Clause 67 - Rating of meters
Local Government Bill
9:30 am
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
This is a simple clause which extends the rating of meters to those belonging to the operator of a supply network in water, gas and electricity. I have a simple question for the Under-Secretary: how much is this likely to increase the average cost to the consumer of water, gas and electricity bills; and how much money will it raise in total?
Mr Desmond Swayne (New Forest West, Conservative)
Why has the Under-Secretary avoided the simpler option of de-rating those meters currently owned by the network operators? What would have been the cost of such a measure?
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
The clause will make meters subject to rating whether they belong to the network operator or to a separate metering company, ensuring that as competition is introduced into metering services, meters will remain subject to rating even though they no longer belong to the network operator. Gas, electricity and water meters used to measure supply to consumers are subject to rating where the meters belong to the operator of the supply network.
The utility markets are being opened up to competition, which applies also to the provision of gas and electricity metering services. There has not been any decision on whether there should be
competition in water metering services since most water supply to domestic properties is unmetered. However, under present rating legislation the network operators could face unfair competition from new companies providing separate metering services. At present no rates are payable for a meter attached to a distribution network where the meter does not belong to the network operator. Thus while a network operator has to pay rates on its meters, its competitors in the provision of metering services would not pay rates on their meters attached to that operator's network. [Interruption.]
The hon. Member for Cotswold has cleverly found that the explanatory notes are so well worded that I felt that it was important to share them verbatim with the Committee. I am glad that he appreciates that approach.
Clause 67 is revenue neutral, which should answer the hon. Gentleman's point. To take meters out of rating would reduce rate revenue by about £20 million. I hope that that answers the point raised by the hon. Member for New Forest, West (Mr. Swayne). The cost of putting in meters is speculative given that we are looking at new metering services companies, and I do not have that figure to hand. This is about being fair.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
How does the proposal square with the aim of the Under-Secretary and of previous Governments to encourage water consumers, in particular, to move to meters to try to avoid the excessive use of water? Surely the proposal will run contrary to that.
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
Not at all. That aim is completely unaffected because the water companies already pay for the meters in question. The water consumer does not bear the burden directly. We are looking for parity between network suppliers and operators and new entrants into the water metering service industry. At present, we do not believe that there will be the effect on the water meter system that the hon. Gentleman suggested.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I find it extraordinary that the Government are introducing something but have no idea how much it is likely to raise. Before we decide whether the clause should stand part of the Bill, we must have an undertaking from the Under-Secretary that he will at least write to the Committee with the Government's estimates of how much they expect the measure to raise.
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
I explained that clause 67 is revenue neutral, so its operation will not produce any extra yield. I hope that that helps him to overcome the idea that it will somehow provide a burden that is not already covered.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I may be in a particularly thick mode this morning, which is highly possible considering the early hour at which the Committee started. Although the burden will fall on the company who is supplying the gas, electricity or water rather than the consumer, that is bound to feed through in
higher bills. The consumer must pay more and the Government must raise more money, because when more meters come into operation from the operators, each one is rated, producing a sum of rates.
Mr Christopher Leslie (Parliamentary Secretary, Cabinet Office; Shipley, Labour)
Clause 67 is about parity and fairness between those who already pay rates on their meters and potential new metering service companies—if we can imagine such firms—that provide meters but are not subject to rates. In the rateable value of the meter, we are able to ensure revenue neutrality in the yield that comes as a result. As meters move from the operator to the new company, the rate bill moves from the former to the latter. I hope that that explains in more detail what I mean by revenue neutral.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I think that I now understand what the Under-Secretary is trying to get at, although I am not sure that he understood himself. It is similar to our previous argument that existing rated meters will come down in order to compensate for the new rated meters.
Mr Nick Raynsford (Minister of State (Local and Regional Government), Office of the Deputy Prime Minister; Greenwich and Woolwich, Labour)
No.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
The Minister is shaking is head, so I am still unclear about what the clause means. We will undoubtedly probe the point again. We have other important matters to debate, and it is a relatively minor query. I hope that my hon. Friends will accept the clause.
Question put and agreed to.
Clause 67 ordered to stand part of the Bill.