6 Jan 2014 : Column 42

Mr Mark Spencer (Sherwood) (Con): Will the Secretary of State assure the House that he will do everything he can to make sure that local authorities, highway authorities, the Environment Agency and providers of sewerage and water services co-operate and collaborate, rather than pass the buck from one to the other?

Mr Paterson: My hon. Friend makes an important point. We have seen variability with the resilience forums. At the one I went to in Kent, it was quite clear from listening in on conversations that some agencies were really sharp, on the ball and participating, but that others were not quite as reactive. That is one area that we need to look at in the review, first, as I said earlier, to check whether information is getting through to some of these entities and, secondly, whether the entities are actually taking action. That is the area on which we need to concentrate.

Sir Peter Bottomley (Worthing West) (Con): Some 20,000 homes are exposed to flood risk in Worthing and district. I hope that my right hon. Friend will join me in thanking David Robinson, the Environment Agency operations director for South Downs and Solent, and the colleagues of Kieran Stigant, the chief executive of West Sussex county council, for their preparatory work last year, which helped to reduce the risk over the Christmas and new year period. Will he join me in thanking the local media and those who came out with chainsaws to clear the roads, who helped to reduce the impact of the horrendous conditions, which included tides that were up to a metre higher than expected?

Mr Paterson: I am very happy to join my hon. Friend in thanking and congratulating the senior members of the Environment Agency and all the staff who have worked so hard in his area. I am also happy to congratulate and thank all those on the ground who came out with chainsaws to work in such a public-spirited manner, as has been touched on by other Members.

Nicola Blackwood (Oxford West and Abingdon) (Con): My constituency has also flooded, which has led to one tragedy and widespread disruption and anxiety. I join the Secretary of State in paying tribute to the Environment Agency and the emergency services for their tireless work over the Christmas period. However, despite their ever-increasing water bills, my constituents are again facing foul water flooding from sewers that simply cannot cope with flooding. What is he doing to put pressure on water companies to be more prepared for flood events and to ensure that we prevent these very distressing incidents from recurring?

Mr Paterson: My hon. Friend raises a very important point. Very few water shortages have been reported, but we have had incidents of sewage flooding, which she has touched on. Apart from all the other problems of flooding, that is horrendous. We will certainly look at that issue and the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall, will talk to the water companies about it.

Eric Ollerenshaw (Lancaster and Fleetwood) (Con): In thanking the Secretary of State for the £67 million that he agreed to in the autumn for the renewal of the

6 Jan 2014 : Column 43

flood defences around Fleetwood at Rossall, may I ask him whether there is any chance of his persuading the Treasury to increase the valuation that it places on agricultural land so that we can justify greater investment that goes beyond 30 years in the sea defences around Glasson and Thurnham in my constituency?

Mr Paterson: My hon. Friend raises an important point. We have the conundrum that we must protect agricultural land that is of a lower value than land on which property is built and land in the cities. Of course, the risk that lives will be lost is also lower than in cities. The Environment Agency faces that conundrum. There is a matrix to evaluate each project. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall, and I are more than happy to talk to him about the details of the case that he mentions.

Caroline Nokes (Romsey and Southampton North) (Con): Romsey has been very badly affected over the past fortnight by high levels in the River Test, massive surface water run-off and, most particularly, effluent from a Victorian drainage system that simply cannot cope. My huge thanks go to Romsey’s retained firefighters who worked to pump out houses. Will my right hon. Friend assure me that he will work closely with colleagues in the Department for Communities and Local Government to look at areas where housing development is planned on greenfield sites, but where there is already a problem with drainage systems that cannot cope?

Mr Paterson: My hon. Friend raises a very important point. It is completely crazy to have new housing projects that do not have adequate drainage for the conditions. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall, is listening carefully. As we go through the review, she might like to write to him with her recommendations.

Bob Stewart (Beckenham) (Con): Apart from in Maidstone in my county of Kent, were military forces deployed in the United Kingdom over Christmas and the new year to deal with flooding?

Mr Paterson: To the best of my knowledge, the only case was a couple of days ago, when 90 soldiers helped to fill sandbags at very short notice in Maidstone.

Henry Smith (Crawley) (Con): I, too, welcome the comments that my right hon. Friend has made about better passenger information, following the incident in which people were stranded at Gatwick over Christmas and the new year. Will he join me in thanking West Sussex fire and rescue service for rescuing a number of elderly residents in Ifield Green? Will he also join me in recognising that, were it not for the significant capital investment in the Environment Agency’s scheme at Tilgate lake, which was realised over the past few years, the flooding in my constituency could have been a lot worse?

Mr Paterson: I thank my hon. Friend, and I am glad he endorses our views on getting information across to the public in various forums, particularly at his nearby airport. I am delighted to hear that the flood scheme worked

6 Jan 2014 : Column 44

effectively, and his constituents will be among those in the 1 million properties that were protected during this difficult period.

Mr Marcus Jones (Nuneaton) (Con): Many of my constituents in St Nicolas and Weddington wards are concerned about the spectre of new housing development on greenfield land, when there is already a significant flood risk to existing property. Will my right hon. Friend assure me that priority will be given to ensuring that new housing developments do not cause more flood blight?

Mr Paterson: My hon. Friend is absolutely right to raise the matter. It is absurd, given the knowledge that we now have, to build houses or anything else on a flood plain. It is good that the Environment Agency objects to planning applications that it thinks are unwise. In the first half of last year there were 26,060 such objections to planning applications, and 99.6% of those objections were endorsed. Our new planning guidance is clear that development should be located away from flood risk whenever possible, and as my hon. Friend suggests, the Environment Agency is active in vetting planning applications.

Neil Carmichael (Stroud) (Con): I certainly congratulate the agencies and the Secretary of State for all that has been done in the past few weeks, but given that a theme today has been that agencies must work together, will he consider asking for a review of how that might be encouraged? I have various examples from my constituency of agencies needing to work together more, such as on drainage in Woodchester, sewerage in Slimbridge and the Severn estuary flood review. That all shows the need to encourage agency co-operation.

Mr Paterson: My hon. Friend is absolutely right. We should get this in perspective by saying that there was good co-operation across the country, with enormous work put in by the Environment Agency, councils and those in the fire brigade and transport organisations. However, we can do better. He is right that there were a number of cases on the ground in which a few organisations could have been better informed, reacted quicker and done more. That is what we want to examine. We need to get the system sorted out so that it is much more homogeneous and uniform, but let us get it in perspective—I think there were only a few cases in which things went really badly wrong.

Mr Philip Hollobone (Kettering) (Con): Across the country, water and power engineers, local authority and emergency service workers, volunteers and others have done their level best. They are ordinary men and women doing extraordinary things in exceptionally difficult circumstances.

As the Secretary of State said in his statement, the performance of some utilities and local authorities left room for improvement. Where those few councils and utilities have performed badly, almost by definition it will have been because of bad decisions made, usually, by highly paid chief executives. Will the Secretary of State host a meeting, together with other Government Departments, and invite the 10 worst-performing and the 10 best-performing utilities and local authorities, so that one group might mentor the other?

6 Jan 2014 : Column 45

Mr Paterson: I am grateful to my hon. Friend for his question, and that is an interesting idea. We will progress the review by examining the cases in which we think things have gone well, and as I touched on in answer to the previous question, I think that there were only a few cases that showed a need to see how we can co-ordinate better. The co-ordination is the key point.

Dr Thérèse Coffey (Suffolk Coastal) (Con): Over Christmas, it was clear that households and businesses in Snape, Eyke and Southwold were still suffering from the floods earlier in December. Can the Secretary of State assure me that the role of internal drainage boards will continue to be enhanced, and will he consider with the Department of Energy and Climate Change and others a sensitive scheme of felling trees in sensitive areas to prevent trees from bringing down power lines?

Mr Paterson: IDBs certainly have a great role to play, and I am a strong supporter of them. It is all part of our long-term proposal to push responsibility for low-risk waterways down to as local a level as possible. That is how we can help to free up a lot of those waterways, which have been blocked because work on them was stopped under the previous Government. I am happy to discuss my hon. Friend’s other question with her directly.

Martin Vickers (Cleethorpes) (Con): May I refer my right hon. Friend back to the floods of 5 and 6 December, and thank him for his visit to my constituency in the immediate aftermath? Subsequent meetings with the Environment Agency have suggested that it will prepare both a short and long-term strategy, and my residents—particularly in Barrow Haven, which has been flooded twice in the past six years—are anxious for those plans to be implemented speedily. Can my right hon. Friend give a categorical assurance that he will do all he can to ensure that the Environment Agency carries out that work?

6 Jan 2014 : Column 46

Mr Paterson: I enjoyed my visit to my hon. Friend’s constituency. It was an extraordinary event—I think people told me that it was the worst weather they had had in 500 years, which shows what the Environment Agency has had to cope with recently. I would not want to jump the agency’s list of priorities, so perhaps my hon. Friend would be happy to write to the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall, who will take up the matter, and the particular details of the project he mentions, directly with the Environment Agency.

Mr Graham Stuart (Beverley and Holderness) (Con): It is a pleasure to be the end-stop to this statement. I have been a critic of the Environment Agency in the past, but will my right hon. Friend join me in congratulating it on its staff and on the way it is working in partnership with East Riding of Yorkshire council to deliver a much more joined-up approach, as mentioned by colleagues across the House? Can he assure residents in Kilnsea which was flooded—businesses were also flooded there—that remote, rural spots such as that will see their flood defences prioritised for investment, and that they will see that bank renewed, which desperately needs to be done?

Mr Paterson: I am grateful to my hon. Friend and admire his patience in waiting until last. I nearly visited his constituency and saw the advantages of the Hull barrier, which is used as a reservoir at low tide to drain water from his constituency. If he has a particular project in mind, as with the preceding question I think the appropriate route is to write directly to my hon. Friend the Under-Secretary of State for Environment, Food and Rural Affairs, who will take it up with the Environment Agency.

6 Jan 2014 : Column 47

Points of Order

4.51 pm

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): On a point of order, Mr Speaker. On 19 and 20 December there was a meeting of the European Council, after the House had risen for the Christmas recess. The Council specifically discussed defence as well as sustainable growth and unemployment—all things that are important to the United Kingdom. Have you had any application from the Prime Minister to come to the House and make a statement on the outcome of that European Council meeting?

Mr Speaker: No, I have not. It used ordinarily to be the case as a matter of course that there were statements on such matters, and generally speaking—if memory serves me correctly—that has continued to be so, with one or two exceptions. Those exceptions have sometimes been a cause of some concern to right hon. and hon. Members, and we no longer have the debate in advance of the European Council because the Government judge—which they are perfectly entitled to do—that that should come out of the allocation of time for the Backbench Business Committee. It seems a pity if there is no statement after a European Council meeting, but there are various means by which Members can try to pose questions on such matters orally, and get answers, and each case must be considered on its merits. The hon. Lady is an experienced campaigner and she can apply her own resources to the matter.

Toby Perkins (Chesterfield) (Lab): On a point of order, Mr Speaker. We all appreciate that the Secretary of State for Environment, Food and Rural Affairs may be tired after his endeavours in the past few weeks, but I know he would not want that to enable him inadvertently to mislead the House. He said that the figures I quoted in my question to him a few moments ago were wrong, but they were provided by a previous Minister in that Department, the hon. Member for Newbury (Richard Benyon), in answer to a parliamentary question on 9 September 2013. Either the Secretary of State was wrong to say what he said, or the written parliamentary answer given by the hon. Member for Newbury was wrong. I wonder whether you can assist me, Mr Speaker, and my constituents, in getting to the bottom of the matter and finding out whether the written parliamentary answer was wrong, or whether the Secretary of State was wrong earlier today?

Mr Speaker: What I say to the hon. Gentleman is that—

Richard Benyon (Newbury) (Con): He’s wrong.

Mr Speaker: No, it is not for me to say that the hon. Gentleman is wrong, but I am tempted to say it is a tad tendentious of him to raise that as a point of order. All Members are responsible for the accuracy or otherwise of the statements they make in the Chamber, and it is not for me to seek to assist the hon. Gentleman in his endeavours. I have, however, assisted him to the extent that I have enabled him to raise the point, and he has aired it to Members on the Treasury Bench. If any correction is required, doubtless it will be forthcoming; if not, the eager beaver that is the hon. Gentleman will, I am sure, pursue the matter further.

6 Jan 2014 : Column 48

Water Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 1

Legislative competence for water in Wales

‘The National Assembly for Wales shall have legislative competence for water up to the geographical boundary with England.’.—(Hywel Williams.)

Brought up, and read the First time.

4.54 pm

Hywel Williams (Arfon) (PC): I beg to move, That the clause be read a Second time.

Mr Speaker: With this it will be convenient to discuss the following:

New clause 2—Retail exit—

‘(1) The Secretary of State may by regulations make provision about the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company.

(2) Regulations under this section are to be made by statutory instrument.

(3) Regulations under subsection (1) may, in particular, make provision for any such transfer to be subject to—

(a) approval by the Secretary of State;

(b) any such safeguards as may be specified in the regulations;

(c) the transferee company holding a licence containing a retail authorisation pursuant to section 17A of the Water Industry Act 1991;

(d) the provision of any information or other such assistance from the relevant undertaker as may be required by the Secretary of State for the purposes of approving the transfer.’.

New clause 11—Duties of undertakers to furnish the Secretary of State with information: annual review—

‘(1) Section 202 of the Water Industry Act 1991 (duties to undertakers to furnish the Secretary of State with information) is amended as follows.

(2) After subsection (1A) there is inserted—

“(1B) Any company with a duty under subsections (1) and (1A) must furnish the Secretary of State and the Authority with an annual review which provides information about—

(a) their performance;

(b) the total amount of investment;

(c) their taxation structure;

(d) their corporate structure; and

(e) the total amount of dividends paid to shareholders.

(1C) Information under subsection (1B) must be provided prior to the publication of the annual statement of the Secretary of State under section 2A.”.’.

New clause 12—Oversight of charges—

‘In section 2 of the Water Industry Act 1991 (general duties with respect of the water industry), after subsection (2C) there is inserted—

“(2CA) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the rates of charges to—

(a) household premises; and

(b) non-household premises.”.’.

New clause 14—Privatisation of water supply: review—

‘(1) Chapter 1 of this Act shall not come into force until the Secretary of State has laid before Parliament a report on the

6 Jan 2014 : Column 49

performance of the water companies since the privatisation of the arrangements for water supply came into force under the Water Act 1989, the Water Industry Act 1991 and the Water Consolidation (Consequential Provisions) Act 1991.

(2) A report under subsection (1) must in particular review—

(a) the cost of water to the consumer,

(b) the number of disconnections of water supply,

(c) the purity of the water supplied and the number and consequences of water pollution incidences attributable to the operation of the water companies,

(d) the incidences of leakages, low pressure and disruptions to water supply,

(e) the levels of investment in the water supply infrastructure by the water companies,

(f) the profits made and dividends paid to shareholders by the water companies,

(g) the levels of management remuneration of the water companies,

(h) the levels of taxation paid by the water companies, and

(i) the adherence of the water companies in their operations in the UK and internationally to the national legislation and international conventions and treaties on the protection of the environment, human rights and wages and employment conditions.’.

Government amendments 13 to 22 and 59.

Amendment 12, page 124, line 1, in clause 80, at end insert ‘(h) section [Retail exit].’.

Government new schedule 1—‘Orders under section 77: further provision.

Government amendments 23 to 28, 60, 29 to 46, 61 to 64, 47 to 50, 52, 53, 65 to 87 and 54.

Hywel Williams: As is often remarked, Wales is the land of mountains and valleys, and of lakes and rivers. It is therefore very appropriate that I, as a Welsh Member, speak on the Water Bill.

Water and lakes have had a central part in Welsh culture for many centuries. We witnessed astonishing discoveries some decades ago at Llyn Cerrig Bach, the lake on Ynys Môn, of metal offerings to the gods from 2,000 years ago, including some gruesome slave chains.

There is the story of Llyn y Fan Fach. The poor farm boy wins the love of the maiden of the lake. By intrigue, they marry and prosper. He strikes her inadvertently three times, and on the third blow she returns to the lake with all their worldly wealth. There are many other such stories.

Our lakes have inspired poets—too many to quote. One very short extract, which I will translate, will suffice. Gwilym Cowlyd, in his long poem to the mountains of Wales sings thus:

“Y llynnau gywyrddion llonnydd - a gysgant

Mewn gw as gawd ofynydd

A thynn heulwen ysblennydd

Ar len y dwr lun y dydd”.

That translates as: the still green lakes sleep in a waistcoat of mountain, and splendid sunlight draws on the sheet of the water the picture of the day.

Our lakes and rivers inspired Welsh artists such as Richard Wilson, who is sometimes called the father of “English”—sic—landscape painting. His two substantial paintings of Afon Dyfrdwy, the River Dee, can be seen in the National Gallery. His defining painting of Llyn-y-Cau on Cader Idris can be seen at Tate Britain.

6 Jan 2014 : Column 50

So far, so uncontroversial. That fits into the usual Wales box—it is nothing to disturb Front Benchers on either side of the House—and is the conventional picture of our country as a place of extreme natural beauty, and of a long-lived, varied and inspiring culture, but water has also been an emotive, emblematic and defining political matter in Wales for many decades. Let no one in the Chamber doubt or underestimate the power and significance of the water issue in Wales.

I referred in Committee to the controversy and conflict in the 1950s and 1960s over the drowning of Welsh valleys to supply English conurbations against the will of the people of Wales. That was demonstrated in this very House of Commons, when all but one of Wales’s MPs voted against the removal of the people of the village of Capel Celyn and the drowning of their valley to supply the burgeoning and thirsty industrial development of Merseyside.

At the time, the developers saw that as the entirely reasonable harnessing of readily available natural resources for much needed development. They wondered what all the fuss was about. Many Welsh people saw it as straightforward expropriation, akin to the highland clearances. Chillingly, the drowning of Welsh valleys led to the first sustained campaign of bombing in Wales, which, in a further development, led tragically to the injury of an innocent schoolboy, and to the deaths of two of the bombers and the jailing of some of the key perpetrators. Some hon. Members will be familiar with the pictures taken by Geoff Charles, the photo-journalist, of the 1956 demonstration in Liverpool. The people of Capel Celyn marched through the streets of the city to the council buildings, only to find the doors barred against them. Their banners, carried through a city still bearing the many scars of aerial bombardment, said: “Your homes are safe. Save ours. Do not drown our homes.”

One of the leaders of that march in 1956 was Gwynfor Evans, the president of Plaid Cymru, who in 1966 was elected as the MP for Carmarthen. He was the first Plaid Cymru MP, a political earthquake that still reverberates today. Let no one here today doubt or underestimate the power of the water issue in Wales. To borrow RS Thomas’s line, rather than

“Worrying the carcass of an old song”,

let us look at the situation facing us today.

Dwr Cymru Welsh Water is the provider for most of Wales and for parts of England. Dee Valley Water supplies part of north-east Wales and part of the north-west of England. Severn Trent Water supplies mid-Wales and benefits from its water resources. Indeed, it has a 99-year contract with Welsh Water, dating most recently from 1984, to supply up to 360 megalitres per day of non-potable water. That contract ends in 2073.

This arrangement has its roots in the Birmingham Corporation Water Act 1892. It might appear to some as reasonable and practical at the height of municipal power at the end of the 19th century or when water was in public ownership. Indeed, it was the pattern adopted on privatisation and it continues today. To others, it is nothing less than a clear injustice, with a private sector organisation from another country benefiting from a substantial part of what should be a valuable public resource for Wales.

The water industry in Wales is different from the industry in England and in Scotland. It is run on a non-profit distributing basis. Any profits are channelled into lower

6 Jan 2014 : Column 51

prices or investment in the service. This has led to below-inflation price rises for the past three years, with a promise of similar for the future; to a sustained lowering of the gearing of the organisation in an industry where gearing is notoriously high; and to a substantial and sustained investment programme.

To get to the nub of the matter before us in new clause 1, the current arrangements are that the National Assembly for Wales has responsibility for water in Wales, save for that water which flows from mid-Wales to England. New clause 1 provides that the National Assembly for Wales shall have legislative competence for water up to the geographical boundary with England—nothing more and nothing less. It is a reasonable aspiration for any legislature to have legislative competence for important resources within its territory, and it is reasonable that the current arrangements should be changed.

Mr Philip Hollobone (Kettering) (Con): I am listening to the hon. Gentleman’s speech with great interest. When the water industry was established, the boundaries were set on the basis of natural watersheds, which, unfortunately, do not coincide with the boundary between Wales and England. Would the new clause not cause unnecessary and potentially expensive administrative complexity which would benefit neither Dwr Cymru customers nor those in England?

Hywel Williams: I thank the hon. Gentleman for his intervention. He anticipates my next points, though he is welcome to intervene again should he still be unsatisfied.

We are not in a static, pre-privatisation and pre-devolution situation. Things have moved on, not least in respect of the current status of the NAW as a legislature following the most recent Act—I note that some hon. Members still call it a Welsh Administration, but that is another matter—and there is the prospect of further change as a result of the Silk commission’s reports. Change is central to the relationship between England and Wales, and has been so at least since the establishment of the Welsh Office in 1964. The pace picked up enormously since 1997 and 1999, with the establishment of the Welsh Assembly. The then Labour Secretary of State for Wales said famously that devolution is a “process, not an event”. That is a truism, whatever the current Labour First Minister in Cardiff might wish for as a constitutional settlement, so that it will “all just go away” and he can continue on his unambitious meander.

Plaid Cymru tabled amendments to Labour’s Government of Wales Bill in 2005-06 that would have had a similar effect to new clause 1, but the then Labour Government rejected them. They retained what, as a shorthand, I call the “London veto on Welsh water”. Their attitude was in contrast to that of the then hon. Member for Suffolk Coastal and former Environment Minister, John Selwyn Gummer, who is now in another place. In response to my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd), he said:

“Under the clause, a Secretary of State, by diktat, would be able to say that a Measure that has a passing or glancing effect on some matter of importance—sufficiently important for the Assembly to feel that a Measure is needed—should be stopped because he has ‘reasonable grounds to believe’ that it would have an ‘adverse effect’. It is difficult to imagine that a Secretary of State would

6 Jan 2014 : Column 52

not be able to stop anything that he did not like. The condition of having ‘reasonable grounds’ does not help, so vague is the wording used in the following paragraphs.”

It was not just the Plaid Cymru MP who was sceptical about the Labour Government’s attitude. John Selwyn Gummer went on to say:

“I agree with the hon. Member for Meirionnydd Nant Conwy.”

That was his constituency at the time.

“Either we trust the Welsh people or we do not. It is extremely difficult for me to accept that the Welsh people have to be singled out and measures taken to ensure that, where water is concerned, they should not in any way or in any circumstances be able to do anything that might upset the plans of English Ministers.”—[Official Report, 24 January 2006; Vol. 441, c. 1359.]

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): I congratulate my hon. Friend on making a powerful case for the full devolution of Welsh water resources. Is it not the case that were his new clause successful, the people of Wales would be in full control over their entire water portfolio and that those who abstain or oppose his new clause when we divide will essentially be saying that large parts of Welsh water resources should be under the control of the British state?

Hywel Williams: My hon. Friend makes a telling point that I shall refer to later: there is no centre ground on this matter. Either the Assembly controls Welsh resources or the Government here in London do so. It is a question of whether the Welsh people have self-determination on this matter or whether there is a veto from London. I know which option he favours—it is the same one I favour.

Jonathan Evans (Cardiff North) (Con): The hon. Gentleman rightly referred to the Capel Celyn situation—I remember it from many years ago when I first entered politics—and rightly said that across the political spectrum there was universal opposition in Wales to the drowning of valleys. Today, however, he should help the House. What is the mood in Wales today? He obviously feels that this is yet another step in devolution, but there is no great appetite for it elsewhere in Wales.

Hywel Williams: That is an interesting point. At every turn, when further devolution is proposed, right hon. and hon. Members of all parties always say that there is no appetite for it, and they point to polls allegedly showing no appetite for further change, but subsequent polls always show that the Welsh people support further devolution. They support devolution that goes further than the Government’s proposals. They supported further devolution before and after the Government of Wales Act. The hon. Gentleman has his own opinion and I have mine, but I think I have my ear closer to the ground of Welsh people’s opinion.

Jonathan Edwards: The hon. Member for Cardiff North (Jonathan Evans) might have noticed over the summer that the Silk commission undertook the most detailed study of devolutionary attitudes in Wales since the Senedd was created in 1999, and it clearly indicated overwhelming support for the people of Wales getting control over their natural resources, be that wind, water, shale gas or whatever. The people of Wales want those

6 Jan 2014 : Column 53

resources in the ownership of the Welsh people, and the guardian of the Welsh people is our own sovereign Parliament in Cardiff.

Hywel Williams: I am grateful to my hon. Friend for that further point, however disappointed we both might be with the guardianship of the current Government in Cardiff.

Eight years after the Government of Wales Act, circumstances on the ground are much more pressing. For example—a small example, perhaps—the fracking industry, if it proceeds, will be a heavy user of water, and as the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), has confirmed:

“Water sourced from local water companies for projects in England could potentially originate from Wales.”—[Official Report, 18 December 2013; Vol. 572, c. 640W.]

At the very least, there is the threat of history repeating itself—of industrial development and growth in wealth in England being based on resources from Wales, of the benefits to Wales being limited and of the legislative control of the Welsh Government being limited to part of the country only and being subject to a London veto. I believe that that is insupportable. It would be seen by many as Capel Celyn and Tryweryn once again.

Bob Stewart (Beckenham) (Con): Does the hon. Gentleman’s new clause imply that the Welsh Assembly could stop water coming into England if it wished to do so?

Hywel Williams: The hon. Gentleman anticipates my next point: it is a matter for the Welsh Government to decide what they would do; they have the right to decide for themselves. What I am against is this place’s veto and this place telling the Welsh Government what they would or should do. I think that in a reasonable world—and I think the Welsh Government are very reasonable people—they would be highly unlikely to turn the off taps, but they might be able to reverse what I described earlier as a patent injustice. What might the Welsh Government do with legislative competence up to the border? That is a matter for them.

This Water Bill introduces competition into water provision. Water companies in Wales are wholly or mainly exempt, but that still leaves open to competition a huge area of Wales owned by Severn Trent, which is expressly against the wishes of the Welsh Government—at least for that part of Wales for which they have the power to decide.

Mr Hollobone: I am following the hon. Gentleman’s speech with genuine interest. If water is abstracted from the area within Dwr Cymru’s competence and Dwr Cymru receives proceeds from that abstraction, could that money be used to keep water bills down for the vast majority of Welsh Water customers?

Hywel Williams: I thank the hon. Gentleman for his intervention. As I said, the agreement with Severn Trent predates privatisation, and the amount of money that changes hands is, I think, nominal. I have to confess that I do not know precisely how much it is, but my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) has referred in the past to a very

6 Jan 2014 : Column 54

small amount of money changing hands, which has only a marginal effect on what Welsh Water is able to achieve. I would also point out that what it achieves by being a not-for-distributive-profits organisation is enormously greater than any money it might get from Severn Trent.

Mr Hollobone: The hon. Gentleman mentioned fracking, which could well be a growth business in Wales as in England. From what he says, it seems to me that any water abstracted from Dwr Cymru’s area could mean a negotiation between Dwr Cymru and the users of that water. If it wanted to do so, Dwr Cymru could charge quite a high price for what is a very valuable resource.

Hywel Williams: The hon. Gentleman makes a fine point. That would be the case if, say, Northumbrian Water sells to Yorkshire Water: there are different prices in different parts of the country, depending on the economics of the transport of water. The moot point about water is that it is in some ways a transport business rather than a water supply business, because water is extremely heavy and difficult to move about. It would be a matter of negotiation. As I pointed out, however, Welsh Water does not have control of some of the more significant water resources in Wales—the water sources in mid-Wales. Incidentally, I do not want to stray from the water industry, Madam Deputy Speaker, but fracking might take place in south Wales and possibly not in north-west Wales—the part I represent. Someone has to say that, I suppose—start at home.

Ofwat addressed the matter of realigning legislative competence in its evidence to the Silk commission. People who frighten the horses over the costs would do well to listen to what Ofwat had to say about the “potential impacts” of moving away from the “wholly or mainly” boundary—that is, the current situation. It said:

“During our evidence session I was asked about any possible impacts of moving away from the current policy boundary definition. We believe that there are likely to be some administrative costs to companies (and customers) from such a change and that there could be some incidence effects on customer bills (which could be positive or negative for different customers).”

In other words, it will impact differently, but Ofwat says:

“Generally we would expect both of these to be relatively minor.”

I do not think that there is a reason to be particularly frightened of any costs that might be involved.

5.15 pm

More significantly, perhaps, I point out to those on the Opposition Front Bench that the Labour party’s stance on the matter is clear. In their submission to the Commission on Devolution in Wales, the Labour Welsh Government stated that they wanted the National Assembly to have full legislative control over water up to the geographical boundary with England. They also stated that they wanted to remove the London Government’s power to intervene in Welsh affairs in relation to water, which I referred to earlier as the London veto. Interestingly, that is a complete volte-face from the stance taken by the Labour Secretary of State for Wales in 2006, who was insistent on the veto.

In its evidence to the Silk commission, Labour said that

“the Assembly’s legislative competence should henceforth extend up to the geographical boundary with England”

6 Jan 2014 : Column 55

and, on page 9, that competence should be

“extended to the geographical boundary with England in line with the legislative competence for other acts of the Assembly.”

Labour also said:

“We also propose removal of the existing Secretary of State unilateral intervention power in the case of functions relating to water”—

that is, the veto. It went on to say:

“There is an important interdependency between Wales and England in terms of water resource management, water supply and water quality. We consider that any concerns about potential adverse impact in England in relation to these matters would be more appropriately addressed through inter-governmental mechanisms that set out the basis for co-operation and joint working between the respective Governments.”

That is the Labour party’s stance.

Jonathan Edwards: Considering the clear position of the Labour Welsh Government, does my hon. Friend share my surprise that there is not a single Labour MP based in Wales in the Chamber today to defend that position?

Hywel Williams: Alas, I am not surprised at all by the complete lack of Labour MPs from Wales in the Chamber. They might still be celebrating, who knows?

In conclusion, if the coalition Government are unwise and refuse to accept the new clause and we are forced to press it to a Division, I expect the main Opposition party, which is also the Government party in Wales, to join us in the Lobby. After all, this is not just a Welsh test for the coalition Government. It is also a test for the Opposition in this place and for their friends in Wales of their consistency and commitment to the people of Wales. Are they serious about devolving power to Cardiff, or is this to be a case of echoing St Augustine: “Make me pure, but not yet”?

Miss Anne McIntosh (Thirsk and Malton) (Con): It is a pleasure to follow the hon. Member for Arfon (Hywel Williams), who moved his amendment so eloquently.

I want to speak in support of two little amendments that have been grouped under the heading “Regime of the water industry”. New clause 2 and amendment 12 have been tabled in my name and those of a number of colleagues on the Select Committee on Environment, Food and Rural Affairs. We followed the proceedings in the Public Bill Committee with great interest, but chose to bide our time until the remaining stages before we entered into the legislative process, having done what I thought was a welcome piece of work in the pre-legislative scrutiny of the draft Bill.

New clause 2 specifically considers the possibility of allowing a retail exit. It would empower the Secretary of State to make provision by regulation for the transfer of an undertaker’s assets and liabilities associated with its non-household retail business into a separate company. Regulations would be made in the normal way by statutory instrument and would make provision for any transfer to be subject to the approval of the Secretary of State and such safeguards as may be specified in the regulations. Amendment 12 would amend clause 80 by inserting the relevant section on retail exit.

We considered retail exit during the pre-legislative scrutiny. Inevitably, a number of companies may not necessarily fail but will regrettably have insufficient

6 Jan 2014 : Column 56

customers to allow them to stay in the market. New clause 2 and amendment 12 would simply recognise that impact and allow companies to function in what would be considered a normal competitive market. An exit clause such as we propose would facilitate new entrants, particularly larger ones, into the water and sewerage retail markets.

We recommended in our report during the pre-legislative scrutiny that the Bill should include such provisions to enable incumbent companies to exit the retail market voluntarily. It would be helpful to hear from the Minister whether he is minded to accept new clause 2 and amendment 12. During our inquiry, both regulators—Ofwat, which covers England and Wales, and the Water Industry Commission for Scotland—said that incumbent companies and, indeed, new entrants were united in calling for the Bill to include an exit route.

During the Public Bill Committee, Opposition Members proposed a new clause to allow incumbent companies to choose whether to provide to the retail or wholesale market only, subject to approval by the Secretary of State. Regrettably, the Opposition’s new clause was defeated in a vote. New clause 2 would have a different effect from the new clause proposed by the Opposition in Committee, as it would specifically enable companies to exit the retail market by transferring their retail contracts and liabilities—that is, their retail business—to a third party where they chose to do so. That would open up the market to new entrants who hold a retail authorisation, by allowing them to acquire whole retail businesses, rather than acquiring one contract at a time. That would allow economies of scale.

Alison Seabeck (Plymouth, Moor View) (Lab): The hon. Lady is without doubt an expert in these matters, given her role on the Select Committee as well as the all-party group. On the basis of the work done by her Committee, will she give the House a sense of the amount of interest in entering the market and the number of people involved?

Miss McIntosh: I am grateful to the hon. Lady for her good services to the all-party group, where we serve as fellow officers. We hear of many entrants, but obviously, until the law is in place, it is difficult to put a number on that. I am sure that my hon. Friend the Minister will have heard and can perhaps comment, as he is closer to the issue.

We suggest that if existing companies are unable to compete with new entrants who want to come in for very good reasons and lose customers as a result, it makes sense to allow an exit strategy. I personally feel that we heard no compelling evidence during the pre-legislative scrutiny of the draft Bill and during our consideration of the water White Paper to suggest that the reform should not include a retail exit strategy. That is why we feel honour bound to come forward for the sake of the Bill’s completeness.

New clause 2 would give all undertakers the power but not the obligation to transfer their non-household retail business to a different company. It would give the Secretary of State the power to make any such transfer subject to approval and any necessary safeguards to ensure an orderly exit from the market. I hope that the House will be able to support the proposals because much of the Bill is silent on these matters and we want to use the new clause and amendment to give it more teeth.

6 Jan 2014 : Column 57

There are several arguments in favour of allowing such a retail exit. For example, an exit clause is needed to allow the market to function normally and competitively. Additionally, a company should be able to organise its business in the way it considers best in the interests of its customers and shareholders. An exit clause would facilitate new entrants, especially larger ones, into the water and sewerage retail market because they would not need to win one contract at a time. Without new clause 2, I understand that economies of scale would work against new entrants and either prevent them from entering the market or, at the very least, reduce the benefits that they could provide to new customers due to higher costs of entry. I hope that my hon. Friend the Minister agrees that the proposal is helpful and that he will be minded to accept it. It would not be in the interest of companies or their customers to force companies to stay in a market in which they have few or no customers.

The general thrust of the new clause goes to the heart of this group of amendments dealing with the regime of the water industry. We should learn from what has happened in Scotland. I understand that DEFRA has stated that it intends to create a market in which access is regulated—in other words, with the rules of entry clearly set out and adhered to by all market participants. The reverse side of the coin is that if the rules of entry are to be set out, the House would, I am sure, want rules of orderly exit to be set out. I am not saying that exit would happen in many cases, but it is important that such rules are on the statute book.

Following our pre-legislative scrutiny, we said that as much detail as possible should be set out in the Bill so that the House could consider it. It is wrong—I part company from my hon. Friend the Minister in this respect —to leave too much to regulations, given that many of us with a great interest in this subject will not be selected to serve on the Delegated Legislation Committees that consider them. As the Bill does not provide for retail exit, the strategy is too open. It could be argued that the Government’s approach is based on the premise that parties in the retail market should be left to negotiate among themselves about matters such as service and price, but that could be set out in the Bill.

Considerations of price, service levels and the ability to respond to difficulties go to the heart of why it is important to have a competitive market in England, as has been achieved in Scotland. There must be a way of policing a situation in which incumbents are simply slow in responding to requests for information or services from new entrants. It is important not only to facilitate the path for new entrants, but to allow for an exit strategy and to bring about a competitive market. The Bill is completing its remaining stages in the House today, but little is known about upstream competition. The Government are asking that we take an awful lot on trust, but it would be better if the Bill provided for a definite exit strategy, which is why I commend new clause 2 and amendment 12 to the House.

John McDonnell (Hayes and Harlington) (Lab): I am pleased to follow the hon. Member for Thirsk and Malton (Miss McIntosh). I see in the national press that she has had a little local difficulty. I hope that she can resolve the matter, because she would be a loss to the House if she were not returned at the next election—unless of course she were replaced by a Labour Member.

6 Jan 2014 : Column 58

I want to speak to new clause 14, which is in my name. It suggests to the House that before we move forward with further legislation, we stand back and look objectively at the performance of the water supply industry since 1989 when it was privatised. I am not part of this common agreement among some parties in the House that privatisation and competition have been a success and are the way forward. In fact, I deeply regret what has happened since privatisation.

5.30 pm

I have set out the suggestion that before we go further, the Government should produce a report that examines some of the key issues affecting the water supply industry and the consumer. I am talking here about the cost of water to the consumer, the number of disconnections that took place during privatisation—although that is no longer allowed under the Ofwat regulations—the purity of water supplies, the leakages, the levels of investment, the profits and the dividends paid to shareholders, management remuneration, the levels of taxation, particularly taxation avoidance, by the water companies and also their adherence to employment, human rights and environmental practices across the world. I say that because the water industry is second only to the energy industry in ripping off the British public. Since privatisation, the water companies have stolen from the average consumer of water in this country. The Government need to expose that in a comprehensive assessment, which this House can debate, before we consider the future structure of the water industry.

Let me go through some statistics showing what has happened since privatisation. Since 1989, real water bills have risen 50%. Since 2005, there has been a 35% nominal increase and a 7% real increase in bills. Since 2010, bills have gone up by more than 12.5%. At the same time, individual family incomes have gone down by 5%. It is interesting to see where the money has gone. Most of it has gone into paying interest charges on water company debts or dividends to their owners and shareholders. Interestingly, most of those owners and shareholders are now overseas.

The performance of the companies has not really matched the rise in payments. I looked at, for example, the issue of leakages. A great deal has been said about the investment in the infrastructure of the water industry since privatisation. I represent a constituency that is served by Thames Water, which continues to lose up to a third of its water in leakages every year. The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) wrote an article in the Evening Standard, which excoriated Thames Water for its failure to invest in tackling that particular problem. Not only do the companies fail to tackle the leakages, but they are some of the worst polluters of our rivers. I asked the House of Commons Library to provide some recent information on the companies. South West Water was fined £50,000 plus costs for sewage discharge into Salcombe bay in November 2013. It was fined a further £50,000 for sewage discharge into the Tamar estuary. Thames Water lost a final appeal against pollution fines in 2011, and the estimated final cost of those fines was £400,000.

Richard Benyon (Newbury) (Con): The hon. Gentleman has been a consistent if sometimes lonely voice on this issue for a great many years. It is not for me or for anybody to defend individual water companies, but

6 Jan 2014 : Column 59

does he not concede that companies such as South West Water have spent an enormous amount of money cleaning up our beaches and rivers? Has he measured the trajectory of investment that was happening before privatisation and compared it with the £100 billion plus that has been spent since privatisation on improving our water sector and making it more environmentally-friendly and on keeping costs down for customers?

John McDonnell: I have heard the argument about infrastructure investment doubling since privatisation, but what is significant—

Alison Seabeck: Let me pursue the point about South West Water. There is no doubt that it has made dramatic inroads into the problems around the coasts, but there is an issue with the privatisation in the first place. The customer base was far too small to sustain the work that needed to be done around those coasts. As a result, bill payers in the south west—here I disagree with the hon. Member for Newbury (Richard Benyon)—are paying an extraordinarily high amount for their water.

John McDonnell: I agree that significant investment has been made in the infrastructure, but the problem is that since the 1990s that has declined as a proportion of the overall turnover of the industry. So the record is not glowing by any means, and the cost of that investment has been paid through significant debt burdens on those companies, which is eventually then paid for by consumers

Hywel Williams: I am sure the hon. Gentleman would agree that the level of investment would be even higher if all the profits were devoted to investment in the infrastructure, rather than being siphoned off abroad.

John McDonnell: That is one reason why I support the Welsh model of a not-for-profit company, because, as I say, I feel that the general public have been ripped off throughout this period.

Let me just finish off with my last couple of examples, because I would not want to miss them out: United Utilities was fined £75,000 for management failures that contributed to a fire in October 2013; and Severn Trent Water received a £30,000 fine for sewage pollution in September last year. The performance record of these companies is that not only do they not tackle the leakages and the real need for infrastructure investment, but they are polluting the very water they are supposed to be protecting and supplying.

Joan Walley (Stoke-on-Trent North) (Lab): My hon. Friend mentioned Severn Trent Water. Given the pollution incidents involving water companies, does he agree that there is an urgent need to examine the court costs and fines imposed on water companies? Does he also agree that there is a real danger that some companies might prefer to go ahead, pollute and accept a fine because that approach is nowhere near as expensive as making the investment in the first place?

John McDonnell: The drive for profits is making these companies ignore their duty towards the wider environment, and the fines and costs are relatively marginal in comparison with the profits they make.

6 Jan 2014 : Column 60

Richard Benyon: I promise not to intervene again, but I cannot resist doing so now. Does the hon. Gentleman’s research go back prior to the privatisation of the water sector? In those years, were there any cases of pollution, of leakage or of poor infrastructure? The Minister will know that there were, because there were some appalling cases, one of which was in his constituency, and that the £100 billion we managed to gear into this sector has dramatically improved things. I entirely agree with the hon. Gentleman that there is much more work to be done, and we cannot have a system where the water industry sits outside—

Madam Deputy Speaker (Dawn Primarolo): Order. Interventions are supposed to be brief. If the hon. Gentleman wants to make a defence of the water industry, he can stand up to make a speech—he may not do so in an intervention.

John McDonnell: Former Ministers need an element of retraining, so may I say to the hon. Gentleman that he can intervene on me as often as wants, but perhaps he could be a bit briefer?

The issue is this: we are not talking about advocating a return to the previous model of nationalisation here; we are talking about the long-term future of the water industry, which is why this debate is important. My view is that privatisation and competition has not worked, but there are other models that we should explore. The Welsh model of a not-for-profit organisation ploughing the money that comes back into the infrastructure and into quality of service is the one we should now be exploring.

Hywel Williams: Does the hon. Gentleman agree that this can be clearly seen in Welsh Water’s response to the cryptosporidium outbreak in my constituency some years ago, when it managed to spend £1 million almost immediately on installing new mechanisms to get rid of the cryptosporidium and then spent £7 million on further treatment works? It responded appropriately and quickly to the outbreak.

John McDonnell: Competition and privatisation have not worked, which is why I do not think that the Bill, the main thrust of which is to introduce more competition and privatisation, represents the way forward. It provides further opportunities for exploitation. I think that we can all agree to condemn the level of profiteering that has taken pace, particularly in recent years.

I wish to put on the record what has been happening, as independent examinations have shown. Sir Ian Byatt, Britain’s top water regulator throughout the 1990s, wrote in the foreword to a report by the think-tank CentreForum that

“many companies, especially the private equity infrastructure funds, have paid out excessive dividends to their owners.”

He went on to argue for some form of dividend control. That was echoed by Jonson Cox, Ofwat’s chairman, who has called for water companies to share unintended gains with consumers, arguing that the profits and tax- reducing corporate structures were “morally questionable”. I can understand why.

Let me give some examples of the profiteering that has gone on. Northumbrian Water is owned by Cheung Kong Infrastructure Holdings, which is based in Hong

6 Jan 2014 : Column 61

Kong. Last year its operating profits were £154 million, but it paid nothing in tax. Its debt was £4 billion. Its chief executive, Heidi Mottram, received a salary, bonus and benefits worth £595,000. Yorkshire Water is owned by Citi, a US company, GIC, which is based in Singapore, Infracapital Partners and HSBC, based in the UK. Last year its operating profit was £335 million, but it paid only £100,000 in tax. Its debt was £4.7 billion. Its chief executive, Richard Flint, received a salary, bonus and benefits worth £800,000.

Anglian Water is owned by Canadian Pension Plan, Colonial First State Global Asset Management and Industry Funds Management, which is based in Australia, and 3i, which is based in the UK. Last year its operating profit was £363 million, but it paid only £1 million in tax. Its debt was £6.9 billion. Its chief executive, Peter Simpson, received a salary, bonus and benefits worth £1,024,000. Thames Water is owned by Macquaire Group, which is based in Australia, China Investment Corporation and Abu Dhabi Investment Authority. Last year its operating profit was £577 million, but it paid minus £70 million in tax, because it is receiving grants from the Government, as the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) pointed out at the time in his article in the Standard on behalf of the Liberal Democrats. Its debt was £9 billion. Its chief executive, Martin Baggs, received a salary, bonus and benefits worth £845,000.

South Staffs Water is owned by Alinda Capital Partners, which is based in the US. Last year its operating profit was £16 million, but it paid only £200,000 in tax. Its debt was £488 million. Its chief executive, Elizabeth Swarbrick, received a salary, bonus and benefits worth £202,000. Sutton and East Surrey Water is owned by Sumitomo Corporation, based in Japan. Last year its operating profit was £17 million, but it paid only £1 million in tax. Its debt was £219 million. Its chief executive, Anthony Ferrar, received a salary, bonus and benefits worth £290,000. Those are obscene levels of profiteering at the expense of the consumer.

Why is the borrowing level so high? It is not because it is all going into infrastructure. It has now been exposed that some of the borrowing is being used to pay dividends to shareholders and high salaries to chief executives and board directors. That was not the intention of the Thatcher Government’s original privatisation—well, it was not the stated intention. Privatisation was meant to reduce prices, increase investment and make the industry more accountable to the wider public through shareholding. That has not been the case. It is not more accountable through shareholding, because most of the companies that now own British water are owned by overseas shareholders. It does not make it any more efficient for the consumer, because prices have gone through the roof in recent years, which people are angry about. It does not make it more accountable to the taxpayer. In fact, the taxpayer is being bled dry as a result of tax avoidance and the various scams that have been going on, which have been explored by Richard Murphy, the tax justice expert.

Corporate Watch has produced an excellent report on some of those issues. It reports that six UK water companies took high-interest loans from their owners through the Channel Islands and then converted them into euro bonds. They then lent them back to the companies and paid virtually no tax on them whatsoever. This is a tax scam for which these water companies

6 Jan 2014 : Column 62

are used as a vehicle. Corporate Watch found that the six companies it looked at—Northumbrian, Yorkshire, Anglian, Thames, South Staffs, and Sutton and East Surrey—had borrowed £3.4 billion using this method. It highlights Northumbrian Water as “the most brazen case” as it paid 11% on just over £1 billion of loans it had taken from its owner, the Cheung Kong group, a Hong Kong-based conglomerate run by the world’s ninth-richest person. No wonder he is the world’s ninth-richest person—we are making him so. This is a scandal. The Bill does not go any way near addressing this rip-off of the British consumer or tackling some of the tax evasion and tax avoidance by these companies that has gone on. People are angry about this. In recent reports in the media there has been exposure after exposure, and people expect this House to act on these matters.

5.45 pm

Before we go any further with this Bill, we should consider in detail the record since privatisation on all these matters—cost, performance, and implications for our taxation system—and then come to a considered view about whether privatisation has worked and whether there are alternatives. Minor reforms will not satisfy people when their next water bills come through the door; they will be extremely angry. I urge that we look sensibly at the not-for-profit model that is operating in Wales, because on that basis people can at least be confident about what they pay in and that what is given to these companies through tax subsidies as a result of their long-term investment plans is poured back into the supply of decent and pure water at a reasonable cost. That is why I tabled my new clause.

It may well be that, as the hon. Member for Newbury (Richard Benyon) said, I am a lone voice in this House—with a number of others; my hon. Friend the Member for Luton North (Kelvin Hopkins) is here and has shared similar concerns—but I do not believe that I am a lone voice in the wider community. People are fed up with being ripped off by energy companies, water companies and others, and fed up with being exploited as a result of privatisation.

Thomas Docherty (Dunfermline and West Fife) (Lab): May I take this opportunity, Madam Deputy Speaker, to wish you and all hon. Members a happy new year? I hope that all hon. Members have had a peaceful and enjoyable break and have returned refreshed and looking forward to this busy year.

Unfortunately, the festive period was not a happy experience for many households up and down the country. Many hon. Members spent a great deal of their recess dealing with the impacts of the recent weather events on their constituents. It is therefore appropriate that later we will discuss a series of amendments on the clauses that will help to provide support to many of those affected households. I look forward to having that debate in more detail, but for the moment I want to focus on the new clauses in the first group of amendments.

Last year, in his now infamous letter to water companies, the Secretary of State trumpeted water privatisation as

“one of the greatest success stories of privatisation.”

If one measures success by the payouts made to investors, it is without doubt a great success story. Let me echo the thoughtful remarks by my hon. Friend the Member for

6 Jan 2014 : Column 63

Hayes and Harlington (John McDonnell) and pick out a few examples of the dividends paid out since 1989. Severn Trent Water has paid out £6.2 billion in dividends, Thames Water has paid out £6.3 billion, the north-west’s United Utilities has paid out £7.3 billion, and Anglian Water investors have recouped some £6 billion. Overall, a staggering £40 billion has flowed into the pockets of investors. It is fair to say that many customers would not share the Secretary of State’s appreciation for his wonderful friends the chaps running the water companies.

Indeed, their view is shared by many of the coalition’s own MPs. I am disappointed that the hon. Member for Skipton and Ripon (Julian Smith) is not present. In last year’s excellent debate on the water industry he said that

“Yorkshire Water…is exploiting my constituents and people across Yorkshire.”—[Official Report, 5 November 2013; Vol. 570, c. 213.]

I do not know whether the Chair of the Environment, Food and Rural Affairs Committee shares that view of Yorkshire Water.

Miss McIntosh: Any company that is prepared to invest £1 million in improving the provision of water to Filey has to be congratulated, so I congratulate Yorkshire Water on that. Does the hon. Gentleman agree that this Government’s arrangements leave Yorkshire Water and other companies free to raise money on the markets in a way that otherwise would not be possible?

Thomas Docherty: I do not want to get sidetracked by a debate about the merits of privatisation—I think you would pull me back in line if I did so, Madam Deputy Speaker—but I will just point out to the hon. Lady that Scottish Water, which is owned by the state, has invested more per connected property, I think, than any of the English water companies, with the exception of South West Water, so I am not entirely convinced by her argument.

To go back to the comments made by the hon. Member for Skipton and Ripon, despite paying out hundreds of millions of pounds to investors, Yorkshire Water has paid next to nothing in corporation tax over the past few years. I am not singling out Yorkshire Water in particular—it is clear that its behaviour is no better or worse than that of any of its competitors. The problem lies with the culture of water companies themselves. They have behaved in an unacceptable manner towards their customers for too many years. It is clear that they have come to regard customers as nothing more than cash cows, and many have paid little or no attention to customer complaints. That is why we believe it is in the interests of hard-pressed customers that the industry be subjected to greater scrutiny.

New clause 11 in particular shines a light on the opaque world of the companies’ financial and business practices. This is not an unreasonable or overly bureaucratic requirement. For many years, water companies voluntarily produced reports such as those that the new clause would require of them; yet, strangely, in recent years they seem to have got out of the habit of providing that information to customers, the regulator and the Department.

It is also worth noting, before the Minister replies, that Ofwat’s Scottish counterpart, the Water Industry Commission for Scotland, requires Scottish Water to

6 Jan 2014 : Column 64

produce the relevant information on an annual basis. Therefore, we believe that this is not an onerous or bureaucratic requirement.

New clause 12 would require Ofwat to pay far more attention to the problem of affordability of bills. I am conscious that we will have a wider debate about affordability when we discuss the second group of amendments, but Ofwat’s current interpretation of its role as an economic regulator is far too narrow. Both household and business customers feel that they are an afterthought, and the new clause makes it clear that Ofwat must have due regard to the cost of bills when setting the prices in future review periods. Labour believes that during a time of unprecedented squeezes on household budgets, much more must be done to help hard-pressed customers. Our two new clauses are important measures that would ensure that water companies served their customers’ interests, not the other way around.

We will, unsurprisingly, support the Select Committee’s new clause 2 on retail exit if it is pressed to a vote. We welcome the fact that the hon. Member for Brecon and Radnorshire (Roger Williams) appears to have had a change of heart over the festive break. During the Bill’s Committee stage he did not vote in favour of Labour’s proposal, but we very much welcome his change of heart. If we do not get an opportunity to discuss the proposal today, we hope that the other place will note that even members of the Bill Committee have signalled that they believe, on reflection, that it is a sensible and worthwhile measure. I will not repeat the discussion we had in Committee, but I think it is fair to say that, based on the signatories to the new clause, the proposal has cross-party support, which we welcome.

We will also support the Government’s amendments. I am slightly surprised that they felt the need to table a series of amendments, but not as surprised, I suspect, as the Minister when he was informed by his civil servants. The Minister has told us many times that he is lucky enough to be half Welsh, so one would have thought that he would have noticed the impact on Wales of the new clauses tabled by the Government in Committee. I hope he will explain how that slightly embarrassing oversight occurred.

We hope we will have an opportunity later this evening to press our new clauses to a Division. We welcome the spirit in which this first part of the debate has been conducted and I do not wish to detain the House any further at this point.

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Rogerson): I start by echoing the remarks of the Opposition spokesman, the hon. Member for Dunfermline and West Fife (Thomas Docherty), with regard to the earlier statement made by my right hon. Friend the Secretary of State. Our thoughts are with those who have been affected by the storms and flooding over the Christmas and new year period, and I pay tribute to all those who have worked incredibly hard, including the Environment Agency, local authorities, the emergency services and, of course, those volunteers and community representatives who have supported their neighbourhoods and neighbours.

This discussion has covered a number of new clauses and amendments in relation to the regulation of water and sewerage undertakers and licensees, particularly those provisions designed to extend competition in the

6 Jan 2014 : Column 65

sector. The new clause tabled by the hon. Member for Arfon (Hywel Williams) would alter the devolution settlement by devolving further powers to the National Assembly, and he has set out his appetite for doing so. Generally, the Government of Wales Act 2006 devolves its issues down the national border, but the situation is not so straightforward for water supply. Water catchment areas and water supply management infrastructure cross the national boundary. The appointment and regulation of any incumbent water company whose area is not wholly or mainly in Wales is not devolved. That means that the legislative competence of the Assembly does not cover the parts of Severn Trent Water’s area in Wales.

Jonathan Edwards: Would the Minister be so kind as to inform the House of the situation in terms of the geographical boundaries of the water system in Northern Ireland? Is it based on the water table, as is the case in Wales, or on the actual state border with the Republic?

Dan Rogerson: The hon. Gentleman sets out his aspirations quite clearly by viewing the boundary between Wales and England in the same way as the sovereign state boundary between the Republic of Ireland and Northern Ireland, but I am addressing my remarks to the devolution settlement within the United Kingdom.

Roger Williams (Brecon and Radnorshire) (LD): The Minister is well aware of the new clause’s implications for devolution. Does he agree that such a fundamental change would be better considered as part of devolution legislation, not as a new clause in a Bill on another matter?

Dan Rogerson: I thank my hon. Friend for his helpful intervention. He has somewhat pre-empted the remarks I was about to make, but I am happy that we speak as one on this issue.

Licensing of water suppliers is also not devolved. I recognise the deep, historical reverberations in Wales—we heard about them in the heartfelt speech by the hon. Member for Arfon—about the management of water, which is an essential natural resource. Much of the responsibility for water is, I am pleased to say, now devolved. However, further changes to the current devolution arrangements would have implications for customers and household bills on both sides of the border. They would also affect the companies, their assets and their operating rules, and possibly the people who work for them. Therefore, changes should not be undertaken without very serious consideration of all the implications.

The UK Government position is that we will not make changes to the devolution settlement in advance of the review and report by the Commission on Devolution in Wales—the Silk commission—which, as hon. Members will know, is led by Mr Paul Silk. The commission is currently working on part II of its remit and is expected to report in the spring. It is reviewing the powers of the National Assembly for Wales in the light of experience. The commission’s terms of reference make it clear that any changes it proposes must enable the UK Parliament and the National Assembly better to serve the people of Wales.

6 Jan 2014 : Column 66

6 pm

New clause 2 would provide the Secretary of State with the power to make regulations allowing incumbent water companies to transfer their non-household customers to a water supply licensee with a retail authorisation, subject to the approval of the Secretary of State. That would allow such companies partially to exit the water supply retail market or, alternatively, it might enable the introduction of regulations to mandate the separation of retail and wholesale functions into two legally separate companies, both of which would be within the incumbent’s control. Amendment 12 would commence the provision on Royal Assent, which means that it might be possible to transfer customers before the retail market opens in April 2017, if the Secretary of State produced the regulations before that date.

We heard a range of arguments for retail exit during the debate in Committee. Although some of them undoubtedly have merit—I again emphasise that we do not rule out coming back to the issue in future—other arguments are less convincing. The intention of new clause 2 is to allow retail exit only from the non-household market, leaving household customers with incumbent companies. That does not address our concern that enabling water companies to walk away from the non-household retail market risks being a bad outcome for household customers.

Thomas Docherty: I wish you a happy new year, Mr Deputy Speaker. Given that new clause 2 specifies that the process can take place only with the Secretary of State’s consent, will the Minister tell the House how such an unintended consequence might happen?

Dan Rogerson: We are very clear that we look at such issues strategically across the whole market, rather than picking them case by case. The issue is that we want to make reforms based on the principles that we set out during discussions in Committee and elsewhere.

Were a company to exit and to leave household customers on their own—without the non-household element—customers would not only be left with a company that had limited incentives to focus on improving customer service, but would be at risk of having higher bills, because providing, as new clause 2 does, for forced legal separation of the companies’ retail businesses would reduce regulatory stability and risk increasing the cost of capital.

Let me be clear: we want to see a successful retail market. The Bill sets a framework for new entrant retailers to enter the market on an equal footing with the retailers of the incumbent water companies. Our opposition to a provision about retail exit has nothing to do with supporting the position of incumbent water companies; we expect Ofwat to use its regulatory powers to make sure that new entrants can be confident that they are competing on a level playing field.

However, retail exit is not about delivering a level playing field. For example, in written evidence to the Public Bill Committee, the Water Industry Commission for Scotland argued that a provision about retail exit was needed so that new entrants had other options for increasing their market share than

“to acquire customers by winning them one contract at a time.”

6 Jan 2014 : Column 67

However, that is exactly how entrants to the market in Scotland have had to win business unless an existing licensee surrenders its licence or has it withdrawn. In that case, the customers of the exiting licensee are shared out among other licensees, but otherwise all business customers stay with the incumbent retailer, Business Stream, until they actively decide to switch.

Some commentators have painted a picture of an incumbent water company being left without any customers, because all of them are lost to their customers once our retail reforms are in place. We feel that that is a very unlikely scenario, given that non-household customers represent only some 10% of the total retail market, and that 90% of customers—in other words, households—will not be able to switch suppliers.

It is quite an assertion to say that 100% of an incumbent’s non-household customers will switch suppliers. Some 60% of non-household customers in Scotland have put their water services out to tender, but most customers have elected to stay with Business Stream. We understand that only about 5% to 10% of customers have switched since 2008. The customers who stayed with Business Stream have benefited from improved services, without having to switch, by renegotiating their terms. We might expect a more active market in England from 2017.

Thomas Docherty: I fear that the Minister is confusing two different issues. Undoubtedly, competition in itself has brought huge savings and has made Business Stream—or Scottish Water—change its whole ethos, but like does not follow like: simply because customers have stayed with Business Stream does not mean that the market is not working. Given that only 10% of customers have switched, as he says, does he not accept it is quite likely that some smaller water companies will not be able to compete with big retail providers?

Dan Rogerson: I certainly was not seeking to suggest that the market is not working in Scotland. My point was that some people have chosen to stay with their incumbent, and they may wish to do so rather than to have an incumbent abandon them and walk away.

An Oxera report commissioned by WICS and published in November 2012 predicted that incumbents would lose some 40% of their non-household customers in the first year of the opening of the retail market, with a 5% loss of profit. However, arguments that make an economic case for exits seem to be based on incumbents losing all their public sector and multi-site customers in the first year of market opening. The Oxera view is bolder than that of the rating agency Moody’s which, in February 2012, said that a worst-case scenario would be incumbents losing 25% of their non-household customers in the short to medium term, with a much smaller loss of 0.69% of profit. Although no doubt all incumbents will lose some customers, we can suppose incumbents will take steps, such as those that Business Stream has taken, to retain customers.

Anecdotal evidence from business customers suggests that incumbents are already upping their game, even though retail competition reform is some years away. Large business customers have suddenly discovered that they have a named customer service contact, and some have been offered improved metering services. The idea

6 Jan 2014 : Column 68

of incumbents sitting around while customers disappear is therefore, in our view, an unlikely scenario. In addition, water-only companies will be able to apply to Ofwat for a sewerage licence, which will allow them to compete with licensees and other incumbent sewerage companies by offering both water and sewerage services to their customers.

My point is that this is evolution, not revolution. Many non-household customers may choose to stick with the incumbent supplier because the incumbent supplier will improve its services to them as a result of the reforms. The benefits of that may in turn be passed on to household customers. Forcing or even allowing retail exit ignores such points. Where customers choose to switch, we anticipate a growth market in which innovation and competition lead to benefits, both environmentally and in customers’ bills. Allowing partial retail exit would open the door to forced separation if individual cases of discrimination were discovered, and we have made clear our position on that.

As I have said, any decision on separation should be made by Ministers and Parliament. We are not prepared to take the risk of forced restructuring, or even the potential for it as provided for in new clause 2, destabilising investment or increasing costs to customers. The new clause envisages the Secretary of State permitting exits, but that may not reduce the risk of a competition authority forcing an incumbent water company to make an application to exit. I therefore urge hon. Members who tabled new clause 2 and amendment 12—led by the Chair of the Select Committee, the hon. Member for Thirsk and Malton (Miss McIntosh)—not to press them to a Division.

The hon. Lady raised other issues about the industry in general, particularly in relation to upstream reform. We know from experience that setting out how markets should work in primary legislation is very inflexible and can stifle innovation. I know that she is keen for us to do more in that regard, but our view is that that was one clear lesson from the last attempt to extend competition through legislation in 2003. That is why the framework in the Bill sets the scope and direction of reform, without being overly prescriptive. We are working closely with Ofwat, customers and the industry—through the high-level group and the Open Water programme—to ensure that new markets work effectively, and we know that the industry does not want to constrain the market unnecessarily with too much detail in primary legislation, any more than the Government want to do that.

On new clauses 11 and 14, the hon. Members for Dunfermline and West Fife and for Hayes and Harlington (John McDonnell) have raised important issues about how the sector is run. As the hon. Member for Dunfermline and West Fife pointed out, we had a previous debate on this set of issues in which hon. Members from all parties were keen to put on the record their concerns about the past operation of the industry. I fear, however, that we have been talking about things as they were, not as they are and will be. Ofwat is already taking action to improve standards of corporate governance across the sector. It recently consulted on principles relating to board leadership, transparency and corporate governance, and it is putting pressure on water companies to strengthen audit arrangements, board member appointments and governance. The response from water companies has been positive and I welcome that. I do not want to

6 Jan 2014 : Column 69

belittle the issues that the hon. Member for Hayes and Harlington set out, but Ofwat has listened and is providing leadership to deal with them.

John McDonnell: Is the Minister satisfied that United Utilities, which supplies water to the north-west, is forecast to have made £627 million in the year up to March last year, which is up from £594 million; that Pennon, the owner of South West Water, which must supply his constituency, is due to unveil profits of £273 million, which is up from £268 million; and that earnings at Severn Trent Water, which supplies the midlands, are expected to hit £525 million, which is up from £504 million? The profiteering is continuing as normal.

Dan Rogerson: The hon. Gentleman is referring to the current price review period, but we are about to enter a new one. The measures that I am setting out have been prepared by Ofwat to change the industry and to meet its aspiration of better performance by the industry. They also recognise the low cost of borrowing from which companies have benefited in the latter years of the current price review period.

John McDonnell: Would the Minister put his mortgage on United Utilities, Pennon and Severn Trent not increasing their profits next year?

Dan Rogerson: I suspect that they would not welcome my mortgage, given the debts that they are already dealing with because of the investment that they have put into the sector. The Secretary of State made it very clear in the letter that he sent to the industry and the framework that he set out for Ofwat that we want to see a settlement that reflects the market conditions that companies have benefited from in recent years. Ofwat, in turn, has been very clear that it expects companies to take account of that in the coming price review period. Companies are responding to that and we have seen some good signs.

Mr Charles Walker (Broxbourne) (Con): I do not often applaud water companies, but Affinity Water, which serves large parts of my part of the world, hopes to achieve an average bill reduction of 0.7% before inflation in each of the five years up to 2020. That is worth welcoming.

Dan Rogerson: I thank my hon. Friend for that intervention. As he is not always an enthusiast for what water companies do, it means all the more that he is prepared to offer those words of congratulation. It is fair for hon. Members across the House to express clearly their view that water companies should offer a fairer deal to consumers. That is what the Government want to see as well. That is why I am pleased that water companies are responding positively to the process.

Hywel Williams: The Minister talks about fair deals between water companies. Is he satisfied with the terms for the supply of water from Wales to Severn Trent, especially given that Severn Trent is apparently selling on 30 million litres of water a day to Anglian Water at commercial rates? Of course, that is happening on the back of Welsh resources.

6 Jan 2014 : Column 70

Dan Rogerson: The hon. Gentleman is tempting me to get into the specifics of individual companies. The framework that the Government have set out and our policy statements are very clear, and Ofwat is responding to that. The companies will have to take account of that and satisfy the regulator that they are acting fairly and effectively.

Richard Benyon: Given that one of the key objectives of the Bill is to increase the resilience of the water sector across the country—or perhaps I should say countries—should we not welcome the fact that Severn Trent is trading bulk quantities of water with Anglian Water and say that we hope to see more water flowing from areas where it rains a lot to areas where it does not?

Dan Rogerson: My hon. Friend and predecessor is a great advocate of ensuring that we have a far more resilient water sector on environmental and sustainability grounds, as well as on economic and social grounds. It is important that we get that message across and I welcome his intervention.

New clauses 11 and 14 would place a duty on water companies to report information that is already freely available in the public domain. Both new clauses require reporting about company performance, investment, tax, corporate structure and dividends. Indeed, the hon. Member for Hayes and Harlington cited those figures in his speech, which shows that they are readily available.

New clause 14 would also require the Secretary of State to report on the cost of water, disconnections, water quality, leakage and the legal compliance of water companies. The cost of water to consumers is published every year in each company’s charges scheme. The Water Industry Act 1999 removed the power of any water company to disconnect homes because of the non-payment of bills. That prohibits the disconnection of the water supply to homes, schools and hospitals. The drinking water inspectorate is responsible for providing independent reassurance that water supplies are safe and that drinking water quality is acceptable to consumers. In England and Wales, 99.96% of drinking water supplies meet national and European standards. The tiny proportion that are failing to meet that standard—0.04%—are predominantly private supplies, rather than supplies from incumbent water companies. Since the mid-1990s under the current framework, there has been a 30% reduction in leakage, which is more than 2 billion litres per day. Companies are now operating at their sustainable economic level of leakage.

6.15 pm

The information on tax and corporate governance that is required by both new clauses is already available. They would therefore not increase transparency. I direct hon. Members towards each company’s business plan and annual reports and accounts.

Mr Charles Walker: To refer once again to Affinity Water, its business plan for the five-year period from 2015-16 to 2019-20 states that it intends to reduce abstraction by 42 million litres a day over that period. That is very welcome, particularly in my part of the world. How will I be able to check up on Affinity’s progress towards that objective?

6 Jan 2014 : Column 71

Dan Rogerson: My hon. Friend is an astute and fearless challenger of all authorities, whether they be in the private or public sector. I am sure that he is well aware of the routes that he can take to challenge the company on that matter publicly and privately. The new clauses that we are debating would not assist him in that aspiration.

Thomas Docherty: The Minister probably has first-day-back blues. I refer him to Opposition new clause 11, which would allow the hon. Member for Broxbourne (Mr Walker) to check the performance of his water company.

Dan Rogerson: The hon. Gentleman hopes that his new clause would require further reports to be made to the Secretary of State. However, that information is already in the public domain. That is why supporting new clause 11 would not be helpful. I understand and respect his desire to ensure that the industry is as transparent as possible. I understand the ambition behind the new clause, but I do not share his enthusiasm for the wording that he has chosen.

The privatisation of the water industry has been a success story in terms of investment. Helpfully, the hon. Member for Hayes and Harlington pointed out that I represent a constituency in the South West Water area. The coalition Government have recognised that there were a few flaws in the privatisation process, so there is now extra money to support bill payers in the south-west, who paid for the clean-up of the beaches around the south-west peninsula.

As was pointed out by my predecessor, my hon. Friend the Member for Newbury (Richard Benyon), there has been huge investment in infrastructure since privatisation. That is one of the key successes that we want to build on and not jeopardise. The stable regulatory framework for the water sector has enabled companies to attract more than £111 billion of low-cost investment to upgrade water and sewerage infrastructure and to improve customer service and environmental standards.

I agree that we should be putting pressure on the water sector to act as transparently and responsibly as possible. Ofwat is already doing excellent work on the issues that have been raised by hon. Members. I do not believe that duplicating the reporting requirements would help. For that reason, I believe that new clauses 11 and 14 should be resisted.

New clause 12, for which the hon. Member for Dunfermline and West Fife argued, would place a duty on Ofwat to have regard to the charges to household and non-household customers. That would simply duplicate Ofwat’s existing duty.

I turn to a number of technical amendments, which the hon. Member for Dunfermline and West Fife charitably referred to. I will move amendments 13 to 50, 52 to 54 and 60 to 87 formally at the appropriate time. They will mainly make changes to schedules 5 and 7. Schedule 7 makes consequential changes to the Water Industry Act 1991 and other primary legislation as a result of our reforms, and schedule 5 makes further changes should the Welsh Ministers decide to adopt the reforms being introduced in England. Amendment 59 and new schedule 1 will provide the Secretary of State with the power to produce transitional orders that allow us to deliver retail and upstream reform separately.

6 Jan 2014 : Column 72

Taken together, our amendments will provide Ministers with the maximum flexibility to commence the different market reform provisions transparently and in stages, as per our commitment to stagger the implementation of our retail and upstream reforms. They will enable the current arrangements to continue without diverting attention from the immediate priority of preparing for the opening of the reformed retail market in April 2017.

Hywel Williams: We have had an interesting debate, and I was glad to hear the contributions of the Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), and the hon. Member for Hayes and Harlington (John McDonnell), with whom I yet again agreed entirely. I was also glad to see the hon. Member for Newbury (Richard Benyon) taking an interest in his former beat, and to see the hon. Member for Brecon and Radnorshire (Roger Williams) in his place, although essentially in a non-speaking role.

I was disappointed by the lack of contributions from Welsh Members, and disappointed that the hon. Member for Dunfermline and West Fife (Thomas Docherty) did not make any reference to my new clause 1. Pretending it is not there does not mean it will go away.

Thomas Docherty: The hon. Gentleman should have intervened on me if he was concerned that I had not covered his new clause. I echo the point that the Minister made—the Silk commission is examining the issue and will report in the spring. [Interruption.] We think that will be the right time to consider the matter properly.

Hywel Williams: My hon. Friend the Member for Perth and North Perthshire (Pete Wishart) asks from a sedentary position, “What do you think?” The Minister might choose to enlighten us, but possibly not—he would prefer to listen to the Silk commission.

My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) made a point about legislative competences and borders. In Northern Ireland the matter is not considered problematic, because the national or state boundaries are followed; nor is it considered problematic for legislative competences to cross the border in the case of Wales. Legislative competence seems to become a problem only when proposed by Plaid Cymru. Of course, it is also proposed by the Labour Welsh Government, but they are not here to make that point. That does not seem particularly fair dealing.

The Minister said that the status quo is the status quo, and that the matter is not devolved because it is not devolved, and presumably it will not be. He gave us no indication of what the Government would eventually propose following Silk. We look forward to that with interest.

On a personal note, I missed many of the sittings of the Public Bill Committee—

Thomas Docherty: And we missed you.

Hywel Williams: The shadow Minister is very kind. I was disappointed to have missed those sittings, and I apologise to Members of the Committee. Unfortunately, it was unavoidable.

It is my pleasure to press new clause 1 to a Division.

6 Jan 2014 : Column 73

Question put, That the clause be read a Second time.

The House divided:

Ayes 6, Noes 282.

Division No. 165]


6.23 pm


Durkan, Mark

Llwyd, rh Mr Elfyn

Lucas, Caroline

McDonnell, John

Ritchie, Ms Margaret

Williams, Hywel

Tellers for the Ayes:

Pete Wishart


Jonathan Edwards


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Baker, Norman

Baker, Steve

Baldry, rh Sir Tony

Baldwin, Harriett

Barker, rh Gregory

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burrowes, Mr David

Burstow, rh Paul

Burt, rh Alistair

Burt, Lorely

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Elphicke, Charlie

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fallon, rh Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Freeman, George

Freer, Mike

Gale, Sir Roger

Garnier, Sir Edward

Gauke, Mr David

Gibb, Mr Nick

Gilbert, Stephen

Glen, John

Goodwill, Mr Robert

Graham, Richard

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Griffiths, Andrew

Gyimah, Mr Sam

Halfon, Robert

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Hayes, rh Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Hopkins, Kris

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Hunter, Mark

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Sir Greg

Kwarteng, Kwasi

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lefroy, Jeremy

Leigh, Sir Edward

Leslie, Charlotte

Lewis, Brandon

Lewis, Dr Julian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Lord, Jonathan

Loughton, Tim

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maude, rh Mr Francis

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Menzies, Mark

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Ottaway, rh Sir Richard

Paisley, Ian

Parish, Neil

Patel, Priti

Pawsey, Mark

Penning, Mike

Penrose, John

Perry, Claire

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pugh, John

Raab, Mr Dominic

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reid, Mr Alan

Robathan, rh Mr Andrew

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Sharma, Alok

Shelbrooke, Alec

Simpson, Mr Keith

Smith, Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stuart, Mr Graham

Stunell, rh Sir Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Syms, Mr Robert

Tapsell, rh Sir Peter

Thornton, Mike

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vickers, Martin

Walker, Mr Charles

Walker, Mr Robin

Walter, Mr Robert

Ward, Mr David

Watkinson, Dame Angela

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Amber Rudd


Anne Milton

Question accordingly negatived.

6 Jan 2014 : Column 74

6 Jan 2014 : Column 75

New Clause 3

Provision of benefits information

‘(1) The Secretary of State may by regulations make provision about the disclosure of benefits information about occupiers to water undertakers and sewerage undertakers in connection with section 144C of the Water Industry Act 1991 (non-owner occupiers).

(2) In this section “benefits information” means information which is held for benefit entitlement purposes by the Department for Work and Pensions.’.—(Miss McIntosh.)

Brought up, and read the First time.

Miss Anne McIntosh: I beg to move, That the clause be read a Second time.

Mr Deputy Speaker (Mr Lindsay Hoyle): With this it will be convenient to discuss the following:

New clause 7—National affordability scheme—

‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.

(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—

(a) the Water Services Regulation Authority; and

(b) the Consumer Council for Water.

(3) An order under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.

New clause 8—Billing information: affordability—

‘Any company providing water services to a residential household must include on its bills—

(a) details of any tariffs provided by that company;

(b) a recommendation of the lowest possible tariff for each residential household; and

(c) information regarding eligibility criteria and how to make an application for assistance under Water Sure.’.

New clause 9—Provision of information to water companies: landlords—

‘(1) The Water Industry Act 1991 is amended as follows.

(2) After section 207 (Provision of false information) there is inserted—

“Provision of information to water companies: landlords

Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.’.

6 Jan 2014 : Column 76

New clause 10—Water companies: recovery of losses—

‘(1) The Secretary of State, or the Authority, may prohibit losses to a water company due to non-payment of bills from being recovered through charges on customers.

(2) This section comes into force on the day after the Secretary of State has laid before Parliament a report setting out how water companies have failed to take action on these matters,’,

Amendment 9, in clause 80, page 124, line 1, at end insert—

‘(e) section [Provision of benefits information].’.

Miss McIntosh: I wish to consider new clause 3 and amendment 9, which seek to address legislation already on the statute books in the Flood and Water Management Act 2010. I remind the House that the cost of bad debt to each household in England is approximately £15 per annum, and in times of great hardship and a period of austerity, which the Government are dealing with through the actions we continue to take, it is incumbent on the Government to consider every opportunity to defray the costs to each household in that regard.

New clause 3 seeks to provide benefits information by allowing the Secretary of State to regulate to

“make provision about the disclosure of benefits information about occupiers”

to water and sewerage companies in connection with the revised part of the Water Industry Act 1991. It goes on to state that

“‘benefits information’ means information which is held for benefit entitlement purposes by the Department for Work and Pensions.”

Amendment 9 would make the consequential change to the current clause 80, to allow the provision of benefits information. I sat where the hon. Member for Dunfermline and West Fife (Thomas Docherty) is currently sitting and followed the passage of the Flood and Water Management Bill as closely as he is following the passage of this Bill. I have been very taken with the idea of trying to reduce bad debt in this way. Recently, I was most fortunate to receive a written answer from the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Hemel Hempstead (Mike Penning), who helpfully told me that at present the legislation does not permit the transfer and provision of benefits information by the Department for Work and Pensions in the way I wish. He did not say it could not be done; he said only that the current law does not permit it. We are where we are.

Mr John Redwood (Wokingham) (Con): To help the House, will my hon. Friend explain what kind of information she would like to see transferred and how it would help?

Miss McIntosh: I hope that my right hon. Friend will bear with me as I take the House through it.

In the Environment, Food and Rural Affairs Committee report on the draft Bill, we reiterated our previous recommendations that the Department should implement without delay the existing provisions of the Flood and Water Management Act 2010 on bad debt, to which I have referred. In our view, it is unacceptable for honest customers to be forced to subsidise those who can pay but refuse to pay their water bills. To answer my right hon. Friend’s question, the specific provision is section 45 of the 2010 Act, which introduces new section 144C to the Water Industry Act 1991. That is what we propose

6 Jan 2014 : Column 77

in new clause 3, which would require landlords to arrange for information on their tenants to be provided to water companies.

Instead of implementing the existing bad debt provisions, the Government currently rely on a voluntary approach, whereby landlords share information on tenants on an online database set up by the water companies. Before I go further on the voluntary approach, it might be helpful to ask my hon. Friend the Minister this question: what is to prevent a customer who happens to be a tenant from marking on their electricity bill the fact that they have no problem with it being made known to the electricity company and the Department for Work and Pensions, whichever works best, that they are in receipt of benefits? The Environment, Food and Rural Affairs Committee was fortunate to enjoy the company of the hon. Member for Dunfermline and West Fife for a time. I am sure he remembers our exchange, but the Committee has great difficulty in understanding what the problem is for the Government—either the Department for Work and Pensions or the Department for Environment, Food and Rural Affairs—in permitting that flow of information.

The House will recall the tragic case of an elderly couple who sadly passed away because they could not afford to pay their utility bills for heating. No one had informed the electricity company of that fact. I believe that what is good for electricity companies—in law, such information can be provided to those utility companies —should be equally good for the water companies, which are also utility companies. They should have access to the same information.

A close reading of proceedings in Committee shows that Water UK acknowledged the new database for landlords and tenants, but claimed that

“experience has shown that a voluntary approach simply does not work.”––[Official Report, Water Public Bill Committee, 3 December 2013; c. 15, Q19.]

It gave the example of Northumbrian Water. It has had an easy-to-use website for landlords to provide information for two and a half years, yet only 7% of all rented properties have been registered. That is a problem and this is a matter of some urgency. The Government need to press ahead—the House would support that.

In Committee, the Opposition tabled a new clause that would have meant landlords providing contact details of their tenants to the water companies, but it was voted down. The Environment, Food and Rural Affairs Committee produced a report on the water White Paper—we have worked hard on the issue and I hope we have made a positive contribution. My hon. Friend the Minister nods because he, too, was a member of the Committee when we adopted the report. I find myself in good company this evening. The report recommended that DEFRA work with the Department for Work and Pensions to ensure that all means-tested benefits claimants are given the option to consent to the sharing of their data with their water company for the purposes of help with affordability issues.

I and hon. Members who have put their names to new clause 3—a number are members of the Environment, Food and Rural Affairs Committee—believe that there is a difference between electricity and gas bills and water bills. If people do not pay their heating bill, their supply can be cut off, whereas if people do not pay their water bill, the water company is simply not permitted

6 Jan 2014 : Column 78

to turn off the supply of clean water going in or prevent waste water—sewage—going out, for reasons of hygiene and good health.

6.45 pm

My hon. Friend the Minister must recognise the urgency. This year, it will be four years since the Flood and Water Management Act 2010. The legal basis exists. New clause 3 and amendment 9 would give the Secretary of State the power to make the regulations on the disclosure of benefits information relating to tenants to water and sewerage companies in connection with the bad debt provisions in the Act. The benefits information should include all information held by the Department for Work and Pensions on benefit entitlements.

All the Secretary of State needs to do is introduce appropriate safeguards in regulations to protect data. As I have indicated to the Minister, there could be a box on the bill for the customer to tick to indicate that they are willing to have information shared with the water or sewerage company. The Committee has previously recommended a simple tick-box on a customer’s bill consenting to such information disclosure. I urge him to tell the House what has changed since he endorsed such a provision in the previous Parliament—he was a member of the Environment, Food and Rural Affairs Committee in the last Parliament, and was so until recently in this Parliament.

The Committee believes that the proposal is a helpful suggestion to the Government in closing a loophole and preventing an omission from the Bill. The legislation is in place. The new clause would enable companies to determine which customers cannot pay and those who will not do so. There is a clear distinction between the two. Those who can pay but will not pay are costing £15 per household. The provision would allow water companies to target information about the charitable funds and social tariffs they operate on the most vulnerable customers—those who simply cannot afford to pay, perhaps even for a temporary period—and allow them to make arrangements for which they are eligible.

There is a precedent for the disclosure of information. I understand that the Secretary of State for Environment, Food and Rural Affairs implements the warm home discount scheme, which has been regulated pursuant to powers granted to the Secretary of State in the Energy Act 2010.

The information provided by Ofwat following recent submissions of water companies’ business plans in December, which was part of the current price review round, shows that three companies have social tariffs, that 12 companies will have a social tariff by 1 April 2015, and that five companies have proposed not to introduce a social tariff.

In conclusion, I urge my hon. Friend the Minister to follow through on what he so eloquently supported when he was a member of the Select Committee and allow consumers to benefit by making benefits information available at the earliest possible opportunity. That will enable those who cannot pay to be on the radar screens not just of landlords but of the Department for Work and Pensions and their own water utility company.

Thomas Docherty: I wish you a merry Christmas and a happy new year, Mr Deputy Speaker.

6 Jan 2014 : Column 79

I welcome the thoughtful remarks by the hon. Member for Thirsk and Malton (Miss McIntosh). As she rightly said, the Minister and I had the pleasure of serving on the Select Committee under her chairmanship. She was an excellent tutor to both of us, although I suggest, looking at the debates today and in the Bill Committee, that I remember more of what the Select Committee agreed than the Minister. I am sure he will eloquently explain his position.

Dan Rogerson: The hon. Gentleman is always kind enough to remind me repeatedly, so I fear I can never forget any of our deliberations.

Thomas Docherty: It is always a good thing to be a charitable and giving soul, so I do my best to try to accommodate the Minister.

I would like to speak to the new clauses that stand in my name. As I said earlier, much attention has been paid to households that faced a difficult Christmas and new year because of the climatic conditions that battered the United Kingdom. Much less, however, has been written on households that faced a stressful period because of the economic conditions that have battered the United Kingdom, not just in the past three weeks but in the past three years. Hundreds of thousands of households did not enjoy the Christmas that all of us here in the House of Commons did, in warm and secure homes with plenty to eat and with presents given and received. Too many families were left unable to enjoy the Christmas joys that we take for granted.

The cost of living crisis cannot be dismissed as a soundbite, as many Government Members try to do. The cases of hardship regularly brought to the attention of Members of Parliament cannot simply be batted away. At a time when household incomes are continuously being squeezed, it is not acceptable to Opposition Members for most water companies to continue to do so little to help their struggling customers.

The size of water bills may not have reached the obscene level of their gas and electricity counterparts, but there is no disputing their cumulative impact. Citizens Advice reported to MPs in November that it had received almost as many inquiries from people worried about their water bills as they had about the other two utilities. DEFRA’s own statistics state that some 2.5 million households now find themselves in what the Department itself defines as water poverty, while in the past year water companies reported pre-tax profits of £1.9 billion and paid out, in dividends, a staggering £1.8 billion to their shareholders.

You might have expected the water companies to rush forward with schemes to assist their hardest-pressed customers, Mr Deputy Speaker. After all, the previous Labour Government put in place legislation to allow each company to introduce a tailor-made scheme for its own region. The water companies told the then Government and Parliament that that was all that was needed: a voluntary system of social tariffs that each and every water company would then set and implement quickly. Four years later, what progress has been made? So far, only three water companies have got around to implementing social tariffs, helping a grand total of 25,000 households across the country. Even by the end

6 Jan 2014 : Column 80

of the price review period, more than a third of water companies will still have not bothered to lift a finger and introduce such a scheme. When the water companies gave evidence to the Bill Committee, did they acknowledge that they had let down their customers and Parliament? Did they acknowledge that the rate of progress was not good enough? Did they say sorry, even once? Of course not. They blamed everyone but themselves: they blamed the regulator, they blamed the Government and they blamed the customers.

What has been the response of the Secretary of State, and his Minister with responsibility for water, to the crisis facing households? The Secretary of State sent a letter to the companies in October begging them not to raise prices further. It was not, we note, an instruction or a warning that if they did not take heed, the Government would step in. It was not even a rebuke; it was just a weak letter. That is why the Opposition have tabled four new clauses that will each help hard-pressed households. Taken together, they would make a tangible difference to those struggling with the cost of living crisis. With your permission, Mr Deputy Speaker, I will briefly take each new clause in turn, explaining the existing problems and how our proposals would address them.

First, on bad debt, I will build on the excellent remarks by the Chair of the Select Committee. Ofwat estimates that on average bad debt adds £15 to every customer’s annual bill. Note, of course, that that is just the average amount; in some cases, it is significantly more than that. As the hon. Lady said, water companies are, rightly, not allowed to cut off those who cannot afford to pay their bills, but they are allowed to pass the cost of non-payment on to their other customers. In effect, the sector already has cross-subsidisation.

Richard Benyon: Average figures are exactly that—average. There are, of course, water companies that underperform and their debt is much higher than average, but the corollary is that other water companies perform considerably better. Does the hon. Gentleman not think that there is much work to be done to learn best practice from water companies such as Yorkshire Water, which serves the constituency of the Chair of the Select Committee, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) and is outperforming the others extremely well? We should learn from such companies about bad debt.

Thomas Docherty: I know that you are a fan of all things Yorkshire, Mr Deputy Speaker, and I will come on to Yorkshire Water in a moment, if the former Minister will bear with me.

As the hon. Lady said, among those who do not pay there are those who can pay. That is unfair on decent customers who meet their obligations and we believe the time has come for more robust action to be taken. Some 80% of those who do not pay are in rented accommodation. One of the challenges facing water companies is tracking down those who refuse to pay because they move homes far more often than the average person. The only way to track them down effectively is to require landlords to provide water companies with a list of tenants. Individuals moving property would not then disappear from the system and evade paying their debts.

6 Jan 2014 : Column 81

The measure would be a simple step and it would not require a disproportionate amount of new bureaucracy to implement. It is estimated that approximately half of total bad debt falls into the category of “can pay, won’t pay”. The Select Committee, of which the Minister was previously a member, has unanimously backed the measure throughout this Parliament, so why the opposition from the Government?

Mr Mark Spencer (Sherwood) (Con): I understand, and sympathise with, the point the hon. Gentleman is making, but there is no legal way to force a tenant to inform their former landlord of a forwarding address. How can a landlord know what information to supply to the water companies, so they are able to track former tenants?

Thomas Docherty: I am grateful to the hon. Gentleman, who I think is a recent addition to the Select Committee. I do not think he was a member of the Committee when we had this discussion, so for his benefit I will say that it is quite simple. As the water companies have said, they would be supplied with names and addresses. The onus would then be on them to carry out the necessary activity to match up the appropriate individual, and there would be no significant burden on the landlord, the local authority or social housing provider. The burden for that work would fall on the water company. He will recall from our time in Committee that I was not always the water industry’s biggest fan, but on this the Select Committee, the water industry and the Opposition are united, so again I come back to this question of why the Government are so opposed to the proposal.

7 pm

Mr Redwood: I fully agree with what the hon. Gentleman is trying to do, but I share the concern of my hon. Friend the Member for Sherwood (Mr Spencer). How would it help to know the name of the tenant who has done a bunk, moved somewhere else and not given a forwarding address and who has no intention of paying the bill? Would the water companies not need investigatory powers to track down the tenant?

Thomas Docherty: I have huge respect for the right hon. Gentleman and his knowledge, but we are clear that, as they themselves accept, it is the water companies who would have to do the legwork; no additional burden would be placed on the landlord, as it would be for the water companies to contact householders, and obviously they would have a list of new tenants. I will use the example of the electoral roll: candidates, parliamentarians and political parties receive a list of those who are new on the register, and we then contact them to welcome them to the area. When the name of somebody who disappears from one property appears at a different property, it would not be beyond the wit of a water company to work out who they were. In Committee, the Government’s key objection seemed to be that it would place an unfair burden on landlords, so we are keen to stress that, as the Minister will recall from his time on the Select Committee, it would place an additional burden not on the landlord, but on the water companies. The companies themselves want this power. To reiterate, we are absolutely clear that those who can pay should pay, so why the opposition from the Government?

6 Jan 2014 : Column 82

Dan Rogerson: The hon. Gentleman has set out how the burden of pursuit would fall on the water companies, but of course the burden of providing that information to them would fall on the landlords, so there would be a burden.

Thomas Docherty: I congratulate the Minister on stating the blindingly obvious. Of course, the landlord would have to provide that information, but it is not the longest list in the world, and it is information that landlords have anyway, so the Opposition, like the Select Committee, find it difficult to comprehend why it would be so onerous for landlords to provide a list of their tenants by property. If he has specific examples of hard-pressed landlords who have made representations to him, I am sure he will refer to them when he responds.

For the fourth time, I ask myself the question: why the opposition from the Government? The Secretary of State has had his usual Pavlovian reaction to a suggestion that the Government should take action. It appears once again that when Parliament, the Select Committee and the water industry ask DEFRA to do something, its knee-jerk response is to think of spurious reasons why it should not or cannot do it. Our new clause would be a pragmatic and efficient measure that would help to drive down costs on all decent households, help water companies to do their job and ensure that all customers meet their responsibilities.

Our second new clause—new clause 10—recognises that not all water companies have done all they can to tackle the problem of bad debt. As I mentioned earlier, although the average bad debt figure is about £15, there are wide variations across the country. As the hon. Member for Newbury (Richard Benyon) pointed out, that is because some, such as Yorkshire Water, have worked with customers and debt advice groups, such as Citizens Advice, to put in place measures to help customers genuinely struggling to access payment packages and programmes, but unfortunately that is not the case across the country. Too many water companies have come to the unsurprising conclusion that, because they can pass the cost of bad debt on to their other customers, they need not bother to do anything about it themselves.

That is why we have tabled new clause 10. We want to give Ofwat and water companies a clear and unambiguous signal that hard-pressed customers should no longer be treated as a cash cow by companies that cannot be bothered to meet their own responsibilities. Where the regulator and the Department are satisfied that water companies are not doing enough to pursue bad debtors, the cost should no longer be passed on to other customers. Taken together, not only would our two new clauses be practical measures, but they would send a clear signal that while we will do more to help those who are struggling, we expect all customers and water companies to do their fair share.