Examination of witnesses (Questions 400-419)|
TUESDAY 13 FEBRUARY 2001
400. But it is the case that it will remain
for the Council to take that decision so if it, in effect, decides
that public disclosure is the overwhelming requirement, it can
say, "Well, we are doing this and we do not believe it is
going to seriously prejudice the interests of the company".
In other words, what is the external constraint on them seeking
to publish where they decide that that is what they want to do?
(Ms Darcy) We are concerned that the Council may effectively
exercise self-censorship and be concerned that its relationship
with the regulatory body will be put in jeopardy or damaged by
401. How would that work in practice, given
that the whole purpose of the Council is to protect consumers
and, therefore, is the whole reason for its existence? What sanction
could the regulator have?
(Ms Darcy) A relationship between the regulatory body
and the Consumer Council which, by its very nature, must be fundamental
to the success of either body, could suffer because of, perhaps,
the regulator in the future not sharing as much data with the
402. So you are concerned that, if the regulator
feels that information has been inappropriately published by the
Council, they might decide in future not to give the Consumer
Council as much information as they have done in the past?
(Mr Scorer) Or even where the disclosure of the information
is a reflection of competing policy priorities between the regulator
and the Consumer Council.
403. Although the very nature of the Consumer
Council is that it is there to take an independent view on behalf
of consumers, which may not be exactly the same view as the regulator.
Does it not depend on the extent to which the Consumer Council
is vigorous in defending the issue of consumers?
(Mr Scorer) You could have a situation where the Consumer
Council says, "We have this information; it belongs in the
public domain to lie with the consumer; we acknowledge it will
have an impact on the company but it will not be substantial or
serious". It is not about proportionality or reasonableness
here; it is the significant impact on the interests of the company.
If there is a comeback to the Council when it publishes information
knowing the impact it may have, the Council members will feel
constrained that they need to ensure they are not stepping knowingly
beyond their remit by publishing information. We think it will
act as an inhibitor to information which they believe should be
out there for the benefit of consumers but which puts that corporate
body in jeopardy, particularly in terms of its long-term relationship
with the companies with whom it does not have a right to get information
from directly. Are you, therefore, prejudicing your access to
information in generality by publishing a particular piece of
information to make it available to consumers? Because the balance
is so finely drawnand, we think, incorrectlyin the
Bill, it could jeopardise the life-blood of the Council which
is access to information from the companies.
404. Is not the answer to this that the Council
should have all information directly, and then it would not be
so frightened of getting it wrong with the regulator?
(Mr Scorer) You are hearing evidence from ONCC and
they are the people who can give you the firm line on that
405. We want to know if you would support that
(Mr Scorer) We would support the view that the Consumer
Council should not be dependent on the regulator as the broker
of the information.
406. And that it should have it directly from
(Mr Scorer) It should have a right to access directly
from the companies, yes.
407. And it should have the same information
as a regulator or anybody else would have or could have?
(Mr Scorer) There will be issues about the costs of
duplicating certain pieces of information which goes to the Regulator
in one form and to the consumer council in another, but we think
there should be a right of access to information from the companies
held by the Consumer Council and by the regulator.
408. It seems to make sense.
(Mr Scorer) It would seem to us to be an important
change to the clauses in the Bill as it stands.
409. Do you want any provisions on competition
in this Bill?
(Mr Scorer) Importantly, we think there must be clauses
on competition in the Bill. We were not happy that the regulatory
clauses in the Utilities Bill were taken out, but the one seed
of comfort we had was that we would get a Bill that would be a
proper proportionate response to the pressures of competition
and restructure. We have not got that in this Bill; it is inadequate
in that regard. We think this is a time-critical issue and we
do not want to see a Bill go forward without the clauses in competition.
We want to see settled government policy on competitionthe
parameters to forms of competition that should go forwardand
for that settled government policy to inform the drafting of a
Bill that is still required as a matter of urgency.
410. Do you think there are too many different
regulators involved in the water industry at the moment?
(Mr Scorer) No. There are issues about how the number
of regulators, if you include English Nature, work together and
whether the hope of joint regulation would be furthered by this
Bill. We do not think there are too many; we think there are regulators
with clear duties but there should be procedural process issues
on the face of the Bill which would enable better joint working
between those regulators. It was a disappointment that we did
not have, on the face of the Bill as it stands, proper thought
out memorandum of understandings and working relationships between
the regulators between price determinations, and lines of accountability
from the joint regulators, maybe to this Committee but certainly
to DETR, to report on how the object of regulation has been furthered
by the joint working between the regulators as they stand. For
us it is an issue not so much about the number of regulators or
the clarity of duties that they hold but about the process issues
which would enable joint regulation to be seen as working, as
being joined-up regulation.
411. And how would you see the Consumer Council
fitting in to all these different regulators?
(Mr Scorer) There is an issue, I think there may be
a presumption, that the Consumer Council should only have regard
to Ofwat as being the economic consumer focus. That would be difficult.
There needs to be proper memorandum of understandings between
the Consumer Council and all the regulators to ensure it is able
to look across the scope of the industry and concern itself with
consumer issues as they are taken forward by DWI. We cannot pretend
that water quality issues are not of concern to consumersthey
self-evidently are and every survey the Consumers' Association
has done has put that at the top below price. So the Consumer
Council needs to have a 360 degrees focus around the industry.
412. Presumably you would want access to information
that was held by all these different regulatory bodies?
(Mr Scorer) There would need to be a memorandum of
understanding which had that at its heart. The life-blood of this
Consumer Council is going to be information. Some will get it
through complaint handling and that will be a very valid source
of information for its policy; others will depend on bilateral
relationships with the different regulators and companies so that
the memorandum of understanding will have to identify how that
sharing of information happens at an early stage and happens with
413. You do talk about the need for mechanisms,
though. A memorandum of understanding is not my idea of a mechanism?
(Mr Scorer) Absolutely, and a memorandum of understanding
may well be a broad-brush document saying, "Of course, we
should get together"
414. Forgive me, but if we are going to be precise
you cannot have a broad brush and a mechanism. What is it we are
(Mr Scorer) I think we need the memorandum of understanding
to set the tone and the purpose of the relationship between the
two bodies, and flowing out of that you need much more detailed
work on how papers are shared, what sort of access to information
is required, when the Consumer Council can comment on documents
that may not be public consultation documents. You are absolutely
rightthe mechanisms need to spin out of the memorandum
of understanding otherwise it would be enormous, and they need
to be updated but the face of the Bill needs to take account of
the need for memorandum of understandings between all the different
bodies associated with the regulation and representation of consumer
415. Why do you want to see the Bill promote
(Mr Scorer) We always start from the position that
demand management can help reduce consumer bills fundamentally
and further the more efficient use of water. We are particularly
concerned that the Bill should have a duty on the regulators to
promote demand management.
416. Not the water companies?
(Mr Scorer) We feel that what is required would be
regulatory and, in some ways, political dynamism, drive.
417. "Political dynamism"? Are we
going to define that?
(Mr Scorer) Perhaps I should avoid trying to define
"political dynamism" and stick to regulatory dynamism!
What we would like to see is the responsibility being held by
the regulatorand it could be either or both the EA and
Ofwatto ensure that different forms of demand management
of water information and water efficiency measures are taken forward,
that the water companies take them seriously, they have proper
thought-out plans, they are delivering on those plans and meeting
targets. We do not think that leaving it to the water companies
without some firm regulatory oversight or even back-stop powers
to deliver on demand management would give us the sort of confidence
that we would see effective demand management in the water industry.
An example could be, under the 1996 Act, that companies have to
provide information on water efficiency to their customers but
who is going to oversee the content of that, the form, the dissemination,
whether it has impact on water efficiency measures at the end
of the day? We think, without a regulator pushing forward the
agenda, monitoring performance against targets and, at the end
of the day, holding some regulatory back-stop power to make sure
that companies live up to their promises and their plans
418. There are already some sanctions, are there
not? Leakage targets are a case in point?
(Mr Scorer) Absolutely, and we would like to see much
wider regulatory powers; a duty on the regulator to have regard
to companies fulfilling demand management plans and targets for
water efficiency. Our concern is that, without the duty on the
regulator, we would not see effective demand management but just
see a paper exercise.
419. The Environmental Agency will not give
access to new water unless it is satisfied the company is using
all its demand management tools properly, will it?
(Ms Darcy) That is right, but we are looking at the
whole gamut of different demand management initiatives. We appreciate
that some of them are currently covered under legislation and
regulations more than others. What we are concerned with is that,
under a competitive environment, these softer issues might be
swept under the carpet. We think in a competitive environment
it would be more difficult to cover these sorts of issues and
make sure the companies do fulfil their obligations, because the
different regulators involved could lead to these issues falling
Mrs Dunwoody: Thank you very much indeed. You
have been very helpful.