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Water Tariffs Bill

Volume 505: debated on Wednesday 10 February 2010

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

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to review and report to Parliament on the current level of water poverty by local government area; to require water and sewerage companies to offer a social tariff to all customers within the water poverty threshold; to require the Office of Water Services to set common tariff levels for all water and sewerage companies; to require water and sewerage companies to contribute to an Infrastructure Investment Fund; and for connected purposes.

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 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.

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).