My Lords, I wish to speak to Amendment No. 82. Before I do so, I declare an interest as a director of a water-only company in the South East. As we know, Amendment No. 82 inserts a new clause requiring the Secretary of State and the Assembly in Wales to take appropriate steps to encourage the conservation of water. I agree wholeheartedly with my noble friend Lady Byford that that really should be at the beginning of the Bill, because it is one of the most important issues.
I should like to ask the Minister what action the Government intend to take in respect of the water-resource situation in the south-east of England. We heard from the noble Baroness, Lady Miller, that there had been a huge drought. It makes me smile wryly when I consider that, in Committee, we talked about drought and were not quite laughed out of court, but we were told that the matter was not in our ken, that the country had too much water and had not had drought for seven years, and goodness knows what else. The situation is now very serious.
As I explained many times during the passage of the Bill, the south-east region is water-resource deficient. A recent Environment Agency report, State of the Environment 2003—The Environment Agency's assessment of the environment in South East England, showed that Kent, Sussex, Hampshire and the Isle of Wight's water resources were the most precious in the UK. More water is consumed for each person in the South East than anywhere else in the country, which, combined with the fact that it is more deficient there, sets up a real problem. The area receives one of the lowest amounts of rainfall each year.
The amount of water available to each person is already lower than in Egypt, Morocco and Kenya, and less than a fifth of that in Turkey. As the noble Baroness, Lady Miller, has said, drier summers are predicted in Britain in the future as a result of climate change. Added to that, a huge increase in demand for water in the South East is forecast as a direct result of population growth. Our population is going to grow by about 2 million. According to the Environment Agency, that will cause more unsustainable water abstractions unless demand is managed and new resources are developed. We all know about the outcry that greets new resource development such as reservoirs.
At last month's Economist Water Conference, the Environment Minister, Mr Elliot Morley, was quoted as saying that the South East has already been officially recognised as a water stressed area. In that context I want to ask the Minister what the Government's intentions are regarding demand management measures for the South East and, in particular, for water metering? The Defra policy paper, Directing The Flow: Priorities For The Future of Water Policy, published in November 2002, discusses the water resource situation and identifies as a priority for water policy,
"prudent use of water resources and keeping its use within the limits of its replenishment".
That point was made by the noble Baroness, Lady Miller, and my noble friend. The paper goes on to state:
"We will continue to use the twin track approach of demand management and development of resources to achieve sustainable management of water resources".
The Water Bill takes forward the main supply measures set out in the Defra paper, putting water resource and drought plans on a statutory basis and makes changes to the abstraction licensing system. The Government are also aware of the need for water companies to reduce their leakage rates. However, as the Environment Agency has pointed out, the majority of the region's water companies achieved a reduction in their leakage rates between 1997-98 and 2000-01.
I turn to demand management measures. The Government's policy is to permit the growth of metering on a voluntary basis. It is now clear that that approach is less than equal to the water resource challenges that we face in the South East. The agency's report, State of the Environment 2003, the Environment Agency's assessment of the environment in south-east England, published in June this year, states:
"All water companies in the South East have seen an increase in the number of metered properties since 1997/98. This increase has mainly been through voluntary take-up, installations in new homes and the metering of sprinkler or swimming pool users".
But it goes on to state:
"Continuation of this policy is unlikely to achieve the metering levels the Environment Agency believes is necessary. Most of the companies are unlikely to achieve the forecasts for 2004/05 and 2024/35 proposed in their water resource plans".
For some time, the agency has accepted that real water savings from metering will come only when there is sufficient metering penetration to introduce innovative tariffs that dissuade high domestic use.
As I have explained previously, the reality is that pursuit of a policy of optional metering, at the request of customers and free of charge, is ineffective as a demand management tool. Compulsory metering is much more economical than optional or selective metering. Optional metering is more costly because meters may be situated only in every third, 10th or 20th house. In other words, compulsory metering is the only economic way of applying demand management in a scarce water area.
Furthermore, the situation in the South East has deteriorated since we last discussed the Bill and since the agency produced its report. For eight consecutive months, the region has had below-average rainfall. According to the Met Office, 575 mm of rain should have fallen in south-east England during the first 10 months of the year where only 346 mm fell. River flows have continued to fall throughout the autumn, which has been the third driest in the region since records began. As has been pointed out, if we do not have substantial rainfall this winter, the region faces water shortages next spring.
The water companies that serve the region have called on their customers to help conserve water supplies, but it seems ludicrous to suggest to people in the middle of November that there should be a hose-pipe ban, because few hose-pipes are used at this time of year. I note that WaterVoice Southern, which is the voice of the consumer, is backing these efforts.
Therefore, in light of the new Clause 81 and the deteriorating situation in the South East of England, do the Government have any plans to change their policy on metering? If not, do they believe that the situation in the South East is now sufficiently serious to warrant the Secretary of State declaring it "an area of water scarcity" and therefore to be subject to compulsory metering without the need for a company application, which would only delay the inevitable that a change in policy is required to recognise the seriousness of the situation?
Lest I should be accused of worrying only about the South East, although that is where the situation is serious, the whole of England and Wales is seriously water deficient. According to a press notice from the Environment Agency this month, throughout England and Wales there is less water available per person than in some countries in Africa and the Middle East. Given the Government's own projection that there will be an increase of 3.3 million households in England and Wales between 1996 and 2016, and that the population is set to increase by 2 million over the same period, the situation is serious. Can the Minister inform the House what other measures the Government are considering in terms of demand management or resource development in order to comply with their new duty to take appropriate steps to encourage the conservation of water?