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Water Bills

Volume 570: debated on Thursday 21 November 2013

Ofwat estimates that, from 2015, pressure on bills could be reduced by £120 million to £750 million annually. I have written to water companies to call on them to consider the pressure on household incomes when making future bill decisions and, in particular, to consider whether they need to apply the full price increases next year allowed for in the 2009 price review. The Government encourage water companies to introduce social tariffs for vulnerable consumers and to reduce bad debt.

That is just not good enough. As families struggle with this Government’s cost of living crisis, can we have a duty on water companies to introduce social tariffs?

I am grateful to the hon. Gentleman for his question, and I entirely agree with him, I think. We fully appreciate the pressure that many of our hard-working constituents are under to pay their bills, but I am afraid that I have to remind him that in the last five years of his Government, between 2005 and 2010, water bills rose by 20% to £389. As of today, water bills are just under that, at £388.

Water bills have increased by almost 50% since privatisation, and yet last year, regional water companies made £1.9 billion in profits and paid £1.8 billion to their shareholders. What are the Government doing to ensure that water bills come down for the consumer?

I am grateful to the hon. Gentleman for his question. Unfortunately, he did not listen to my preceding answer, which was that under the watch of his Government—because Ofwat did not do its job and because, as with the banks, the last Government did not regulate properly—bills went up. We are fully conscious of the impact of bills on our hard-working constituents. We have a robust regulator in Mr Jonson Cox. It is clear from his statements and negotiations that he expects water companies to hold or reduce prices, while continuing with the enormous investment that privatisation has brought. Do not underestimate the £116 billion that has been brought into the industry, which will make it efficient and keep bills down.

Does the Secretary of State agree that a large component of the increase in the cost of water bills comes from European directives, such as the waste water directive, the urban waste water directive, the bathing water directive and the drinking water directive? All of us would support those directives, but will he commit to the earliest possible engagement of the Department and Ofwat in limiting the cost of implementing them?

I am grateful to the Chair of the Select Committee for that question. She is absolutely right that we are bound by European law and regulation in this area of competence. We intend to regulate the industry in conformity with those laws. There is a balance to be struck. As I have mentioned, since privatisation, £116 billion has been brought into the industry. We have improved the quality of our rivers and water enormously, but we have to respect the impact of bills on our hard-working constituents.

The people of the west country have been suffering the pain caused by their water bills for many years. We are grateful to the Government for the recent help in that regard. Given that the wholesale price of water is not rising, in that it falls from the sky and is free, is my right hon. Friend convinced that the regulator is robust enough to ensure that rises will be kept to a minimum?

My hon. Friend is right to focus on the regulator, because the last Government did not have a robust regulator. The whole system depends on having a rigorous and robust person in charge of Ofwat. I am pleased that we have that person in Jonson Cox.

Will the Secretary of State set out for the House the steps he took to tackle the rising cost of water bills between his meeting with the water companies on 10 July and his follow-up letter four months later on 4 November?

The shadow Secretary of State has to recognise that it is not for me, in my office, to dictate prices. The industry is a combination of private companies and a vigorous independent regulator. It is important that I do not overstep the mark and that I support the vigorous regulation that he is bringing in. When the new price review comes through, I think the hon. Lady will be pleasantly surprised to see that prices will be held and that some may fall. However, we need to have the balance that I have spoken about because if we are to keep the industry efficient and keep prices down for the long term for our hard-working constituents, we need to keep the investment coming in.

In other words, the Secretary of State did absolutely nothing. Does he understand that families who are struggling to pay their water bills want action from the Secretary of State, not a weak letter? With only three companies helping just 25,000 households, it is clear that the voluntary approach has failed. Will he therefore commit to amending the Water Bill, which we will debate on Monday, to require all water companies to be part of a new national affordability scheme and finally ease the cost of living crisis on families?

The shadow Secretary of State has to recognise that the schemes that help some water bill payers are paid for by others. She wants to require there to be a universal tax on all water bill payers. I would not endorse that.