Clause 42 - Objectives and duties under WIA
Water Bill [Lords]
8:55 am
Mr Norman Baker (Lewes, Liberal Democrat)
I beg to move amendment No. 281, in
clause 42, page 45, line 23, after 'the', insert 'immediate and long term'.
Good morning, Mr. Amess. I happy to say that I am in fuller breath than I was during several earlier sittings. I am pleased to move the amendment, in my name and that of my hon. Friend the Member for Guildford (Sue Doughty). It relates to the objectives and duties under the Water Industry Act 1999. The amendment would insert the words ''immediate and long term'' in relation to the interests of consumers, and there is a good reason for doing that.
New subsection (2B) talks about consumers' interests being promoted by ''effective competition''. I do not think that anyone would deny that effective competition has a role to play, but on its own it cannot deliver on the long-term interests of consumers. Indeed, competition tends to operate on the basis of short-term rather than long-term advantage. In other words, what consumers say they want, by and large, if they are asked, is to have water at the cheapest price possible. They would regard that as an advantage to protect consumers, and they would say that competition was about that in so far as there is competition in a monopolistic industry such as water.
That is not necessarily in consumers' interests in the longer term, however. Water prices are in the news, because there has been a clear indication that they will rise above inflation, and there is a necessary objection to that from consumers and others who feel that prices are rising beyond what is reasonable. The interests of consumers in the longer term require, for example, investment in long-term infrastructure works to ensure that there is no water shortage, that there is adequate reservoir capability, that any pipe work to transfer water from one area to another is done, that the environment and the quality of water are satisfactory, that any concerns about pathogens, bacteria or whatever in water are dealt with satisfactorily, that water is of a satisfactory standard for drinking and so on. That requires long-term investment, but I am not confident that the clause takes account of those wider factors beyond competition and ensures that consumers' long-term interests are addressed.
I do not want to stray too far from the clause, but there is also an issue about the relative costs of water, which vary from one part of the country to another. We had a discussion about the south-west the other day. It is difficult to defend a situation that happens to have been inherited from privatisation whereby water
prices vary widely between different parts of the country.
It could be argued that the prices for water consumers in one part of the country should reflect the costs that apply to their supply, and the costs of supplying water in the south-west will differ from the costs of supplying it in, say, Northumberland. Nevertheless, the wide variation does not necessarily relate simply to geographical necessity; it relates also to the rather curious and flawed arrangements for privatisation. Those were put in place by the last Conservative Government to privatise the then 10 public companies, with a green dowry to help them along the track. Those flawed arrangements have been perpetuated through the K factor subsequently and have never really been examined since, so they are still in place many years on.
That is not dealt with in new subsection (2B), which talks about promoting effective competition. The needs of the consumer must be addressed in many different ways, which go beyond that narrow aspect. It would be wrong if the objectives and duties under the WIA simply related to promoting competition and failed to take into account the myriad other factors that I have referred to.
I hope that the Minister will accept that there is good reason for the amendment. He may have been advised that there is a problem with it; for example, that it relates to the wrong part of the Bill. If so, will he explain how the wider objectives of ensuring that water is drinkable and there is proper long-term investment, which I am sure that he recognises are for the consumers' benefit, will be reflected in the objectives and duties under the WIA?