Examination of Witnesses (Questions 380-390)|
WEDNESDAY 30 APRIL 2003
Lord Jauncey of Tullichettle
380. You advocate that the new WaterVoice, CCW,
will be given a statutory right to be consulted, in the Bill.
Now can you ever envisage a situation in which, having been consulted,
the new body came to the conclusion that the decision which was
made by the regulator was adverse to a large number of consumers,
and, in that event, would you think that it would be appropriate
to give this new body a right of appeal against Ofwat's decision?
(Mr Terry) It would have, of course,
a right of appeal, or it would have a right of request for judicial
381. Forget about judicial review.
(Mr Terry) I am not quite sure to whom you would appeal.
382. I was assuming it would be the Competition
Commission, as indeed other companies appeal in relation to licence
(Mr Terry) I think, as it is at the moment, we are
reasonably content with the status quo. I think, if there was
a shift to increase the ability of the companies to appeal to
the Competition Commission, for example, we would suggest that
that could be considered perhaps as a counter-balancing proposal,
that the statutory customer body also, under the circumstances
which you outline, might have a right of appeal to the Competition
Commission. And I think really it is if the current status quo
applies I think we would say, warts and all, we would probably
accept it as it is. But if there was a move to increase the ability
of a company to appeal then I think we would want some counter-balancing
proposal to make sure that, for example, the new Consumer Council
for Water, under certain circumstances, had the right of appeal,
on behalf of customers, on customer-related issues, to the Competition
383. Of course; but are you suggesting that,
in respect of their right of appeal, they would have a right to
appear as parties in a company's appeal, or that they would have
the right to initiate an appeal at their own instance, or both?
(Mr Terry) I think, probably both. If, for example,
a company were to be appealing about a price limit, I think we
would expect the new Consumer Council for Water to have the right
384. You would like to be heard?
(Mr Terry) Yes, to be heard. But I think also, if
there was a change, and I think it is an `if' there was a change
to the current procedure, we would consider that it would be right
that there was some balancing right of appeal by customers. Let
us bear in mind, My Lord, that for all domestic customers, and
the majority of business customers, it is a monopoly supplier.
They have no option as to where they take their service from,
and, in general, you have no option as to whether you take the
service or not. So I think the answer to your question is, under
those circumstances, we would want to see some balancing proposal.
385. I must declare a peripheral interest, in
that I am paid on a consultancy basis by a water treatment company,
but this question has nothing to do with that, it is a more general
one really. If one of the main duties of a regulator is to look
after the interests of the consumer, I am still not clear why
then WaterVoice, to take one example, is needed; indeed, I wonder
whether a proliferation of voices representing the consumer does
not add to the confusion for consumers as to precisely who is
acting in their interests and who they should go to when they
(Mr Terry) The water regulator has a
number of duties, currently he has a duty to ensure that the companies
can finance themselves, and a subsidiary duty to look after the
interests of customers. I think the change which was proposed
in the new Bill is to make the interests of customers higher up
the agenda, but I think the other duty will still remain. I think
it is more a process by which an organisation, which is a dedicated
organisation looking at customer interests, can actively lobby
and actively work and ensure, if you like, it is a sort of a watchdog,
that the Director General is actually considering all aspects
of the customer's perspective when he makes a particular decision.
I take your point about the proliferation of customer bodies,
but, in the case of the water industry, where, as I say, it is
a regional monopoly, I think a strong body which can reflect,
particularly at a regional level, through the particular regional
customers' concerns to the Director General, is something that
would be a valid part of the process.
386. You used the word `watchdog' for WaterVoice,
but actually the shorthand for `regulator' in the tabloid press
is also `watchdog.' is it not? Who is the watchdog, this is what
the consumer might be asking; who is on watch?
(Mr Terry) Yes; that is always a danger, but I think
if you actually write the Memorandum of Understanding correctly
you will be clear whose responsibility a particular input and
a particular output are. I think it can work, but it will require
a determination by the parties involved in the new circumstances
to make sure it works properly.
(Mrs Reiter) If I may add something to that, I think
the other thing is, we are slightly unique, in the sense that
we have not just the supply of the water and the removal of the
sewage but, of course, there are tremendous regional environmental
overtones. I think there is a requirement therefore for local
representation and local feedback to the centre on customer issues,
because the customer issues are not just the price of water, however
important that may be, but also it is the question of the protection
of the environment. And actually it is interesting to see how
people are recognising the benefits that they have received as
a result of what they have paid in their water bills in the past.
It does not mean to say they are prepared to pay a great deal
more in the future, but, in fact, they are now beginning to recognise
what has been achieved through the water and sewerage bills. I
think part of that success, blowing our own trumpet, is to say
it is because of the work that we have been able to do with the
Baroness Gould of Potternewton
387. I wonder if I can go back, I think almost
to where I started, in a sense, because I do feel very strongly
about the need for a dedicated consumer interest, I think that
is absolutely essential. Really it is your relationship with Ofwat
and how you achieve that that I am still getting at, and perhaps
I can give you a little example: I noticed in the Memorandum of
Understanding, on the question of market research, it says `can
be done with Ofwat or separately, as the occasion rises.' So my
question is, has an occasion ever arisen where actually you have
done separate market research, and for what purpose did you do
it, and then, the results of that, how did you influence Ofwat
to take note of it?
(Mr Terry) My Lord, could I answer that
by saying that currently we are undertaking a piece of work; we,
WaterVoice, felt it was necessary to conduct market research associated
with the reason customers are getting into debt. We made the business
case for that and we went to Ofwat and said, "Look, we would
like to conduct this particular piece of research; here are the
reasons we would like to conduct it, and this is what we would
expect the output to be, and this is what we'd expect to do with
the piece of work." Ofwat said, "Well, actually, we'd
quite like to join you on that piece of research." So they
have actually come alongside us and are working with us in that
particular piece of research. But it is a piece of research which
we are managing, directly as a result of our identification of
this particular piece of work as a need. And it is the one example
because, since we signed the Memorandum of Understanding in 2002,
it is the one piece of work that actually has fallen into the
category that you are talking about. But it was a piece of work
which we identified, identified the need, made the case to Ofwat
and we are actually conducting it, although Ofwat are working
with us, as are, for example, Water UK, on aspects of that particular
piece of market research.
388. Could you envisage a situation where you
have a problem with not being able to persuade Ofwat that something
is necessary, and therefore would conduct a piece of market research
in order to prove that point to Ofwat; could you ever envisage
a situation like that?
(Mr Terry) It would be extremely difficult under the
current way we are constituted, it would be extremely difficult
to do that, insofar as we come out of the Ofwat stable. I think
it will be something the new Consumer Council for Water would
be able to do, which is one of the reasons, I think, that we believe
that that separation would be a good thing.
389. One final question, because I think it
is something to which you attach importance in your memorandum.
Under the new authority you would like to see the members of the
CCW involved informally in consultation about the appointment
of members of the new authority; I just wondered why informally?
(Mr Terry) We accept entirely that the
appointment of the Director General and the appointment of the
Board is a matter for ministers but I think it would be something
to which we might add value, because of our knowledge of customer
issues. Really, it is trying to help improve the quality of the
decision about the selection that ministers would make, it was
a sort of not embellishment but a bit of polishing at the edges
which we thought we might be able to make by making that sort
of contribution. It was not a question of the argument for consultation,
just the form that it would take.
390. Fine; thank you very much indeed. That
has been extremely helpful. We are most grateful to you for the
memorandum and most grateful to you for being with us this afternoon
and answering our questions so fully. It has been extremely helpful
to us. Thank you.
(Mr Terry) My Lord Chairman, can I thank you very
much indeed for the opportunity to speak to you. Thank you very
Chairman: Thank you.