Water and Sewerage Charges (Limit on Household Expenditure)

– in the House of Commons at 12:32 pm on 15th March 2006.

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Photo of Adrian Sanders Adrian Sanders Opposition Deputy Chief Whip (Commons) 12:32 pm, 15th March 2006

I beg to move,

That leave be given to bring in a Bill to establish a limit on the percentage of household income spent on water and sewerage charges;
to provide for the capping of domestic water and sewerage charges so that the percentage limit is not exceeded;
and for connected purposes.

Water and sewerage charges have increased by an average of 48 per cent. in real terms across the country since privatisation in 1989. The increase is an alarming 85 per cent. in the far south-west, mostly due to South West Water having some of the largest infrastructure and environment protection liabilities falling on one of the smallest customer bases. Indeed, the sewerage element of the water bill in the south-west has increased by over 100 per cent.

Failure at the time of privatisation to protect customers in areas where disproportionate charges would have to fall under market conditions, and inaction since, have compounded a problem first identified 30 years ago, and the situation is not set to get any better. Presently, households in Devon and Cornwall on fixed and low incomes are finding the £449 average South West Water bill too much to accommodate. Many people in the south-west are spending more than 3 per cent. of their disposable income on water and sewerage bills alone. That situation is unsustainable. It is projected that bills in the south-west will, on average, be £675 within the next four years. That is not only unjust but a wholly disproportionate burden, especially in the context of the low average incomes in the far south-west. In my constituency people earn 23 per cent. less per week than the United Kingdom average, yet their water bills are 33 per cent. higher than the average. The greatest burden is falling on those who are least able to carry it.

Water poverty is defined as spending more than 3 per cent. of disposable income on water bills. Nationally this year, nearly 10 per cent. of households were in water poverty, and that is set to rise. It is estimated that by 2010, 40 per cent. of the lowest quintile of earners will be spending more than 3 per cent. of their disposable income on water. Families and pensioners should not have to fear the next water bill to arrive, and worry about how it is to be paid.

Those figures are unacceptable. More than 21 per cent. of average-income households in the south-west spend more than 3 per cent. of their income on water and sewerage. That is only the burden on the average household; the position of pensioners, families and vulnerable groups is much worse. In Devon and Cornwall, pensioners spend more than 6.5 per cent. of their incomes on water and sewerage before they find the money to pay their council tax, electricity bills and escalating gas bills.

As we know, the council tax protests started in Devon as a result of what were considered to be high council tax charges. A campaign began, with people withholding some of the increase in their council tax. As the Government are well aware, 75 per cent. of a local authority's income comes from central Government and not the council tax payer. An enormous number of people would have to withhold council tax for it to have any impact on local Government services.

There has recently been talk of a similar campaign over water charges. As 100 per cent. of the charge funds the company, not many consumers would need to withhold a proportion of their payment for its share price to plummet. Who would be there to pick up the pieces if a water company went into liquidation following the cutting off of its income stream by its own customers? The Government would have to intervene to deal with the chaos caused by lack of water and sewerage supplies. That is why the issue demands the Government's attention.

Pension and benefit rates are supposed to reflect essential outgoings such as payment for water and heat, but national rates do not reflect regional variations. Many reasons and excuses are given for that regional disparity, but there seems to be no willingness to change. The far south-west must bear most of the burden of cleaning up the nation's coastline: 3 per cent. of the population pay for the cleaning of 30 per cent. of it. Just under 10 million tourists visit the area each year, and local people must accept the knock-on cost throughout the year in the form of higher water charges. Projects in other regions also have an impact on their water bills—for instance, the renovation of Victorian infrastructure—yet their bills are not increasing by as much as 10 per cent. a year.

There are a number of ways of helping customers who are stuck in this situation. First, there is water bill equalisation. The precedent in Northern Ireland demonstrates that the Government are willing to consider fairer charging, and a similar method could be introduced in the rest of the United Kingdom. The Consumer Council for Water has said that the circumstances of Northern Ireland and the far south-west are identical in terms of low population, lower incomes and huge coastlines.

Under the scheme in Northern Ireland, the water bills of some 200,000 households will be capped at no more than 3 per cent. of their incomes. That will not just help pensioners and those claiming benefits; all households will pay an average of £30 less, and some bills could be as low as £60.

The principle has also been tested north of the border, in relation to electricity bills. Customers in the north of Scotland were burdened with high bills, due to geographical circumstances that increased the cost of distributing electricity. To reduce this unfair burden, subsidies were put in place, saving the average bill-payer £27 a year and keeping 15 per cent. more people out of fuel poverty. That situation sounds remarkably similar to that of the people of the far south-west: geographical circumstances resulting in a higher utility charge.

Another option is a payment similar to the winter fuel payment to help pensioners stay out of water poverty. Pensioners are the group worst hit by high water and sewerage charges, and they would benefit most from support. However, such a payment to all pensioners would not target those who need support—those whose water and sewerage bills exceed 3 per cent. of their income.

So there are many mechanisms that the Government could consider, and which they have shown a willingness to implement in other contexts. They should have a duty of care to ensure that nobody in the United Kingdom lives in water poverty. More than 30 years have elapsed since the problem of disproportionate water charges was first identified, and it is more than a quarter of a century since legislation was introduced in this House to deal with it; sadly, it was repealed prior to privatisation. It is time that action be taken. This issue should not have to come before the House again in 30 years' time.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst 12:41 pm, 15th March 2006

This is a piece of typical Liberal nonsense, but it is dangerous nonsense and the kind of thing that we have come to expect from the muddled thinking of the Liberal Democrats. I thought that we had many legitimate concerns these days about water supply. In fact, a current concern here in the south-east—and, I suspect, in other parts of our country—is that the water supply is in some danger, so we should be very careful when discussing the delicate balance that inevitably must exist between consumption of water, the price charged for it, security of supply and future security of supply. The Bill would interfere with all that in a very negative and unhelpful way.

This is a very obvious populist pitch by a rather desperate political party, but we must not be seduced by that, must we? We must remain focused on the vital necessity of ensuring that the relationship between water consumers and suppliers remains properly balanced. I, being a great believer in the market—as the Liberal Democrats used to be but seem not to be any more—believe that the price mechanism is still the best means of maintaining that balance. We have to ensure that water suppliers can achieve enough revenue and be sufficiently profitable to invest in security and cleanliness of supply, and to address the environmental concerns that rank so highly these days, not least in respect of sewerage, which Mr. Sanders mentioned.

I fail to understand how on earth the artificial limit on the amount that can be charged for water that the hon. Gentleman is arguing for would allow us to achieve security and cleanliness of supply. If revenue is arbitrarily limited, investment will inevitably be limited—unless the Liberal Democrats believe that the difference should be made up by the taxpayer. Perhaps they are prepared to contemplate passing on that additional burden to the taxpayer, turning the clock back to the bad old days when we had insufficient investment in the water and sewerage infrastructure. But I doubt whether anyone, except, perhaps, the Liberal Democrats, would deny that under the new regime we have seen a dramatic and consistent increase in investment in our water supply, for which we should all—householders and other domestic consumers, business and industrial consumers—be very grateful. That would be put at risk if we were to succumb to the argument that the hon. Gentleman made. I am sure that if right hon. and hon. Members were to study the terms of the Bill, they would find it completely unacceptable because it would destroy the relationship that has been built up very carefully between consumers and producers, which provides the investment necessary to ensure that our water supply is continued as we would wish.

A ready resort to capping or limitation cannot be the answer. There may be other answers, and the hon. Gentleman hinted at some of the other approaches that he might favour. However, they are not included in the Bill and, therefore, he undermined the argument for his Bill not only by failing to make the case for it, but by distracting our attention to other possibilities. I hope that the House will not support the Bill and that we hear no more about it.

Question put, pursuant to Bills and nomination of Select Committees at commencement of public business">Standing Order No. 23 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.

Bill ordered to be brought in by Mr. Adrian Sanders, Andrew George, Matthew Taylor, Mr. Dan Rogerson, Julia Goldsworthy, Mr. Colin Breed, Mr. Gary Streeter, Mr. Geoffrey Cox, Mr. Anthony Steen, Angela Browning, Richard Younger-Ross and Nick Harvey.