Clause 42
Flood and Water Management Bill
3:00 pm

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

I beg to move amendment 39, in clause 42, page 26, line 42, leave out ‘may’ and insert ‘shall’.

Ann Winterton (Congleton, Conservative)

With this it will be convenient to discuss the following: amendment 40, in clause 42, page 27, line 8, at end insert—

‘(3A) In determining which community groups qualify for concessionary charges, undertakers shall include as a minimum the following groups—

(a) places of religious worship,

(b) properties owned by Scout and Guide Associations and similar youth groups,

(c) community amateur sports clubs and similar types of sports clubs,

(d) village and community halls, community centres and similar buildings owned, or leased by non profit making community associations.’.

Amendment 162, in clause 42, page 27, line 19, at end insert—

‘(5A) Such guidance shall include reference to the Government’s recommendation of what is a fair and affordable charge for community groups to pay for surface water drainage.’.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

I hope that the reason for my tabling the amendments is clear and that the Committee might be cajoled, seduced and attracted into supporting them.

Amendment 39 would insert “shall” in place of “may”, which would force water companies to provide for a reduction in surface water charges for community groups.  We Conservatives are delighted to have secured this concession. I pay tribute to my hon. Friend the Member for Arundel and South Downs (Nick Herbert), who leads for us as shadow Secretary of State on such matters and was instrumental in achieving the concessions. We welcome the Government’s decision to follow our course and introduce provisions to deal with the problems caused by companies moving to site area charging for surface water drainage. It is fair to say that not all water companies were caught out. I pay tribute to Yorkshire Water as being exemplary, and bringing in provisions that did not do that. I am delighted that other water companies will achieve best practice in this regard.

It should be up to water companies, who know their customers, to be responsive to their needs, with the input of the Consumer Council for Water. However, the Government have not published guidance and without it, it is difficult to know how Ministers intend to implement such schemes.

Amendment 39 is a probing amendment that is designed to give the Minister the opportunity to explain in more detail the Government’s plans and say whether they intend to publish guidance and on what date they will do so.

Similarly, amendment 40 sets out the minimum for community groups qualifying for concessionary charges. The amendment provides the opportunity for the Minister to set out in more detail those organisations to be covered in a concessionary charging scheme. We accept that many organisations might be eligible for concessionary charges, but the Committee will be impressed that the list should

“include as a minimum”—

following cross-party representations to us—

“places of...worship...Scout and Guide Associations and similar youth groups...community amateur sports clubs”,

which, as well as finding it difficult to meet the extra charges, can ill afford mitigation measures such as the installation of other drainage systems. We are well aware that they are currently already suffering from reduced revenues during the recession.

Again, this is a probing amendment tabled so that the Minister can place on the record today which groups the Government plan to include in their guidance, how advanced the guidance is and when they intend to publish it. I should also like to know how they intend to advise water companies to proceed, because I think that those companies would accept that guidance.

We accept that water companies know their customers and are best placed to judge them, but they are not agents for social policy. We hope that the guidance that the Minister intends to publish will make clear, in recommending it, the test that water companies should apply to potentially eligible customers. We hope that Ministers will also make clear whether they intend to allow publicly run premises, such as schools, hospitals and other public buildings, to be included, because that is a slightly grey area. Their inclusion would increase the cross-subsidy required from other customers to a potentially unacceptable level. That would not be fair, given that they should have the resources to mitigate the charges and that they should see the benefit of reduced bills in future.

Does the Minister accept that it would mitigate the expense and the cross-subsidy required if the Committee sent out a positive message that we would encourage all those groups—public bodies and private and voluntary groups—to store grey water? It would help to mitigate the cost across the board. I know that the Select Committee on the Environment Food and Rural Affairs—I have the honour of being a member—is keen on the idea. However, we have not had the opportunity to debate it, and I would like to return to the subject.

Nevertheless, there will be a cost. Yorkshire Water seems to achieve this without going down the path of having a cross-subsidy. Can we mitigate the cost by asking those groups to store water?

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

On that point, I have discussed the matter with Scouts, churches and other organisations, and they are powerfully behind such an amendment. Indeed, the Bill will not only encourage but incentivise the uptake of SuDS, regardless of the concessionary schemes for which the clause provides. The hon. Lady is right to say that will act as an incentive in the drive towards more sustainable systems.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

I am absolutely delighted. The Energy Saving Trust gave evidence to the Select Committee, and there is a huge amount of work going on. I am delighted to have won a concession, but there is a slightly difficult situation with the water companies, and we would welcome any guidance that the Minister can give us on amendments 39 and 40.

Nia Griffith (Llanelli, Labour)

Different circumstances pertain in different part of the country. Scout and Guide groups in Wales that are supplied by Welsh Water have not yet had these bills landing on their doorsteps. I seek an assurance that companies will not be pushed into unnecessarily inventing or making charges, but that if they decide go down that route, we will have appropriate mechanisms to protect such community groups and to ensure that they are not unfairly charged.

If we have too prescriptive a list, valuable organisations could be missed. The danger is that they might be offended that some were included but not others. I would prefer it if we could stick to generalities, which guaranteed that affected groups would be subject to the strictures of the clause, whether or not they had yet been involved.

While we are on the subject of fairness, and trying ensure that we do not unduly penalise anyone, will the Minister tell us what progress he has made on other forms of social tariff? I ask in case we do not have the chance to debate the relevant new clauses.

David Drew (Stroud, Labour)

I am delighted to speak to amendment 162, which deals with the third part of the arrangements that voluntary bodies have asked us to provide. It follows directly from what was said by the hon. Member for Vale of York.

I pay tribute to my hon. Friend the Minister; he must have met more Scouts than the leader of the scouting movement. We know more about his woggle and the colour of his neckerchief than some would like.

Charging is still something of a running sore for the organisations, which ran a major campaign, but it was not helped by one water company, United Utilities. With amendment 162 we seek to clarify exactly what the Government intend for the water companies as we move towards site charging. The Government have been very clear and want to rule out unaffordable increases in the water bills of those organisations. However, they have not quite said what unaffordable is. We need clarity on what is meant by that. As my hon. Friend the Member for Llanelli rightly says, some companies did not rush towards site charging. Other water companies such as my own, Severn Trent Water, were very fair and were willing to look at percentage discounts, which is the model I would prefer us to follow. However, United Utilities, almost gleefully, wanted to maximise the impact on charities and voluntary organisations by moving towards site charging.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

I congratulate the hon. Gentleman both on tabling the amendment and on moving it in such a courteous manner. How prescriptive should the guidance be, bearing in mind the changes across the various water companies?

David Drew (Stroud, Labour)

I heard what my hon. Friend the Member for Llanelli said and I would make the guidance quite prescriptive because we have seen the problems when water companies are allowed to indiscriminately make the rules up as they go along. It may be that it is not appropriate for us to do it in Committee, but by Report the Government should bring out a clear code of practice that lays down the methodology they believe should be put in place to deal with the issue of affordability, and rule out any form of unaffordability in terms of the social tariff that those groups should pay.

Angela Watkinson (Whip, Whips; Upminster, Conservative)

In support of the hon. Gentleman’s amendment, as an ambassador for guiding, which is one of the listed organisations, I know that a lot of community organisations do not have any income. They operate on a break-even principle if they are lucky. If water companies examine their income, it will be a very difficult way of establishing any charge at all.

David Drew (Stroud, Labour)

Of course that is the case and that is why we need a clear template to ensure some consistency and that there are fair water companies who are not trying to usurp their authority.

Clearly, the organisation that should be overseeing the process is Ofwat. Yet again there is no clarity in Ofwat’s role. It would be very useful for the Minister to say that if we have the template in place, Ofwat should be the arbiter of how it is applied. It should have a very clear responsibility to ensure that we do not go through another situation such as the one we went through last year.

Being very parochial, I am hopeful that the Severn Trent Water approach is the way we proceed with percentage discounts. That is subject to discussion and, dare I say, argument, but we need to ensure that Ofwat is the appropriate organisation to oversee what is happening, so that it is fair and reasonable and not subject to the sort of things we saw before, and subject to the changes.

I am very happy for us to move towards more innovative thinking in that regard. I never believed, in all the debates and lobbies that have taken place, that organisations in the third sector should just carry on as they are. Clearly, many of the organisations have a site area, so they could look at ground water harvesting. However, to do that, they have to have the means. If we are talking about a scheme, I am happy for us to have some flexibility so that we could move towards different forms of water management, but there has to be investment in the operation of those schemes.

I have given the Minister a lot to answer, but it is an important issue and Parliament in general and the Government in particular took a lot of flak on it. I am glad that we have listened and I am glad we responded, but let us actually nail down now how the water companies should be asked to respond, what role there is for Ofwat, how we could move to new forms of water drainage, and how it is to be funded.

Roberta Blackman-Woods (City of Durham, Labour)

I congratulate the hon. Member for Vale of York on introducing these probing amendments—they are very helpful. My hon. Friend the Member for Llanelli is very fortunate if community and Scout groups in her constituency have not yet received higher bills. I am afraid that situation does not pertain in Durham. I am pleased that the Minister has listened to the many representations made by the voluntary community, MPs and so on, and that he has brought forward the clause. Nevertheless, a number of water companies would like some guidance about how to operate the provision effectively, particularly on how they could do so in a fair and consistent manner. I am keen to hear my hon. Friend’s comments on that.

Martin Horwood (Cheltenham, Liberal Democrat)

This is my first opportunity to say what a pleasure it is to serve under your chairmanship this afternoon, Lady Winterton. It is a shame that it is only for one sitting, but we seem to be making efforts to prolong the pleasure, so that is fine. I am pleased that the clause has been included in the Bill, but it is unfortunate that, as the hon. Member for Vale of York rightly said, although area-based charging has been successfully introduced in many areas with enough sensitivity to avoid many of the problems, poor implementation in just one area has threatened community groups, churches and others with wholly unfair and unreasonable charges. The measure raises issues regarding the proactive role of Ofwat in relation to such matters, but that is something we might return to shortly when considering other amendments.

I certainly welcome the fact that the clause puts beyond doubt the unacceptability of the practices that have been mentioned. We welcome all three amendments, because they would put the matter even further beyond doubt. That would be helpful. The second reason why I welcome the clause is that it sets a rather important precedent in terms of timing. It is a proposal for a concessionary charging scheme, and it clearly demonstrates the Government’s ability to legislate at short notice, when necessary, on what might be called socially responsible charging or tariffs. If that can be done for the Scouts and for churches, it should be done for some of our least well-off citizens as well. If, for any reason, we do not actually reach the debate on new clause 1 this afternoon, I put on the record my desire to return to the broader issue of social tariffs on Third Reading.

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

I am extremely grateful for this opportunity to respond. There is clear support in the Committee for the thrust of the clause. I will turn to the amendments in a moment. Hon. Members will be pleased to know that I will not go through the history of the matter, and I will not try to attribute praise either. I am glad that all parties have coalesced around the measure.

I had some interesting meetings in my office with Mr. Brian Moore of England rugby fame and Mr. Mike Gatting. Those meetings were lively and punchy—although there was no physical violence—but also productive. Probably the most attended and populated meeting that we members of the Committee and many other MPs have ever had was the one that the Scouts organised in Portcullis House.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

On that point, the hon. Member for Colchester (Bob Russell), who is, of course, a member of the Chairmen’s Panel, will be hugely disappointed if we do not congratulate the Minister on convening that meeting.

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

The simple fact is, for all the denigration of Parliament, an incident such as that shows that we do respond and listen. I take no credit for that.

Many of the points have already been made, so let me give a short history of the subject. Four companies introduced the schemes and, by and large, in three areas at least, those schemes had been progressing well. We always felt, curiously, that we had the structure to make the schemes work. However, I made it clear that if that could not be done and it was necessary to fix the problem legislatively, I would do so. So here we are today. That shows that this place can sometimes do the right thing.

I thank my hon. Friend the Member for Stroud and other hon. Members for tabling the amendments and for speaking in support of them. Amendment 39 would require, rather than allow, water and sewerage companies to set concessionary surface water drainage charges. Amendment 40 would place certain community groups in the Bill. Amendment 162 would require the Secretary of State and Welsh Ministers to say in guidance what constitutes a fair and affordable surface water drainage charge.

I refer Committee members to the copy of the draft guidance to water and sewerage undertakers. This is an exclusive sneak preview for Committee members because it is not yet in the public domain. The draft guidance deals with the issues that they have raised. It elaborates on, and lists, the types of groups that should and should not be included.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

We are not short of papers, but I wonder if I have missed something, because I do not think that I have seen the draft guidance. That is very remiss of me.

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

I apologise for the fact that the hon. Lady has not seen the guidance. I have just sought clarification. The hard copy was sent on the first day of the Committee. I will ensure that she and other hon. Members receive a copy if they do not have one. It has also been sent by e-mail.

We have done a lot of work. Who should and should not be included in the guidance is laid out copiously. I reassure my hon. Friend the Member for Stroud that there is an indication of the type of charge, but the charge is not specified because the document must be future-proof. It goes into detail about the type of consultation that is necessary to bring forward any charging scheme.

When we met the Scouts, the Churches, community associations, the Central Council of Physical Recreation and others, it was interesting that they did not want individual householders to be disadvantaged as a result of the concessionary scheme, and did not want disproportionate bills to impact on others. They understood that it will be the responsibility of the water company, the regulator and the consumer bodies to sit down, talk the matter through and come up with a scheme that is appropriate for the area. A church should not suddenly find that it is saved from excessive bills, only for the parishioners to go to their parish priest or minister and say, “Thanks very much, my bill has gone through the roof.” We need to get the matter absolutely right.

I know that hon. Members will look at the guidance, and I would be grateful to hear, perhaps on Report, whether they think it is right or whether it needs tweaking. The spirit of the guidance is to say to water companies, consumer representative groups, voluntary sector groups and so on that if a company has a proposal that provides the incentive to develop surface water drainage schemes, they need to sit down and talk through the implications. The hon. Member for Vale of York should not have representatives of businesses in her constituency walking through the door saying, “Thanks for nothing. You have saved others, but you’ve just skinned us alive.” We therefore have to get the matter absolutely right. Rather than prescribing a set amount and fixing it for ever and a day, we are instead fixing for ever and a day the idea that if a company brings forward one of those schemes, it has to consult, get it right and balance the equation, as regards different groups.

Turning to the principle, I applaud the idea behind the campaign; that is why we brought the guidance forward. As the hon. Lady said, many voluntary groups and others live from hand to mouth. Money comes in, and it goes out. They spend what they need to spend to bring children in, to enable them to do activities, or to take them camping, and then it is gone. The church raises enough money to keep the roof on—it does not do it for other reasons—and so on. So the principle is absolutely right, and I think that we have met it with the combination of the guidance and what is in the clause.

The Secretary of State and Welsh Ministers will issue guidance to undertakers that will cover the need for concessionary schemes from which community groups should benefit, and set an affordable charge. It will be very much in line with what is in the amendments. Undertakers are required to have regard to the guidance. I have made the Secretary of State’s draft guidance available, and if anyone has not received a copy, we will send it to them again.

We will expect all companies that move, or have moved, to a site area that charges for surface water drainage to assess whether a concessionary scheme is necessary for community groups, and to ensure that such groups do not face unaffordable charges. I hope that the draft guidance makes that clear.

The draft guidance has not been out for consultation. It has gone only to Committee members, but we would put it out rapidly, subject to the Bill getting Royal Assent, which I hope it will, with the will of the House and the other place. As soon as that happens, we can get the guidance out for consultation.

Paragraph 3.1 on the need for a concessionary scheme states that:

“The Government is clear that they do not want to see community groups facing unaffordable increases in their water bills as a result of site area charging for surface water drainage. We expect undertakers to ensure that this is the case and Ofwat will ensure that undertakers have had regard to this guidance in its approval of individual charge schemes.”

As I have said, we must not forget that other customers will be subsidising the concessionary schemes for community groups, to a lesser or greater extent, so the profile of each company’s customer base will differ markedly. I have seen some of the differences, and they are quite stark.

The guidance will also make it clear that we expect companies to undertake impact assessments and consultation, not only with community groups but with their wider customer base and the Consumer Council for Water, before implementation of concessionary schemes. Our approach will give companies the flexibility to reflect local circumstances—that is right and proper—and local needs, and it will ensure that schemes are fair for all customers.

I am happy to reveal some of the elements in the draft guidance, and I know that Members will look at it as well. Paragraph 4.2 of the draft guidance states that, as a minimum, we would expect to see the groups that the hon. Member for Vale of York has identified in amendment 40 included in concessionary schemes. However, we do not want to include those groups in the Bill because it would mean that any changes necessary in the future could be made only by revising primary legislation.

In addition, if we specified eligible groups in the Bill, it would have to be absolutely clear in legal terms who the members of each class were, and that is not simple. We have been through this before—the issue of trying to identify specific community groups—in previous legislation. It can be done, but it is notoriously difficult. Any legal ambiguity would lead to poor legislation and would risk the clause becoming the subject of litigation to establish the scope of the classes.

I accept that the hon. Lady’s amendment refers to community groups that should be included in a concessionary scheme “as a minimum”, but there is a real risk that specifying any community groups in the Bill will open the floodgates for further amendments to include additional cases from additional groups in the primary legislation—believe me, I have been through this already. Let us deal with that in secondary legislation and in the guidance, and let us get the guidance absolutely clear.

Concessionary schemes could include charities, but are we then talking about charities’ headquarters, or their shops, which compete with retailers on the high street? It could include schools, but are we then talking about private schools, public schools or every school? It could include hospitals, and so on. For all those reasons, I am firmly of the view that we do not want to specify the groups in the Bill. We need to work together on the guidance, and get that absolutely right.

Martin Horwood (Cheltenham, Liberal Democrat)

The Minister may be making a bit of a meal of this. Having worked in a number of charity headquarters and visited many charity shops, I do not think that many of them would have much of a problem with area-based charging.

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

Let us get it right in the guidance, because we have the future-proofing and flexibility there to do so.

The hon. Member for Vale of York mentioned schools and hospitals. We acknowledge that one scheme currently in place includes local schools and hospitals to some extent. We have said in the guidance that schools and hospitals should not be included in perpetuity. They are big organisations and involve big surface water areas, but if we were to move, particularly where a scheme might include them already, there would be a transition from where we are now to where we need to go. To pick up on the point that the hon. Lady made, we are trying to incentivise a change to using well-managed surface water otherwise, rather than putting it straight down the plughole and into the drains. However, we must do that over time, and the guidance, again, explains how that might work.

On affordable charges, Severn Trent, in the constituency of my hon. Friend the Member for Stroud, runs a concessionary scheme that has come in for plaudits. It has worked well. Under the scheme, organisations that benefit from the concession tend to pay about £100. It varies slightly, but that is the average.

However, as I said, I do not want to stipulate a charge in the Bill or elsewhere, because it will change over time. We need to set the criteria, and then companies need to go out and talk to people about what they are going to implement so they can decide which band to place organisations in, based on impact assessments and consultations. As I said, I have issued draft guidance to the Committee, and Ministers in Wales will issue guidance as appropriate.

Turning briefly to amendment 162, I assure my hon. Friend that the Government’s guidance will include a section on an affordable charge.

Roberta Blackman-Woods (City of Durham, Labour)

I do not know whether this is the appropriate place to mention this, but what is the Minister’s thinking on the other social tariffs that might be available to protect vulnerable families and individuals, as my hon. Friend the Member for Llanelli mentioned?

Huw Irranca-Davies (Parliamentary Under-Secretary (Marine and Natural Environment), Department for Environment, Food and Rural Affairs; Ogmore, Labour)

I do not want to pre-empt the discussion that we might have during debate on a subsequent amendment, time allowing, but I note the fact that four hon. Members have now raised that point and the wider issue of social tariffs and affordability for individuals and home owners as well as community groups. I hope that we get to debate that amendment, because I hear what hon. Members have said and have been lobbied a fair bit on the issue of social tariffs as well as on Scouts, voluntary groups and community associations. I note the comments that have been made.

Anne McIntosh (- Shadow Minister, Environment, Food and Rural Affairs; Vale of York, Conservative)

I could not find the consultation on the guidance among my papers, but I am delighted that my hon. Friend the Member for Norwich, North found it on the desk. The Minister may take it as read that we will consider it carefully in preparation. It is generous and timely of him to share it.

I thank the Committee for having such a full debate on the issues. I thank the hon. Members for Llanelli and for City of Durham for their contributions and the hon. Member for Stroud for his very full amendment. The amendments were intended to be probing amendments. I am glad of the debate; the amendments raised several issues, and I thank the Minister for his full reply. I will withdraw them at this stage, but we will obviously return to them on Report. I beg to ask leave to withdraw the amendment.