Examination of Witnesses (Questions 342-359)|
WEDNESDAY 30 APRIL 2003
342. Good afternoon. May I welcome you to the
meeting of the Committee this afternoon. We are very grateful
to you for coming, we are also very grateful to you for the paper
that you put in. I might add, we are very grateful to you for
keeping to the recommended length as well, which, given the amount
of evidence we have received in writing, is very helpful to us.
Before we get underway by putting our questions to you, could
I ask you, for the record, to introduce yourselves and your positions?
(Mr Terry) I am Maurice Terry. I am Chairman
of the WaterVoice Council and also I am Chairman of WaterVoice
North West. Sheila Reiter is a member of the WaterVoice Council
and is Chairman of WaterVoice Wessex; and Roy Wardle is the Secretary
to the WaterVoice Council.
343. Fine; thank you very much. Are there any
comments you would like to make to us before we start putting
questions on the paper that you put in?
(Mr Terry) Yes, My Lord Chairman. First of all, my
colleagues and I welcome the opportunity to give evidence to the
Committee and to answer questions about WaterVoice's work and
our role in achieving improved regulatory accountability in the
water industry; and, if I may, My Lord Chairman, I have got just
one or two observations. Although currently WaterVoice is constitutionally
part of Ofwat, we operate with a substantial degree of freedom
under a Memorandum of Understanding, which we negotiated and signed
with the Director General, Philip Fletcher, in January 2002. Our
current working relationship is based on an ability to be able
to speak from different perspectives, avoiding surprises in the
announcements and the statements we make, and a respect for each
other's views. As you may know, My Lord Chairman, subject to the
enactment of the Water Bill, which is currently in the House of
Lords, a new Consumer Council for Water will be set up in about
two years' time, which will create WaterVoice as a completely
independent body from Ofwat. Now we are confident that the good
working relationship which we enjoy now with Ofwat will continue,
and that full independence will not lead immediately, or even
ultimately, to a more confrontational and less productive relationship
between WaterVoice and Ofwat. As WaterVoice, we are concerned
solely with the interests of customers, and, for the purposes
of Your Lordships' inquiry, with regulatory accountability to
WaterVoice and to the customers whom we represent. Our approach
is, wherever possible, to work with the regulators as well as
the other stakeholders in the industry, the water companies, for
example, the Environment Agency, Drinking Water Inspectorate,
English Nature, to mention a few, just to get the best outcome
for customers. Where necessary, we will question and challenge
Ofwat and the other regulators, both privately and publicly, when
they take a view on policy or a decision which we think is not
in the customers' best interests. We believe that water regulation
generally has worked very well, has produced benefits for customers,
benefits for the water environment, and a good level of regulatory
accountability to customers has been ensured and achieved; but,
as we set out in our written submission, we believe there is scope
for things to be tweaked and to improve the accountability. And
we are very happy to answer questions related to our presentation,
or any other points Your Lordships might like to make to us.
344. Thank you very much. Could I start by putting
a question about WaterVoice itself, and then move on to look at
the role of the Director General which picks up on a point I put
to Sir Ian Byatt when we had him before us. Now WaterVoice, as
you mention in your paper, is the consumer watchdog in the industry,
but, of course, the members are appointed by the Director General.
So one question that arises is, you speak for the consumers, but
how confident are you that you know the interests of the consumers;
in other words, if you are looking at it from the perspective
of someone outside, how are you able to assure them that you are
the body representing consumers?
(Mr Terry) I think probably that is a question which
is a valid question to any consumer organisation, and we do take
that very seriously, I have to add, My Lord Chairman. But there
are a number of specific things which we do which we think make
us accessible and give us the ability to feel, if you like, the
nature of the issues surrounding customers. And, firstly, the
Chairman and members, yes, they are appointed, but they are drawn
from a very, very wide background, people with a public service
history, people from industry, and so on and so forth. With that,
and with the members, we ensure that we have got a broad range
of skills. Secondly, all our committee meetings are held in public,
and some of our regional committees have listening sessions, where
they invite members of the public to contribute, as part of the
meeting, and others actually to speak at the meeting. Also, jointly
with Ofwat, we conduct market research, but that is a fairly limited
area because it is an extremely expensive issue to carry out.
We make a lot of noise, we issue press notices, we publish articles
in the press, and, from those, we invite and receive quite a lot
of comment; for example, we published as a consultation our forward
plan for the next two years, right through to the end of the life
of our committee. We make presentations at local conferences,
we make presentations at national conferences. But, I think, most
of all, although it is a self-selected group, we handle about
10,000 formal complaints, so that is 10,000 customers with whom
we come directly into contact, and probably about four times that
number approach us for information and for guidance. Now, as I
say, they are self-selected, to a certain extent, but they do
enable us to feel the nature of the issues that surround customers
at that particular point in time.
(Mrs Reiter) Speaking from a local regional Committee
point of view, in addition to the annual media plan, we do have
a local media plan, and obviously we try to keep in touch with
TV, radio, newspapers, etc. We also send briefing notes to our
local MPs to keep them up to speed on issues that we think they
might be interested in, or may be getting correspondence about
from some of their constituents. But also we do quite a lot of
work with things like the Women's Institute; in my area, for instance,
we addressed their annual conference, in Wiltshire, which was
rather nice, a much bigger attendance than we ever expected, quite
frankly, but it went well. The Townswomen's Guild, CABs, we work
with them very closely and we have run debt seminars with them.
So we do try, through getting to very ground-based organisations,
to get that constant feedback from people as to what they are
feeling about water and sewage issues.
Chairman: Indeed; thank you very much. On your
first point, I take your point, because it does seem to be fairly
common practice in many consumer bodies to be appointed by the
Director General for that particular sector, and that was something
we were looking at.
345. Mr Terry, I have followed absolutely everything
you said, I think, and obviously you do an admirable job, but
if you were God would you choose you differently? I was not quite
clear if you answered the question.
(Mr Terry) Would I choose us differently?
346. Yes; if you were starting again, if there
was a new Bill?
(Mr Terry) I do not have an answer, My Lord, for that,
really. I think, nothing is going to be perfect. You know, if
you were elected, or an elected body of consumer representation,
I am not quite sure how you would organise your constituency or
how you would organise, if you like, the ability to be able to
bring in new people and rotate people through. Because that is
one of the advantages of the public appointments system. I think
also it is fair to say that the appointments, as I said, to WaterVoice
are from a wide range of backgrounds and skills and age and experience,
and they follow the, well, I am not sure if it is the Nolan Principles,
but the principles for public appointments, including independent
assessment, and so forth. So I think, from the practicalities
of it, my answer to you would be that probably it is not intellectually
perfect, but I am not able to think of anything better at this
particular point in time.
347. Just a supplementary, because I think one
way of interpreting the question is that it is a choice between
appointment and election; another way of looking at it would be
solely in terms of appointing: who does the appointing, and might
there be an alternative mechanism by which members are appointed?
(Mr Terry) Yes, My Lord Chairman, I think
I would say that, under the new, proposed creation of the Independent
Consumer Council for Water, the new WaterVoice, let us call it
that, the appointments will be made by ministers. As it is at
the moment, the chairmen are appointed by the Director General,
in consultation with ministers. We would expect the ministers
to make the appointments in consultation with the appropriate
bodies, one of whom might be, for example, the Director General,
I do not know, but I think that will be a change which comes with
the format of the new Council in the new Water Bill.
348. For how long is your appointment?
(Mr Terry) Individually, I think I am
right in saying, we are appointed for four years.
349. And is that renewable?
(Mr Terry) Can I talk about my particular case? I
was appointed for four years as Chairman for the North West, and
subsequently I was appointed for a further four years for the
North West, and, at the same time, I was asked to take on the
position of the National Council Chairman. The procedure, I believe,
after two appointments, Sheila can perhaps speak about that.
(Mrs Reiter) In my particular case, I had a three-year
appointment and a four-year appointment; the three-year was because
the Periodic Review was coming to an end and it was not appropriate
to appoint me earlier, so I had a three and a four. Then, of course,
I was reappointed, with all the current chairmen, to come up to
2005, which is when, of course, the new Council will come in,
so we all go on the same day.
350. So has there been a turnover of membership
(Mrs Reiter) Yes.
(Mr Terry) Yes. Typically, I would say that members
of our committees, of our regional committees, it is a regional
industry and we are very much a regional structure, the membership
of our regional committees typically is two terms, and the appointment
there usually is for three years, not for four years; so you would
expect someone to serve on the committee for something like six
351. And does anybody serve for only three,
(Mr Terry) Yes; some people, either because they choose
to or maybe we choose not to reappoint them.
352. Sorry; we?
(Mr Terry) Sorry, the process chooses not to reappoint
them. The Director General, in discussion with the chairmen, would
not reappoint them; but that is rare. I think normally it would
be six years. But, for example, in my particular case, I have
had two members who have had only a three-year term of membership
because they felt they were unable to continue to make a contribution
because of other levels of commitment.
Baroness Gould of Potternewton
353. I wonder if I might go back to the relationship
with the consumer, and I was very pleased to hear that you try
so many avenues to find out what the consumer actually wants from
you. I wonder if, first, you can say how you follow through what
you learn from all these meetings and discussions that you have
with these groups; how do you follow that through, how do you
establish your priorities that come from that, and then how do
you process it? And perhaps a little bit about what are the 10,000
formal complaints; what actually do people complain about, in
the main? So those are two points. And my last point, and the
last question, is that, in paragraph 24 of your document, you
actually say that the new body must have strong powers to carry
out the role expected of it. Perhaps you could elaborate what
you mean by stronger powers, what its role would be, and how different
would it be from what you do now?
(Mrs Reiter) From the point of view of
how we follow up, most regions work in a similar way, we have
our committee, which then breaks itself down into working groups,
looking at specific issues. It might be metering, tariffs and
metering, it might be customer services issues, whatever. The
PR04 obviously now is going to become a big issue with us, in
particular, and, of course, the environmental issues. So those
are the sorts of working groups that we have. Now any information
that we gather from our "research", as it were, our
findings, are fed back, obviously, through the secretariat, and
that is the first point of call, and that then is fed back to
the working groups. They then bring it back, having debated it
and considered it and placed it within a framework, to the meeting
in public. So that way we get a direct line from any information
that is fed back into us that is significant; we can actually
then take it back to the meeting in public. I hope that answers
(Mr Terry) It is a sort of iterative process, and
one of the things we are able to do, because we have got very
much at the moment a bottom-up structure, regionally, with the
regional committees, because it is a regional industry. We can
take issues which are across the whole regions, and we discuss
those and develop policies at national level, and that is where
we have the WaterVoice Council. We have a series of dedicated,
what we call actually, policy development days, where we sit down
and spend some time, in our Council, working and developing policies
against things, if you like, which have got an across-the-board,
a national remit.
(Mrs Reiter) With information that has been fed in
through the regions.
(Mr Terry) And I think one of the important roles
is the role that we have of auditing the companies' customer services,
and all the regional committees actually carry out audits of their
local water or sewage company and report against a sort of pro
forma of questions and standards, which has been developed, but
very much auditing their levels of customer service against certain
(Mrs Reiter) And also, at the present moment, in particular,
because of the debt situation, we are actually auditing how they
are handling debt matters concerning their customers. We are very
keen on that and very anxious that that is handled properly and
appropriately. So we are looking at not only customer service
in general issues but also specifically on debt issues as well.
(Mr Terry) My Lord, I think your second question was
354. Was related to your paragraph 24, which
is: "must have strong powers to carry out properly the role
expected of it." So what strong powers, and how would they
be different from what you do now?
(Mr Terry) What the Government said, when it launched
the Water Bill, way back in about 1999, or the concept of a Water
Bill, was that it wanted to put customers at the heart of regulation.
At the same time, it wanted to create a strong, one-stop Consumer
Council for Water. We have taken that to mean it wants a body
which is strong, which has got the right powers, it is not afraid
to challenge the companies, it is not afraid to challenge the
financial regulator, Ofwat, and it is not afraid to challenge
the other stakeholders, the other regulators, the Environment
Agency, Drinking Water Inspectorate, English Nature, for example.
And we have taken the Government at its word and said, "Well,
if that's what you want to try to create, we would like to see,
what we believe, from our experience," and we have got some
11 or 12 years' experience in this field now, "what are the
sorts of powers that we would need to take through and have in
order to exercise that role." And I think what we are saying
is, if we are going to be independent, we need to have effective
independence; it is no good saying, "Well, it's an independent
body, but you're dependent on X for this and Y for that,"
and so on and so forth. Particularly we think the power to obtain
information directly from the companies is an important issue,
the ability to be able to publish information which we believe
is necessary on behalf of customers. As I said right at the very
beginning, in my introductory remarks, we are concerned about
customer issues, and the need to publish information on customer
issues. We think it would be good to have complaint resolution
powers, and also we think it would be right for the regulator
to have a statutory duty to consult us; there is an implied duty
in the Bill, but we think it would be very good if he had a statutory
duty to consult us and to take into account our considerations,
not necessarily to follow them, of course, because that would
prejudice his independence, but very much to take account of our
comments. I think that is how we would interpret that role.
Lord MacGregor of Pulham Market
355. Three questions, if I may. The first is
in your paragraph 21 on openness and transparency, where you invite
us to take a view about whether the Ofwat Board's meetings' agenda
and minutes should be published. Can I invite you to take up the
issue? In the light of the Freedom of Information Act, and so
on, where so many others are publishing this, what view do you
take, and why is it they are not published?
(Mr Terry) It is the regulator's decision,
at this particular point.
356. And you do not know why?
(Mr Terry) I do not know why he chooses not to. But
I think we would say that, well, I can see some reasons, perhaps
I will come to that in a minute, we would think that the business
of the regulatory Board should actually be in the public domain,
in the interest of more openness and transparency. Now, of course,
the regulatory Board, as it will be, or the non-executive Board
that Philip Fletcher has at the moment, of course, do discuss
currently price-sensitive, confidential issues, but I do not think
that necessarily prohibits the publication of minutes which excise
those particular issues. Sheila's committee, my committee, the
Council itself, we publish all our minutes, but in those meetings
we do discuss sensitive issues, commercially-sensitive issues,
maybe not often price-sensitive issues, which I know is one of
the concerns of the Director General, but I do not see any reason
why they could not be omitted from the minutes that were in the
public domain as we do now. It should not be beyond the wit of
man to make that information, which could freely be put in the
public domain, to be put in the public domain. The reason there
is a small amount of it which may have a restricted label against
it should not preclude that which is non-restricted going into
the public domain.
357. The Monetary Policy Committee of the Bank
of England, after all, publishes its minutes, and I heard all
the arguments about sensitivity, and so on, before they did so.
(Mrs Reiter) Can I just add something to what our
Chairman has said. Another thought, in fact, is that perhaps the
regulator ought actually to hold at least one meeting a year in
public, in the same way that we do, that could be a special meeting
dealing with customer issues, and whatever, to give the general
public, the regulator and the regulatory body that direct contact.
A meeting in public once a year, to discuss specific issues, might
be a solution.
358. Thank you. The second question really was
how you make your judgments, and I meant this not so much in relation
to customer services complaints, you know, "We've had a rotten
service," and you look into it, and that is fairly straightforward,
I meant more in terms of policy issues. To take an example, certainly
in the early years after privatisation, I know, as an MP then,
that there were an awful lot of complaints from my constituents
about water charges, and yet, on the other hand, there was the
very big need of the water companies to spend money on all the
infrastructure, capital investment, and so on. One had to make
a judgement. How do you set about that?
(Mr Terry) It has to be a balance, a balance between
the short-term issues of costs, current service which customers
are receiving from their water and sewage company, and a balance
between, if you like, the requirements of the improved environmental
standards in the short and medium term. It is quite interesting,
I think, that customers demonstrated, in a piece of market research
which was conducted late last year, that that is exactly the position
they take. They want the current assets maintained, they want
them improved, they want issues like sewer flooding eliminated,
but, at the same point, they want also further standards, improved
environmental standards, better drinking-water quality is one
issue, but cleaner beaches, cleaner rivers, cleaner lakes, and
so on and so forth; and I think that has to be a balance. What
we try to do is reflect that balance insofar as we can. We do
take the position that one of the key issues that faces the regulator,
and indirectly, I suppose, or even directly, Government, is the
issue of affordability, because if you are going to have ever-increasing
environmental standards, and I use that in the broadest sense,
then that takes with it a bill, and there is an element of how
much and how fast it is realistic to ask customers to pay; that
really is the sort of balance that we try to strike. At the end
of the day, we accept it is entirely for ministers, Government,
to give the guidance on what will be achieved and how quickly
it will be achieved, but it does have a direct play-through onto
the prices that customers will be paying.
(Mrs Reiter) So the pace and affordability we would
use as a challenge, not only to the regulator but also to the
other regulators, the environmental regulators and the Drinking
Water Inspectorate, and so on, at the point at which they are
making known what they would like to see at the next Periodic
Review, setting forward the pricing structure for the next five
years. At that point, we would use those two aspects as a challenge
to them, as well as to the regulator.
359. And the last question is a rather blunt
one; what impact do you think you have?
(Mr Terry) I like to think we have a big impact; My
Lord, if I might answer that. One of the things I have been keen
to do, since we "relaunched" WaterVoice under its new
name something like 15 months ago, was to take us away from being
a super complaints organisation, to which Your Lordship referred
a little bit earlier, and make us into a body that is an advocacy
body, a body that really works with, constructively, we hope,
all the stakeholders, and really tries to influence their thinking.
Always, like the parrot sitting on their shoulder, with "customer-representative"
on our lapel, or whatever it is, but really trying to challenge
them to think through these issues. I like to think we are having
an effect, I like to think that some of the words that were in
the ministerial guidelines, which were produced in January for
the next price review, were influenced by some of the issues that
we had raised directly with ministers, directly with Ofwat, directly
with the Drinking Water Inspectorate, English Nature and the Environment
Agency. But it is always a perfectly valid question, because,
at the stroke of a pen, a minister can decide that that is what
it is going to be.