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I asked for this debate to highlight how Southern Water is treating residents of Gatcombe and Chillerton, two of the many delightful villages in my beautiful constituency. I also want to draw attention to the lack of any affordable route to get the dispute that exists with a monopoly supplier considered independently. I have raised those matters with Ministers before, but it seems that they fall down a deep, dark hole somewhere between the Ministry of Justice as a legal issue, the Department for Business, Innovation and Skills as a consumer protection issue, and the Department for Environment, Food and Rural Affairs, which is responsible for the supply of water. My right hon. Friend the Minister may have drawn the short straw, but I am particularly grateful that he is here to pick up the baton.
Southern Water charges some residents of the villages and surrounding areas of Gatcombe and Chillerton full rates for the supply of their water. However, owing to a number of agreements, most notably the Seely agreement of 1907, many residents in the area are entitled to free water or reduced rates for their supply. They pay full rates for sewage and waste water disposal—that is not in dispute.
The 1907 agreement was made between Sir Charles Seely and Shanklin urban district council. The Seelys are an old and distinguished family. Sir Charles was a Liberal Unionist and then Liberal MP for Nottingham, and his second son, Jack, was the Member of Parliament for the Isle of Wight from 1900 until 1906, and again from 1923 to 1924. It is said that he was in South Africa fighting in the Boer War when he received a telegram from his mother telling him he had been elected. He sent a telegram back asking, “Which party?” In fact, he served as both a Conservative and a Liberal MP. It is tempting to think that he would be comfortable with the coalition Government we have today, but all hon. Members know that the Liberals were a very different proposition from today’s Liberal Democrats.
The 1907 Seely agreement permitted Shanklin urban district council to install and maintain waterworks on privately owned land in Chillerton. In return, villagers living on that land were to receive a water supply either free or at a preferential rate, depending on where they lived. The arrangement was to continue for 999 years.
Such a clause would be typical of the Seelys. They were a philanthropic family who did many good works for the island and islanders. Southern Water is the successor in title to that agreement and bound by its terms—or at least it should be. Southern Water claims that the 1907 agreement has “run its course” and that people who live on that land today are not entitled to any discount on their water supply. In fact, some properties currently receive free water, some pay a reduced rate and others get no reduction at all. There appears to be no rhyme or reason as to who pays what.
It is clear that Southern Water is not behaving in a fair and consistent way. It has even asked my constituents for details of which of their neighbours are getting discounted water so it can remove the benefit. Needless to say, my constituents have not responded to such requests for information. Amazingly, Southern Water appears not even to know to whom it is giving discounts.
This issue does not affect thousands of people—there are only 352 electors, and not all of them are affected—but over the years, a number of my constituents have tried to sort out the problem, including John and Adrienne Horne and George Nightingale, who have kept me up to date with what is happening. The parish council and county council have tried to help without success. I have written to Southern Water’s chief executive. Our most recent exchange was in March this year. It was unproductive.
Southern Water says that any financial loss to householders has long since expired, but seems not to understand that the benefit was always intended for the residents whether or not they suffered loss. It says that costs have gone up, that water usage has increased, and that water from the area may not meet current water quality standards. Finally, it says it would not enter into such an arrangement these days, and that it would instead make a one-off compensation payment to the landowner. All those arguments have been made before, but my constituents have received legal advice saying that none of it affects their rights as residents and Southern Water’s obligations to them.
As I said, my constituents have taken legal advice, including counsel’s opinion, all of which confirms their view that Southern Water is bound by the agreement, but all this has been to no avail, and we now seem to have reached a stalemate. Southern Water says that it is interpreting the law in a particular way, and that is that—if it says that a 999-year lease lasts for only 100 years, that, as far as it is concerned, is the end of the story.
As far as I can see, there is little basis on which Southern Water can legitimately argue that this legally binding 999-year agreement has no force in 2012 or beyond, particularly given that residents in some of the newer properties were given reduced rates on their water charges, because of the Seely agreement, as recently as 2008. Southern Water has claimed in correspondence that any benefit should have ceased many years ago.
The Seely land was given at a peppercorn price in 1907 in return for the long-term benefit to villagers, yet Southern Water sold some of it in 2004 for £50,000—houses have since been built on it—adding insult to injury. The Minister knows that Southern Water is a monopoly supplier and that my constituents cannot simply go elsewhere to get water. Ofwat, which regulates the market, states that consumers treated unfairly by water companies must go through the company’s complaints procedure. Afterwards, they have the right to complain to the independent Consumer Council for Water, which is a statutory body that should represent consumers’ interests in dealings with water companies, but the council has refused to get involved, saying it is a legal matter.
It seems that the only way my constituents can get proper consideration of their case is by taking Southern Water to court, but that would cost many thousands of pounds and is simply not feasible. That surely cannot be right. It has been suggested that residents should not pay the water rates that are not due, but Gatcombe and
Chillerton residents are a sensible group of people and are concerned that such a course of action might have an adverse effect on their credit records.
We are left in the position, then, where Southern Water, a financial giant of a company with a turnover of almost £650 million, is riding roughshod over my constituents. It realises that there is no realistic prospect of “the little people” taking it to court and that the regulator will not get involved, so it is applying the law as it wishes it to be applied—and tough luck to anyone who disagrees.
In short, there seems to be no way in which my constituents’ concerns can be examined independently without recourse to the courts, yet Sir Charles Seely knew, more than 100 years ago, that it was necessary to provide “the little people” with a means of settling disputes. The Seely agreement makes provision for independent arbitration of any dispute, but Southern Water is simply not interested. Sir Charles would be outraged, and so am I.
Taking into account that this is a regulated industry, I hope the Minister can help me to find a way forward that will ensure that the residents of Gatcombe and Chillerton get their legal rights. We need to find a way of getting these agreements examined and, if appropriate, enforced consistently and fairly. Furthermore, Southern Water must be made to deal properly with the residents of Gatcombe and Chillerton.
Finally, I would like to thank the Minister very much for being here to respond to this debate. I wrote only recently to his colleague the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend Richard Benyon, inviting him to come to the Isle of Wight for a number of reasons, and this was one of them.
Let me start by congratulating my hon. Friend Mr Turner on securing this debate and, as one who has known him for many years would expect, on the considered way in which he has made his points. It is probably as much a surprise to him as it is to me that I am replying to the debate, rather than the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend Richard Benyon who deals with such issues in the Department. Unfortunately he is unwell this evening, and I volunteered to respond to the debate in his stead. I hope that my hon. Friend the Member for Isle of Wight will understand, therefore, that my depth of knowledge of the subject is a little more limited than that of my hon. Friend the Under-Secretary, who I have no doubt will respond to his invitation—to which he referred at the end of his speech—as soon as possible.
Clearly this is an issue of great importance. My hon. Friend was kind enough to furnish us with a copy of what he was proposing to say this evening, so that we could prepare for it. Having read through it several times, as well as listening to him just now, I can assure him that I fully understand the concerns that he has expressed, and which I am sure most hon. Members would share, faced with such a constituency case. Although this is an important issue, however, I am now going to have to disappoint my hon. Friend slightly, because as my hon. Friend the Under-Secretary said in the letter that he wrote to him on
My hon. Friend also referred to the role of the regulator, Ofwat. As I think he knows, the regulator’s role is to regulate prices, so that companies can charge their customers as a whole, based on that regulation. The regulator can cap the total revenue that companies can collect from their customers, and set rules to ensure that customers are charged fairly. The regulator plays an important role in ensuring that we have resilient water resources, balancing the need for investment to maintain and improve water and sewerage infrastructure to meet water quality and environmental standards with the need to keep prices low for customers. However, as the subject of this debate centres on a legal agreement—which, as I have said, may end up in the courts—I am afraid that I am unable to comment, and I have to confirm that Ofwat does not have a role in the dispute.
Nevertheless, if my hon. Friend will permit me, I would like to spend just a moment on wider water issues, some aspects of which are relevant to this debate. There has been a lot of discussion in the country over the past two or three months, with the initial drought and then the rain over the past 10 weeks, which has brought much needed relief. However, these events demonstrate to everybody in the country the need to take action to secure sustainable water supplies, now and in the future. That action was set out in the Government’s water White Paper, which we published last year. It described a vision for future water management in which the water sector is resilient, in which water companies are more efficient and customer-focused, and in which water is valued as a precious and finite resource. The White Paper also described the actions to be taken by all of us—the water industry, businesses and agriculture, the Government, and families in their homes and gardens. The White Paper sets out the Government’s long-term vision for the water industry and the need for reforming the abstraction and competition regimes. We will also introduce a draft water Bill before the summer recess.
My hon. Friend referred to the fact that his constituents had nowhere else to go for their water. I am sure that he will therefore welcome that part of the water Bill that will increase resilience by increasing competition for customers and stimulating a market for new water resources, precisely to address the issue of customers having no alternative. Upstream competition should encourage existing water resources to be used more efficiently, reducing the threat of drought and requiring less water to be abstracted from our rivers and boreholes in water-scarce areas.
I know that the action we are taking to ensure that our water resources remain resilient and sustainable will be close to my hon. Friend’s heart, and to those of other hon. Members. The White Paper described the things that we can all do to use water more sustainably, whatever we are paying for it. Families can use less water in their gardens by installing a water butt, by using grey water and through other methods. They can also save water, and money, in the home by fitting water-efficient devices such as dual flushes and aerated shower heads, and by repairing dripping taps. I am delighted that the Isle of Wight is leading the way on sustainability. Having strong family connections with the Isle of Wight, I am personally enthused by that fact.
Without wishing to spin this matter out any longer than I or my hon. Friend might wish, I have to reiterate that because the issues that he has quite properly raised and publicised relate to a legal matter, it would not be appropriate for the Department for Environment, Food and Rural Affairs to comment officially or for Ofwat to intervene. In the last part of his speech, however, he said that the Seely agreement made provision for the independent arbitration of any dispute. He also, rightly, said that the prospect of the cost of legal action was rearing its head for the little people. If such a clause exists in the agreement to enable the independent arbitration of the dispute, it therefore seems to me that that would be a sensible and logical step for both sides to take. Speaking personally, I would strongly urge both sides to use that facility for independent arbitration, which should provide a way to resolve this matter without further time-wasting or further cost to either side.
Question put and agreed to.