Clause 42 - Objectives and duties under WIA

Water Bill [Lords] – in a Public Bill Committee at 8:55 am on 16 October 2003.

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Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 8:55, 16 October 2003

I beg to move amendment No. 281, in

clause 42, page 45, line 23, after 'the', insert 'immediate and long term'.

Good morning, Mr. Amess. I happy to say that I am in fuller breath than I was during several earlier sittings. I am pleased to move the amendment, in my name and that of my hon. Friend the Member for Guildford (Sue Doughty). It relates to the objectives and duties under the Water Industry Act 1999. The amendment would insert the words ''immediate and long term'' in relation to the interests of consumers, and there is a good reason for doing that.

New subsection (2B) talks about consumers' interests being promoted by ''effective competition''. I do not think that anyone would deny that effective competition has a role to play, but on its own it cannot deliver on the long-term interests of consumers. Indeed, competition tends to operate on the basis of short-term rather than long-term advantage. In other words, what consumers say they want, by and large, if they are asked, is to have water at the cheapest price possible. They would regard that as an advantage to protect consumers, and they would say that competition was about that in so far as there is competition in a monopolistic industry such as water.

That is not necessarily in consumers' interests in the longer term, however. Water prices are in the news, because there has been a clear indication that they will rise above inflation, and there is a necessary objection to that from consumers and others who feel that prices are rising beyond what is reasonable. The interests of consumers in the longer term require, for example, investment in long-term infrastructure works to ensure that there is no water shortage, that there is adequate reservoir capability, that any pipe work to transfer water from one area to another is done, that the environment and the quality of water are satisfactory, that any concerns about pathogens, bacteria or whatever in water are dealt with satisfactorily, that water is of a satisfactory standard for drinking and so on. That requires long-term investment, but I am not confident that the clause takes account of those wider factors beyond competition and ensures that consumers' long-term interests are addressed.

I do not want to stray too far from the clause, but there is also an issue about the relative costs of water, which vary from one part of the country to another. We had a discussion about the south-west the other day. It is difficult to defend a situation that happens to have been inherited from privatisation whereby water

prices vary widely between different parts of the country.

It could be argued that the prices for water consumers in one part of the country should reflect the costs that apply to their supply, and the costs of supplying water in the south-west will differ from the costs of supplying it in, say, Northumberland. Nevertheless, the wide variation does not necessarily relate simply to geographical necessity; it relates also to the rather curious and flawed arrangements for privatisation. Those were put in place by the last Conservative Government to privatise the then 10 public companies, with a green dowry to help them along the track. Those flawed arrangements have been perpetuated through the K factor subsequently and have never really been examined since, so they are still in place many years on.

That is not dealt with in new subsection (2B), which talks about promoting effective competition. The needs of the consumer must be addressed in many different ways, which go beyond that narrow aspect. It would be wrong if the objectives and duties under the WIA simply related to promoting competition and failed to take into account the myriad other factors that I have referred to.

I hope that the Minister will accept that there is good reason for the amendment. He may have been advised that there is a problem with it; for example, that it relates to the wrong part of the Bill. If so, will he explain how the wider objectives of ensuring that water is drinkable and there is proper long-term investment, which I am sure that he recognises are for the consumers' benefit, will be reflected in the objectives and duties under the WIA?

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health 9:00, 16 October 2003

I can be very brief. In the absence of the words proposed in the amendment, the duties would none the less embrace both immediate and long-term consumer objectives. They must be balanced in any case, so the amendment has no purpose.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I could just leave it at that, because that is true. There is no purpose in the amendment, because there is already an obligation on Ofwat to consider the full range of consumer interests. That includes the immediate, long-term and, for that matter, medium-term interests.

In the broader sense, the amendment would have no effect. In the literal sense, it deals only with the immediate and long term and does not mention the medium term. We must consider the whole range of interests, and the danger of such a specific amendment is that it does not. It fails to mention the medium term, and if we were to interpret it literally, we would have some difficulties with it.

The main point is that there are obligations on Ofwat. New subsection (2C)(e) concerns competition, and the proposal as a whole mentions competition where appropriate. The Bill is balanced and recognises that consumer needs must be taken into account when considering any potential benefit of competition. I do

not disagree that competition is only one element of consumer interest, and we must take a broader view. However, the amendment is unnecessary, and I urge the hon. Member for Lewes (Norman Baker) to withdraw it.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

I am grateful that the Minister recognises that these issues should properly be taken into account. One reason that we tabled the amendment was that we are not convinced that Ofwat's approach to date has appropriately reflected the long-term considerations.

One of my concerns about the regulation of the water industry in general is the justified complaint that the consumer element has not had proper regard to environmental necessities and that, equally, the Environment Agency has not paid enough attention to the consumer element. The Bill is trying to address that, and the problem has been recognised implicitly, but we tabled the amendment to make the position clear.

I am grateful to the Minister for recognising that consumer interest is not merely about competition. I am not convinced that Ofwat takes that into account, and I hope that the new arrangement will improve that. I am happy to withdraw the amendment on the basis of the Minister's comments, but I put down the marker that there is a problem. The new arrangements must be better than the present ones. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment No. 77, in

clause 42, page 45, leave out lines 26 to 36.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

With this it will be convenient to discuss the following:

Amendment No. 82, in

clause 46, page 52, leave out lines 6 to 24.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I hope that the Committee is a little warmer this morning.

These are sensitive amendments. The Government have done a good job in listing the groups of people whose interests should be considered, and the amendments are designed not to withdraw that list in toto, but to ensure that all the right people are included. By including in the Bill a prescriptive list of people whose special interests must be considered, we may miss some out.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Does the hon. Gentleman suggest, as a parallel, that that would be like including the phrase ''immediate and long term'' and missing out ''medium term''? The Minister might draw that comparison.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I am sure that the Minister is doing everything he can to ensure that the medium term is considered.

The hon. Gentleman is right in that when a Bill carries lists or terms that can be checked off, people immediately fall into the gaps. Ethnic minorities, victims of crime or people from other worthy groups

that need special consideration may be missed out because of the prescriptive list.

Another group of consumers to consider—not in a positive way as the list suggests—are those who are able to pay their bills but knowingly avoid doing so because they know that they cannot be cut off, as opposed to those who cannot pay because of their low income. I am nervous when a list of worthy people is included in a Bill, and what we really want is a catch-all phrase or code of conduct.

Photo of George Osborne George Osborne Shadow Minister (Treasury)

I am studying the Bill more closely than I have previously been able. It is strange that the new subsection states that

''the Authority shall have regard to the interests of''

a group of worthy people, but then says that that does not mean that it cannot have regard to the interests of everyone else. Is the subsection's purpose clear? It says that particular groups of people should be taken care of, but the last line of the subsection states that

''that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer.''

The subsection has no purpose. [Interruption.]

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I agree with my hon. Friend, who put it succinctly, and that is why the amendment would withdraw those terms. However, that alone would be unsatisfactory, because we want worthy groups of people to be considered. I feel that the wording requires tightening up. The Minister's words will provide clarification for those who read the Hansard report of the Committee sitting, and I hope that we can prevent the exclusion of worthy groups of people.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

I want to follow up on that point. Every paragraph refers to ''individuals'' who are, for example, ''disabled or chronically sick''. However, bills are sent to households, so what about couples who are, ''disabled or chronically sick'', ''of pensionable age'' or who receive ''low incomes''? The wording is bad.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

My hon. Friend makes an extremely good point.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

The Minister has made two valid sedentary interventions. Yes, the word used is plural, and he also mentioned a moment ago that the interests of all other consumers may be considered. However, both those points suggest that the wording is not as tight as it should be. Therefore, I move the amendment, with the hope not of excluding worthy proposals, but of tightening up the wording so that nobody falls into the gaps and is excluded.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I understand the hon. Gentleman's point. However, he has conceded that, although five vulnerable groups are identified, that does not preclude other groups or individuals with particular needs. He is wrong in saying that he does not want to withdraw recognition for those groups, because his amendment would do precisely that. The whole point of the amendment is that those groups would be deleted from the Bill. Water is a special service with implications for public health and monopolies, and it is important to take into account the needs of

vulnerable groups. Some of those groups are often overlooked and find it difficult to make their own case.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

Would it not be simpler if the Minister conceded that the Opposition have made a good point and proposed wording such as ''the Secretary of State or, as the case may be, the Authority shall have regard to the interests of all consumers''? Surely that is the basic point.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

But that is already implicit in the Bill in the duty that is being placed on Ofwat—a stronger duty than previously existed—to take into account and promote the interests of consumers. Let us remind ourselves what the amendment would do. It says that we are not interested in the needs of disabled or chronically sick people, the elderly, those on low incomes, rural consumers or those outside the competitive market.

I would not be so unfair as to accuse the hon. Member for Leominster (Mr. Wiggin) of wanting to persecute pensioners, the sick and the disabled—that would seem a rather nasty position for any party to adopt—but the report of these discussions is read outside the Committee. I come back to the point that the amendment would delete the part of the Bill that recognises those vulnerable groups. [Laughter.] Some Opposition Members find that amusing, but I think that it is important to recognise the needs of vulnerable groups.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Perhaps I may come to the aid of the Conservatives—although God knows why. In the debate on the last amendment the Minister objected to the phrase ''immediate and long term'' because he said that it was implicit in the Bill and therefore unnecessary. That was the argument advanced by the hon. Member for South Cambridgeshire (Mr. Lansley). Here the Minister says that it is not implicit in the Bill and that we must list it. Why are some things implicit and others not?

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Because these groups are recognised as vulnerable by organisations such as Water Voice and the Consumer Council for Water. The representations that we have received from various organisations that represent vulnerable groups show that water supply for those groups is an issue. I concede that other groups may have needs, and that is why the Bill is drafted as it is. It does not preclude other groups of individuals who may have special needs. The wording covers an awful lot of people.

Photo of Hugo Swire Hugo Swire Opposition Whip (Commons)

That is exactly the point. It covers an awful lot of categories, but not all categories, which is why the Minister has had to add:

''that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer''.

Perhaps the Minister could just insert the phrase ''vulnerable groups'' and leave it to others to decide who falls into that category. Spelling things out in the new subsection and then saying that there additional vulnerable groups makes a mockery of the drafting.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

I do not believe that at all. It is important to spell out how vulnerable groups are defined; otherwise we will get arguments about who is a vulnerable group. We have already had a discussion

about golf courses. There seem to be a lot of golf course fans on the Opposition Benches. We could have arguments that golf courses are some kind of vulnerable group when it comes to water supply.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

On a point of order, Mr. Amess. This is about vulnerable groups, not golf players, and the Minister is being rather disingenuous in suggesting otherwise.

Photo of Sir David Amess Sir David Amess Conservative, Southend West

Order. That is not a point of order, but a matter for debate.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Thank you, Mr. Amess. These are well-understood categories of vulnerable groups. No member of the Committee would seriously argue that the categories set out in the list are not vulnerable groups. The list covers the main categories of people about whom we should be concerned, and I strongly advise Opposition Members not to argue for its deletion.

Photo of Andrew Lansley Andrew Lansley Shadow Secretary of State for Health

The reason that I was slightly amused by the Minister's argument is that I recall sitting in this seat earlier in this Session during the proceedings on the Health and Social Care (Community Health and Standards) Bill. I moved an amendment to require the independent regulator of foundation hospitals to have regard to the interests of certain vulnerable groups, including children and people residing in rural areas. I was told by Ministers with great confidence that it was unnecessary because the independent regulator's duties applied to all patients and all those whom the NHS had an obligation to serve. I have a 180º feeling about the Government's argument here.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs 9:15, 16 October 2003

That is a really weak argument and a very poor point. There is no comparison between hospital provision, which is free and available to all, and the provision of water services, which have costs that can fall on vulnerable groups. I am surprised at the hon. Gentleman for making such a fatuous point; it is one of the weakest that he has made in the Committee. Generally, he makes good points.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

On a serious point, I understand and sympathise with the Government's wish to have regard to special groups, although it might have been better to put ''particular interests'' in line 27 and delete lines 35 and 36.

Will the Minister say something about subsection (2C)(d)

''individuals residing in rural areas'',

a gigantic group of people, many of whom are not vulnerable? Pensioners, disabled people or those on a low income are covered by the three previous paragraphs. I do not think that many people are vulnerable just because they live in rural areas, one of which I represent, and it is rather patronising to suppose that they are.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

Of course, as the hon. Gentleman points out, many people in rural areas are not at all vulnerable but there are isolated rural communities that are not on water mains and do not have main sewerage systems. I have had many representations from hon. Members about the problems in rural areas with water and sewerage services.

We are not saying that everyone in rural areas—or, indeed, everyone who is disabled—is in a vulnerable group and has problems, but such groups are recognised by the regional consumer organisations and the regional Water Voice organisations. In some water companies there are structures and funds to help vulnerable groups, many of which are defined in the Bill. It is undesirable and unnecessary to remove the categories; just because certain groups are in the Bill does not mean that there are not other categories that need special consideration, and they are catered for. But the main groups are in the clause and I strongly urge the Committee to leave it as drafted.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

The Minister is in fighting form this morning. He has probably been listening to the GM debate on the radio. I agree with him that my amendment would not necessarily provide the best protection for the people I want to protect. But he was being disingenuous when he attacked me; perhaps he was trying to stir up his frozen supporters. I urge him to think about amending the proposal to include vulnerable groups, which is the phrase that he used, and which I think the Committee would agree to. Those are the people that we want to support.

Photo of David Drew David Drew Labour/Co-operative, Stroud

I have some sympathy with the hon. Gentleman's remarks. I, too, represent a rural area; I would not describe most people in my constituency as vulnerable but they are a disadvantaged group. Water companies have only recently begun to take cognisance of the fact that people who are not on mains sewerage need additional facilities to remove waste. It is dangerous to use the word ''vulnerable'' in an exclusive sense because it is not as simple as that.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I take the hon. Gentleman's point. I am not suggesting that the words ''rural areas'' should be removed. However, families with children under five are extremely vulnerable, particularly if they do not have any water. As people will be missed out, it would be constructive and sensible to include the words ''vulnerable groups'' in the categories. If the Minister considers that suggestion, I will have no problem in withdrawing the amendment.

Photo of Elliot Morley Elliot Morley Minister of State (Environment and Agri-Environment), Department for Environment, Food and Rural Affairs

There is no need to do that because the clause as drafted takes into account all groups; it is implicit in the proposal. It is often more expensive to provide water and sewerage services in rural areas than it is in urban areas, for obvious reasons. It is necessary to ensure that a two-tier pricing system could not emerge within one water or sewerage company. That is another consideration that should be taken into account in rural areas. These are all perfectly valid reasons. The measure does not exclude any other category that needs proper consideration by the regulator or the Consumer Council and in that respect I urge the hon. Gentleman to withdraw his amendment.

Photo of Bill Wiggin Bill Wiggin Shadow Minister (Environment, Food and Rural Affairs)

I shall withdraw my amendment, but I do not think that the Minister has done us proud, as he usually does. He is clearly not himself this morning and has fallen into a dilemma—pointed out by my hon. Friends—that one cannot say that the measure is

inclusive and write a list, and then say that the inclusion of everyone else is implicit. There is a lack of logic about that. I do not wish to vote on the amendment because I am not against such groups of people being included but I feel very strongly that others will regret that words like ''vulnerable groups'' were not included in the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 254, in

clause 42, page 47, line 5, after 'or', insert 'by'.

No. 255, in

clause 42, page 47, line 22, leave out '(3)' and insert '(4)'.

No. 256, in

clause 42, page 47, line 24, leave out '(3)' and insert '(4)'.

No. 257, in

clause 42, page 47, line 26, leave out '(3)' and insert '(4)'.—[Mr. Morley.]

Clause 42, as amended, ordered to stand part of the Bill.