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Water Supply

Volume 684: debated on Monday 3 July 2006

asked Her Majesty’s Government:

Whether they will put forward proposals to renationalise water companies in the United Kingdom.

My Lords, the Answer is no. Since the English and Welsh water and sewerage companies were privatised in 1989, they have become much more efficient and greatly improved our drinking water quality and the water environment.

My Lords, I thank my noble friend for that Answer. However, does he realise what is happening to the water systems of this country at this moment, especially those that affect London? Does he know that, during a period of proclaimed danger of drought, Thames Water has announced an annual profit up by 23.2 per cent, to nearly £500 million, and yet it says that it does not have the funding to fix the water system and to mend the broken pipes? Does he know that in a recent poll a majority supported renationalisation of our water companies? In those circumstances, surely all water is a public resource and should be returned to the public ownership, in the public interest.

My Lords, I understand why my noble friend asks his supplementary, but there is no way under the present financial regime, or under the previous one, that there would have been £55 billion of investment in the less than 20 years since privatisation. I agree with what he says about Thames Water: it is the worst offender, losing through leakage something like 890 tonnes of water a day—I think that that should be million tonnes a day. It has a massively high leakage level. It has no excuse based on money, as its profits have been more than sufficient for it to carry out the infrastructure works; and, indeed, it is doing that throughout London. At the moment, parts of London are absolutely clogged and half the road has disappeared because Thames Water is replacing the Victorians’ legacy, on which we have dined out for too long.

My Lords, does the Minister agree that the privatisation of British Rail is an awesome threat to us?

Yes, my Lords, but let us face it: the privatisation of British Rail was probably the worst-organised privatisation of the whole tranche. What is more, the Government who did it were warned about it before they did it.

My Lords, I very much agree with the Minister in his opposition to the renationalisation of water. We know what it would be like from the experience in Scotland, where the Scots have enjoyed far lower investment in the water infrastructure and the taxpayer has had to pay considerably more. Will the Minister bear with me and say why the Government continue to refuse to require compulsory metering? It would save 10 per cent of water supplies, be good for the environment and create a market incentive for the privatised water companies to save the resources being squandered through leakages.

My Lords, before I answer the noble Lord, perhaps I may correct my earlier answer: Thames Water is losing 890,000 tonnes of water per day. Its leakage level is measured in weight.

The noble Lord is right about water metering: it would save an estimated 10 per cent of water. As I said last week, the Government have no plans to require compulsory metering nationwide. Water meters are being installed over the next 10 years in 90 per cent of premises in areas of water stress—as Folkestone and Dover were announced to be early this year—on the same basis as elsewhere; that is, at no cost to the individual, though there is obviously a cost to the system. The issues can be looked at where water stress is an issue, but there are no plans to install water meters nationwide.

My Lords, although I have some sympathy with the questioner, does the Minister agree that a better solution would be to convert them into not-for-profit companies, as they were before nationalisation, and such as happened at Newcastle and Gateshead and at Welsh Water, where surpluses are invested in the infrastructure, leaks are repaired and consumers can get a discount on their bills?

My Lords, I do not know the details about Welsh Water, but some not-for-profit company models and some co-operatives can be just as efficient as private sector companies, and that includes getting investment. A different model was chosen in England, and I do not think we are in a position to turn back the clock. As I said, the Government have no plans to do so.

My Lords, is my noble friend aware that the noble Lord, Lord Forsyth, has told him only half the story about Scotland, where water is still in public ownership but Scottish Water is unable to raise money on the private market? Therefore, the regulator has suggested that in Scotland we might consider that Scottish Water should become either a mutual or a co-operative and thereby get the best of both worlds—able to raise money on the private market but unable to be taken over by private companies whether they be French or from any other country.

My Lords, there is obviously a real issue in the Chamber about Scotland. As I said to the noble Lord, Lord Livsey, there are other models. The current model of what is considered old-fashioned public ownership clearly does not allow the money required for investment to be raised. Changes are therefore required.

My Lords, is the Minister aware that people living in blocks of flats are disadvantaged because Thames Water will not install meters unless each occupant or flat owner in the block of flats agrees to have them installed? Can he suggest anything to improve the situation?

My Lords, I cannot suggest anything off the top of my head, but I understand the situation. There is a real problem in the south-east. It is essentially a south-east issue—the leakage, the inadequacy and inefficiency of Thames Water and the rainfall. The south-east is a water stress area—there is no question about that—and something will have to happen. I cannot answer on blocks of flats but, like a lot of other joint services in blocks of flats, services have to be provided. People will generally save money by having meters fitted, and they can have them fitted for free. If they want to go back to the old system after the first year, under the current arrangements they can do so.

My Lords, would my noble friend kindly speak to his colleagues in other departments to prohibit development in the south-east? People can come to the north-west, where we have excellent water and ample opportunity for development.

My Lords, I absolutely agree with that. There is something immoral about the idea of moving water round the country. We could not do that anyway, given the scale and weight of the water that would need to be moved. Yet we have in the Midlands, the north-east and the north-west natural resources and land. Surely it is the people and the jobs that need to move. We need some symbolic moves because we know that the country is very unequally balanced with all this pressure in the south-east. The answer is to move the infrastructure to where the resources are.

My Lords, the noble Lord rather off-handedly brushed aside the possibility of moving water around the country. Studies have shown that a national water grid would be sensible, because it would produce competition among water providers in the same way that gas, electricity and energy now have a genuinely competitive market. At the moment, the water companies are localised monopolies, and a national grid system would solve that issue.

My Lords, it would be the other way round if people, jobs and infrastructure were moved. It is a seductive suggestion to move water from where there is plenty of water. An average family of five uses three-quarters of a tonne of water a day, on an average of 150 litres per person. There are 20 million people in the Home Counties. Just think about what we are asking the infrastructure to do. What a waste of expenditure on infrastructure, when we could do it the other way round, if we did more to save water and be more efficient and ensured that our infrastructure and growth were in areas where the natural resources are.