Select Committee on Constitution Minutes of Evidence


Examination of Witnesses (Questions 342-359)

WEDNESDAY 30 APRIL 2003

MR MAURICE TERRY, MRS SHEILA REITER, AND MR ROY WARDLE.

Chairman

  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.

Lord Acton

  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.

Chairman

  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.

Lord Elton

  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 collectively?
  (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 years.

  351. And does anybody serve for only three, surprise, surprise?
  (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 that question.
  (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 parameters.
  (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.


 
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