he is unable to accept my noble friend's amendment as drafted. That might be a halfway house situation but perhaps my noble friend does not want to settle for a halfway house. However, there are problems of water scarcity in certain areas that need to be addressed.

People who have water meters may be pleased to discover the smaller sums they pay in water charges compared with those who pay fixed charges. I am very sympathetic to the amendment. I hope that if the Minister is not able to accept it as it stands, he will at least give a little more thought to it. This is a very important issue that needs to be addressed, particularly as regards parts of East Anglia, the South

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East and the London area where water shortages are becoming more acute as the years go by but where yet more houses are being constructed. I thank my noble friend for tabling the amendment and giving us an opportunity to debate this important issue. I believe that we all support the amendment in principle.

3.30 p.m.

Lord Whitty: I turn to the issue of metering. The amendment refers to Section 144B of the WIA and the ability of the Secretary of State to designate areas of water scarcity. That may determine whether certain homes are subjected to compulsory metering. Water metering involves considerably wider issues, some of which have been touched on and no doubt we shall return to them.

The noble Baroness asked about new build. All water companies are empowered to install meters in new build. As far as we know, they all do so and all new houses are metered. That may not apply in the case of some remote developments but virtually all new build is compulsorily metered. Therefore, I am not sure that the change proposed by the noble Baroness would improve the position in the real world.

At present the Secretary of States acts largely on the advice of the water companies. It is the water companies that have the knowledge about the scarcity of water, and therefore it is quite appropriate that they are the main source of advice to the Secretary of State. There is nothing in the present legislation to prevent the Environment Agency or indeed anyone else from proposing changes to the prescribed conditions for the Secretary of State to consider, with the final decision resting with the Secretary of State.

The amendment, however, suggests that the Secretary of State should be able to act only after an application to the Environment Agency. That seems the wrong way round. Although the Environment Agency obviously has responsibilities for the totality of supply and can suggest to the Secretary of State that a scarcity designation be introduced, it is not sensible to limit the initiation of that to only the Environment Agency. The water companies can go to the Secretary of State and seek that out themselves. In many circumstances they would be in a better position to do so, and could therefore introduce metering under such designation in areas where water was in least good supply.

I do not think that the amendment is appropriate. We shall no doubt return to the wider issues of metering at a later stage.

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