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Southern Water Authority (Charges)

Volume 887: debated on Tuesday 25 February 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.

11.31 p.m.

The subject of tonight's short debate is of general concern beyond the area of the Southern Water Authority of which I wish to speak in particular. I am very glad that the Minister of State is here tonight to reply, because in addition to his being a celebrated authority on and having an interest in sport he is interested in and is an authority on water and, as I assume follows naturally from that, water sport.

Another reason for my being glad that the Minister is here tonight is that I wish to recall words he used in a debate on the Water Bill in 1973:
"We should like to see …
'that the fullest expression of consumer and local authority interests' is taken into account."—[OFFICIAL REPORT, 1st May 1973; Vol. 855, c. 1146.]
I wish to refer to two aspects of water charges on which neither the consumer nor the local authority interest has been adequately considered. The first of these is the speed of progress towards the equalisation of water charges within the area of a water authority. The second is the method by which those charges are equalised. It will simplify matters if, for the purposes of this debate at least, we accept that there is need and justification for the equalisation of water charges.

On the question of how equalisation can be achieved. I hope that the Minister will agree that we must turn to the report of the Jukes Committee as the authoriy on this matter. I quote from the Water Services Economic and Financial Policies Report, paragraph 3.3:
"We recommend as a general principle, therefore, that charges for 1974/75 and 1975/76 should be levied as far as possible on the basis which would have existed in the absence of water services reorganisation."
Paragraph 3.4 of the report states:
"This means that the Water Authorities should not initiate any moves to equalise charges in their regions during the period 1974/76".
Paragraph 3.6 states:
"It is recommended that the Water Authorities should implement only those adjustments aimed at equalisation or harmonisation of charges which would have been undertaken by the existing authorities but for the water services reorganisation."
Those quotations make very clear what the Jukes Committee had in mind when it made its recommendations to the Department.

We find astonishingly that the water rate charge proposed for Hove in the coming year is to increase from 2£66p in the pound to 6·9p in the pound, an increase of no less than 159 per cent. I hope the Minister will agree with me that that is an astonishing increase against the background of the recommendations of the Jukes Committee. It is brought about by the proposal of the Southern Water Authority to move to equalising water charges within its area, not subsequent to the year 1975–76, as was recommended, not in relatively easy stages, as recommended, but immediately, in the year starting with effect from April 1975.

It seems to me that the introduction of an immediate equalisation at this time must be regarded as highly irresponsible. We are surely all familiar with the public outcry about rates generally. I do not wish—I am sure that you would rule me out of order if I attempted to do so, Mr. Deputy Speaker—to go into a general discussion on the subject of rates, but the public outcry and the continuing concern raised on a number of occasions by hon. Members on both sides of the House must be a factor in considering whether the proposal of the Southern Water Authority is a reasonable one.

It seems to me that common sense dictates that, at a time when there is particular public concern about the level of rate charges, any step which introduces an unusual and dramatic increase in a particular element of the rate charge should be avoided. Against the background of the Jukes Report recommendations we have a strong reason for avoiding that step.

But that is not the only consideration. There is another aspect of the problem which is a little more technical, and that is the method by which one arrives at the ultimate objective of equalising the charge. I hope it will be agreed that when we are considering the water rate we are considering not a tax but a charge for a service. The general rate itself can, in effect, be regarded as a tax on property. I think that all those who pay it so regard it. I suggest, however, that the charge for the provision of water is regarded not as a tax on property but rather as a charge for a service. I contend that in the same way as postage and other services are charged on an equal basis, the charge for water should similarly be on an equal basis.

Surely we can all agree that if we are charging for water on an equal basis we do not set about so doing by charging on a basis of assessing so much per house, because houses on the whole do not use water; water is used by individuals, and the consumption of water varies fairly directly according to the number of individuals with whom we are dealing. It seems to me that a water rate that is assessed per head of the population is much more likely to be a fair water rate between areas than one that is based on an assessment of the value of property.

Furthermore, we must bear in mind that when we try to compare the values of properties in different rating areas we are up against the different tones of the list that might be found in those areas. It has been recognised that comparative valuations based purely on rateable values are not an entirely reliable guide to comparative values. The proposal of the Southern Water Authority to equalise its water rate according to rateable value will cause the charge per head of the resident population in Hove to rise to no less than £6·95p—by far the greatest in the authority's area.

There are implications which go beyond even this immediate effect, because if this application of a uniform poundage is carried through into the general service charge we shall find that the charge per head for domestic ratepayers in Hove will be increased from the present £10·53p for water and sewerage to no less than £43·67p per annum by 1978 at present-day costs merely through the process of equalisation. That is an increase of £33·14 per head. We are looking at these two problems of equalisation on an immediate basis and against the background of the Jukes Committee's recommendations and of rate rises and the concern which they have caused. We must also consider the matter in the light of the fact that water rates as a charge on individuals do not qualify for rate rebates.

Because of these factors, the burden of water rates is especially severe for elderly persons who live alone, very often in property which might have a quite high rateable value. I hope the Minister will agree that the case is established to consider the need for speedy action to avoid this alarming and indefensible increase in the water rate in particular areas of the Southern Water Authority, and particularly in the Borough of Hove.

I am sure I do not need to remind the Minister of his power under Section 5 of the Water Act 1974, under which the Secretary of State
"may give water authorities directions of a general character as to the exercise by such authorities of their functions … so far as the exercise of those functions appears to the Minister to affect the execution of the national policy for water or otherwise to affect the national interest."
I submit that at the present time, when we are all agreed on the need for restraint, an increase in charge of 159 per cent. certainly affects the national interest.

We have established the need and also the fact that there is power to act. I suggest that it is always a little dangerous to rest one's case upon the question of what is fair and what is reasonable, but not often do we find a situation in which what is fair and what is reasonable is so far removed from what is proposed.

I believe that we must reconsider the basis upon which we equalise these charges, because clearly it is not reasonable to charge for a service on the same basis as a charge for tax. More urgently, however, we must reconsider immediately the proposal to equalise the water rate because of its quite arbitrary and exorbitant effect on certain areas and the charge that will fall upon those areas.

11.43 p.m.

I wish to support my hon. Friend the Member for Hove (Mr. Sainsbury) and to say how glad I am to see with us the Minister of State, Department of the Environment, because I know that he recently had an enjoyable visit to Brighton to watch some international table tennis.

I have in my constituency, about 20,000 retired people, many of whom live on small, fixed incomes. The massive increase in water and sewerage charges will be yet another burden upon them. The charges will rise from the 1973·74 figure of 2·48p in the pound to over 4p in the pound, and in 1975–76 they will increase to 6·9p in the pound.

A large number of my constituents, particularly those on smaller incomes, are very angry about the situation. I wish to quote from a letter which one constituent wrote to the Brighton Evening Argus:
"It is little short of a scandal that a ratepayer has to make an arithmetical analysis before he discovers that his water rate has gone up by 41 per cent"
This group will have to face yet another heavy burden. I ask the Minister to support my hon. Friend's request to use his powers to minimise this further hardship which will be imposed on my long-suffering constituents.

11.45 p.m.

It is interesting that we are having this debate. I appreciate the courteous way in which both the hon. Member for Hove (Mr. Sainsbury) and the hon. Member for Brighton, Kemptown (Mr. Bowden) have put their case and have spoken about their great cause for anxiety, but it was predictable and was predicted. The hon. Member for Kemptown voted for the Second Reading of the measure concerned, when some of us predicted exactly what would happen to water charges. Nevertheless, the previous Government decided to go ahead.

I am grateful to the hon. Member for Hove for quoting one of my comments. I hope he will not mind if I quote another which reflects the point we are discussing, which is that the good citizens of Brighton and Hove were provided with ample and efficient and economic supplies of water and now find that in a sense they are penalised and in difficulty because of the prudence of their forefathers.

On 1st May 1973 I said:
"It is clear that some local authorities which have provided first-class capital works and water supplies for their citizens are in danger of having to pay twice. They have already paid to provide first-class facilities, but under the Government's proposals they may well have to provide new capital works in order to serve those authorities which, the Minister says, have been badly served in the past. There is a strong feeling that an increase in water charges could well be brought about not by improvement in supply and facilities in London, Manchester, Birmingham and elsewhere, whose citizens have already paid to do the job in their own areas, but because they will have to pay a further contribution to make up deficiencies of other areas—[Official Report, 1st May 1973; Vol. 855, c. 1058–9.]
I should have included Brighton and Hove in the list when I was making that pertinent point.

But I agree with the hon. Gentleman that the fact that some of us predicted what would happen is no consolation to their ratepayers now. The Jukes Report clearly deals with the matter. I think that the hon. Member for Hove quoted from the Second Report. There have been three reports. I want to read a passage from the third which, while not quite as specific as the quotation the hon. Gentleman gave, was relevant and along the same lines. Paragraph 1.24 said:
"In view of the substantial increases in the general level of charges that may be expected next year, any moves towards the great equalisation of charges should be both gradual and limited in extent in order to avoid further sharp increases in charges to particular groups of consumers."
Ministers in my Department, including myself, saw the chairmen of the water authorities on 20th November last year and drew their attention to those wise words. We asked them to proceed in the determination of their charges for next year along those lines. By and large, we had from them a commitment to do so. Most of the water authorities aim to do what the Act asks them to do, which is to move towards equalisation. It is not for me to defend the Southern Water Authority, because it is an autonomous body, a nationalised industry, set up by the Conservatives. It is a body without proper accountability, which is a point that I made.

Does the Minister agree that in that debate, which for reasons that he knows I was not able to listen to, he was pressing for nationalisation, and not for what the Act established, so that he can scarcely now say that we have a nationalised industry?

The hon. Gentleman was not here and, therefore, could not take part in the debate. I am left to speculate which way he would have voted. I was pressing for a totally nationalised water industry at the centre under which we would provide water to the local authorities and maintain the position of local authorities, which would use the water, clean it and put it back into the national water system. That was the Opposition policy at the time which we urged on the Conservative Government without great success.

It is not for me to defend the Southern Regional Water Authority, but I understand that the authority felt that the degree of administration necessary to get equalisation was much greater in its region than in most others and it could not therefore be done in one go. Other areas—for example, Thanet, Medway, and North-West Sussex—have benefited considerably. The hon. Member for Hove said that everyone would now pay 6·9p in the pound for water. Had it not been for equalisation, Thanet would have paid 7·3p, Medway 9·36p and North-West Sussex 11·64p.

While I acknowledge the problem in the two constituencies mentioned, the Southern Regional Water Authority has given considerable help to a large number of ratepayers elsewhere. It is for the authority to make the judgment whether it is following the right policy. A majority of local authority members serve on regional water authorities these days, although the situation is not exactly as we wish it to be.

I hesitate to interrupt in someone else's Adjournment debate, but I represent a constituency which has suffered from equalisation. I shall be sending figures tomorrow to the Minister showing that over the last two years the Ventnor town council sewerage rate has increased by 974 per cent. Will the Minister deal with sewerage rates in his reply?

I shall not deal with that tonight. There may have been no sewerage disposal at all two years ago—I do not know the circumstances. The Government have just given a 50 per cent. relief to households with no sewerage services, and that is a not inconsiderable amount.

We asked the regional water authorities to take account of the Jukes Committee's proposals. We are in difficulty about giving directions because we have no power to insist on being consulted by regional water authorities before they determine their pricing policies. They have determined their pricing policies, fixed their charges and told local authorities what is to be collected. I have sympathy with the general view put forward. We are trying to shut the door after the horse has bolted. It is this lack of accountability, which I forecast and complained of at the time, that causes considerable difficulty.

The hon. Member for Hove said that the water rate does not attract a rate rebate. Again, that has resulted from the way the Conservative Government went about the reorganisation. They removed water from the sphere of local government and, in effect, established a nationalised industry. Once they did that, water was on the same footing as electricity and gas and, therefore, under the law of the land it was not eligible for rating relief.

The hon. Member also said that rate-able value was an unfair basis, and the Government are inclined to be sympathetic to that view. That is why we established the Layfield Committee. On water charges I cannot go along with the hon. Member when he says that it would be more equitable to have a charge per head of the population, since that would have considerable social consequences. The charges would fall hardest on large families and people who use more water than small families.

Perhaps we should look at the question of charging per household, which would be a system with which I would have sympathy. That would mean that any house divided into, say, two or three households would pay more than the same house next door which was occupied by a lady living alone. I concede that there might be some justice in that. Certainly as and when we can look at these matters we shall do so.

My right hon. Friend the Secretary of State said that we find the whole question extremely disturbing. It has been going the way that many of us predicted. It has caused considerable concern. We cannot divorce the water situation from the reorganisation of local government. Whereas previously the ratepayer was paying for only one set of officers and offices, he is now paying for one set for the county, one for the district and one for the water authority. That reorganisation has its own inflationary momentum.

The question therefore is whether we can intervene immediately. My right hon. Friend said that it would be quite impossible for us to look at the water situation in less than two years. We have given an undertaking to the National Water Council and the chairmen of water authorities to that effect. We are getting on into that two-year period, but we said that we would give the authorities two years to settle down. Then we shall look with an open mind and see how the system is running. I give the assurance that all matters that have been raised tonight will be taken into account in our examination. I know that that is no great consolation to the ratepayers in Hove now.

The Minister talks of a two-year period. Earlier he spoke of shutting the stable door after the horse had bolted. Surely the horse will have bolted that much further in two years. The new authorities come into full effect on 1st April. There is plenty of time for the Minister to exercise the powers that he acknowledges he possesses.

This is the second year of charges for water authorities, and that is why I made the point that we are moving on towards the half-way stage of the period mentioned in my right hon. Friend's undertaking. I honestly cannot hold out any hope of doing anything for the hon. Member's constituents this year because it is too late. The charges have gone out, regrettable though that may be. They cannot be reduced for the people of Hove unless they are increased for the people of Thanet, Medway and North-West Sussex. That would be a very complicated balancing factor and might cause even more widespread distress than the present situation.

I regret the situation which has been created. I have a tremendous amount of sympathy. However, the present Government predicted the consequences of the legislation and we urged the House to vote against it. The Labour Party voted against the measure, but was outvoted by the Conservative Party.

Question put and agreed to.

Adjourned accordingly at Twelve o'clock.