Water Industry (Amendment)

Part of the debate – in the House of Commons at 4:22 pm on 18 February 1998.

Alert me about debates like this

Photo of David Kidney David Kidney Labour, Stafford 4:22, 18 February 1998

I beg to move, That leave be given to bring in a Bill to make further provision

with respect to the water industry. The Bill is to amend the Water Industry Act 1991 and for connected purposes. In short, it is a Bill about sewage, or, more precisely, about the sewers and the works that take away our sewage. It is not an engaging subject, I admit, but it is a very necessary function. The Bill would correct what I believe is an unfair omission from the privatisation of the water industry as carried out by a previous Conservative Government.

Around the country, especially in rural areas, are a number of small sewage works that were excluded from the privatisation of the water industry. That leaves the owners with the continuing liability for the cost of maintenance and upkeep. Since 1991, the environmental standards imposed on those works have been raised, adding to the financial burden on owners. I give as an example Stafford borough council, owners in the years before 1991 of a number of small sewage works provided under public health and housing provisions. Today, those works service a mere 160 or so households in rural areas. The cost of that is ridiculously high, as service on such a small scale is hopelessly uneconomic. If you will excuse the pun, Madam Speaker, it is not the council's business.

As a result, the council has to choose one of two unattractive options. It must either require the service users to pay a service charge many times in excess of the water company's charging rates, or subsidise the charge using other people's council tax and rent payments. In 1996, the cost to Stafford borough council of such a subsidy was almost £100,000 for the year.

Under the 1991 Act, an owner in that situation can ask the water company to adopt the sewage works, but the water company cannot be compelled to do so. In the event of a disagreement between the company and the owner, an appeal may be made to the regulator, Ofwat. The adoption procedure, including the appeal procedure, is contained in section 102 of the Act. The criteria that are set out in the section stack the odds against the owner.

My Bill would turn that around and place an obligation on the water company to adopt the sewage works. It would substitute a new section 102, which would provide that an owner or any of the owners of a sewer or a sewage disposal works may request that a water company make a declaration to adopt such a sewer or works.

The company would be required to make, within four months of such a request, a declaration that the sewer or works are to be vested in the company. The specified date of vesting must be no later than six months after the date of the declaration. That framework provides an overall maximum time scale from request to adoption of a year. In the event of a dispute, an appeal would lie with the Secretary of State for the Environment, Transport and the Regions. For a water company not to carry out the procedure would be an offence, subject to the defence of due diligence.

The Government who devised the sale of the water industry considered that question ahead of the 1991 Act. A consultation paper on water and sewerage law was issued in March 1986; it stated that the Government foresaw that the problems of private sewers would increase unless remedial action were taken. It therefore proposed that all sewers and private sewage works should be transferred to the water companies. The paper continued: The cost of the proposal is difficult to estimate but water authority figures suggest that it could range from £10 million to £30 million per annum in extra maintenance expenditure nationally, depending on the assumptions made. This compares with total water authority revenue of about £2.5 billion. These increased costs, if passed on in higher sewerage charges, would add little to the average annual bill. I am confident that most hon. Members would regard that proposal as a fair and reasonable solution to a future problem that the then Government had anticipated. But what happened? The Government completely reversed their position, and excluded such sewers and sewage works from the Bill. I believe that the fair and reasonable solution was abandoned in favour of maximising the privatisation receipts.

Sewage may not be the most glamorous or engaging subject for our consideration, but I hope that the attention of the House can be captured by a call for fairness and equity in whatever circumstances it may arise. Therefore, on behalf of those few private owners such as Stafford borough council, which have been disadvantaged by the 1991 Act, I ask the House for leave to present this amending Bill.