Water and sewerage charges: non-owner occupiers

‘(1) After section 144B of the Water Industry Act 1991 (charges: charging by volume) insert—

“144C Non-owner occupiers

(1) This section applies to residential premises which are occupied by one or more persons other than the owner (and not by the owner).

(2) The owner must arrange for the undertaker to be given information about the occupiers.

(3) If the owner fails to comply with subsection (2), the occupiers’ liability for charges under this Chapter becomes shared jointly and severally with the owner.

(4) The Minister may make regulations—

(a) about the information to be given under subsection (2);

(b) about timing and procedure in connection with subsection (2) or (3).

(5) The Minister may make regulations exempting owners from liability under subsection (3) where—

(a) information supplied by them is false or incomplete, but

(b) they have taken steps specified by the regulations to ensure its accuracy or completeness.

(6) “Residential premises” means premises that are—

(a) occupied by one or more persons as a home (but not necessarily as their only or main home), and

(b) a “dwelling”, a “house in multiple occupation” or “accommodation for the elderly” within the meaning of paragraphs 1 to 3 of Schedule 4A.

(7) Where a person is the “owner” of premises by virtue of being agent or trustee (see section 219(1)) the duty and liability under this section attach to the principal (and not to the agent or trustee).

(8) “The Minister” means—

(a) the Secretary of State, in relation to services provided by an undertaker whose area is wholly or mainly in England, and

(b) the Welsh Ministers, in relation to services provided by an undertaker whose area is wholly or mainly in Wales (for which purpose section 213 applies with references to the Secretary of State and either House of Parliament being taken as references to the Welsh Ministers and the National Assembly for Wales).”

(2) Transitional provision of an order commencing this section may, in particular, provide for application of the duty in new section 144C(2) to depend on service of a notice by an undertaker.’.—(Huw Irranca-Davies.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

New Clause 1—Social tariff Amendment—

‘The Secretary of State must by regulations make one or more schemes for the purpose of reducing water poverty.’.

This introduces an obligation for the minister to bring forward regulations to introduce a social tariff.

New clause 2—Environment tariff - resources and profit—

‘(1) The Secretary of State must within one year of the passing of this Act bring forward regulations concerning the relationship between the use of water resources and increased revenue.

(2) Such regulations must consider removing the link between increased use of a water resource and increased revenue to water companies.

(3) The regulations must include the creation of a water environment fund to be spent on environmental measures, which may include flood alleviation.

(4) For this section, “increased revenue” is defined as the extra money paid to water companies by consumers above a capped level based on historic household usage for the increased use of a water resource.

(5) Increased charges resulting from increased use of a water resource shall be given to the water environment fund as in section 3 and not as increased revenue to the water company.’.

This is to de-link profit and increased resource use. It requires the Secretary of State to set up a fund to pay for flood prevention measures out of extra profits the water companies receive.

New clause 3—Ofwat having regard to environmental measures—

‘(1) The Water Industry Act 1991 (as amended by the Water Act 2003) is amended as follows.

(2) After section 39(4)(e) insert—

“(f) “sustainable development” is defined as, but not limited to, furthering the interests of existing and future consumers regarding—

(i) their interests in the reduction of water-supply emissions of targeted greenhouse gases;

(ii) their interests in the security of supply of water to them;

(iii) their interests in the broader water environment, including but not limited to, biodiversity and flood alleviation.

(g) in this section—

(i) “emissions” has the same meaning as in the Climate Change Act 2008;

(ii) “water-supply emissions” in relation to emissions of a targeted greenhouse gas means any such emissions (wherever their source) that are wholly or partly attributable to, or to commercial activities connected with, the shipping, transportation or supply of water conveyed through pipes;

(iii) “targeted greenhouse gases” has the same meaning as in Part 1 of the Climate Change Act 2008.”’.

This amends the Water Industry Act 1991 to give Ofwat a remit that includes having regard to greenhouse gas emissions and security of supply.

Motion made, and Question proposed, That the clause be read a Second time.

I certainly welcome new Clause 29, about which I hope we will hear a little more. Bad debt is an issue that definitely needs to be tackled, but this new clause is another example of welcome flexibility from the Government, in that they extracted a recommendation from the Walker report and placed it in the Bill in quite short order.

New clauses 1, 2 and 3 all relate to the responsibilities of Ofwat. It looks as if we will have enough time to address them but if that is not the case I would certainly want to return to them on Report. Ofwat was created in the era of rampant privatisation. As with other regulators that were established at the time, it was supposed to offer some protection to the interests of consumers from the jungle of capitalism red in tooth and claw. As was rather typical of those days, the interests conceived were imagined to be purely economic, and issues such as fairness, environmental responsibility and sustainability were not really on the agenda. Uniquely among regulators, Ofwat seems to have preserved those rather impoverished values in aspic. ofcom and Ofgem, among others, seem to have managed within their regimes to incorporate social tariffs and other forms of socially responsible tariff. In the case of Ofgem, there is such a plethora of social tariffs in the energy industry that we have colleagues in another Committee Room trying to rationalise the scheme.

Ofwat has argued that because of its remit, it cannot do the same thing. As became clear in our evidence sessions immediately before we began full consideration of the Bill in Committee, there is now growing consensus that the matter needs legislation to sort it out. Further legislation may be some time coming, and I understand that the Minister’s ideal is that the whole of the Walker report be properly consulted on and that legislation be then introduced. However, one water management Bill has taken some years to introduce and we may have to wait some time for another, so the time to act is now.

On social tariffs in new clause 1, the need is particularly clear. The Consumer Council for Water points out that water and sewerage Bills have risen faster than inflation for the past four years running. In 2008-09, they increased by about 6 per cent. Overall, since privatisation water bills are some 44 per cent. higher in real terms. It is expected that this year, 12 per cent. of customers will face water and sewerage bills that are more than 3 per cent. of their disposable income. In the south-west, where there is an unfortunate combination of relatively low incomes and very high water bills, some 30 per cent. of customers could well be in that position. Only some 24,000 customers nationwide are on the rather limited WaterSure scheme, and the Minister’s Department estimates that as many as 300,000 households should really be eligible for it. Clearly, the scheme is not working to full effect.

The Consumer Council for Water has worked to rebrand the scheme and has introduced a standard simplified application form, which substantially boosted uptake of the scheme in 2007-08, but it is still a small fraction of the people in need.

The Walker report is equally clear in its analysis of the problem and its conclusions. Paragraph 11.2.2 states:

“Evidence received showed that there are customers in all company areas who find it difficult to pay their water charges. The review team also received evidence showing that affordability  issues are particularly acute where overall income levels are low and where average water bills are high.”

The review paid particular attention to the interaction between the issues of affordability and the introduction of water metering. Paragraph 11.2.4 states:

“Research has shown that where 90 per cent. of households are metered, affordability is likely to worsen for low income single parents and low income households with three or more children. Both now and during the transition to metering, low income households with children are therefore a further group that might need help with affordability.”

The report has identified a number of different groups: customers with low incomes and high essential water use; customers with low incomes living in a high-cost area; customers with low income and children; and—rather broadly—customers with a low income generally.

Paragraph 11.5.2 concluded:

“The review team considers that there are certain adjustments that should be made to the system now”—

I emphasise that point—

“aimed at helping customers who are struggling to pay their current water bills. These changes should continue into the future anticipating much higher levels of metering.”

The review team concluded that the rateable value system of cross-subsidy for low-income customers is poorly targeted and is unwinding as metering develops, and that a package of affordability measures is needed for those on low incomes.

There were various proposals in the Walker report and there are different perspectives on them. Clearly, some consultation is required, but what is needed urgently in the Bill is something that permits that. The situation for water companies is quite ridiculous: a number have had to try to find ways of reinventing social tariff proposals in order to get them past Ofwat.

Some of the companies are taking a very responsible attitude. I shall quote the example of Thames Water, which contacted me recently. It stated that

“by 2015 seven per cent of Thames Water customers, around 360,000 households, would be paying more than three percent of disposable income, with 140,000 of these paying more than five percent of disposable income.

The social tariff proposal that Thames Water made in its business plan focused on customers with the greatest affordability impact. We proposed a two tier tariff giving a 50% discount to the one percent of households paying the biggest proportion of income, and a 25% discount to the next four percent of households paying the next highest proportion of income. We tested our proposals through deliberative and quantitative customer research and found that Thames Water customers were supportive of the need for a social tariff and were willing to pay for this, as long as the cost remained relatively low. Our proposals were costed at less than £1 a year in terms of a cross-subsidy from all other customers to those receiving the discounted bills and were supported by customers at this level.

Our modelling showed that our proposed tariff was particularly effective in reducing the number of customers paying more than 5% of disposable income.”

That number would drop from nearly 3 per cent. of their customers to less than 0.5 per cent. by 2014-15, so it would have a significant impact. The Bill needs to be amended now to make that clear, as Water UK clearly argued in the evidence session. I commend the new clause to the Committee.

I have been encouraged in the past few weeks by some of the Minister’s remarks about his being open to the idea of social tariffs being included in the Bill. I made a few jibes about Thatcherite conservatism in my opening remarks, but I know that the Conservative party has now entered a more liberal and progressive phase, and the right hon. Member for Witney (Mr. Cameron) has now declared that there is such a thing as society, so I am sure that I can count on Conservative support for what is certainly a progressive and liberal Amendment.

New clause 2 deals with a slightly different matter. It would explicitly permit another departure from Ofwat’s purely market-driven framework. The objective is simple: to de-link water use from profit, shifting us from a world of complex water efficiency goals, which are difficult to implement and monitor in practice, to one in which increasing water usage will simply cost companies money and damage shareholder value, thereby unleashing the genius of British business to drive water efficiency forward. It is the same philosophy as that seen in carbon markets. The market framework will be set in such a way that water companies will want to do that as a matter of their core business. That is the best way to proceed, rather than the Government trying to invent ways to make those environmental improvements.

The method I propose in the new clause is simple. Every household will be given time to establish an historical level of usage, which will of course reflect considerations such as the number of children or any medical conditions. If usage decreases, the situation is straightforward, as the household’s bills will decrease and, indeed, the profit of the water company might decrease a little, depending on the exact nature of the tariff. The interesting aspect of the new clause is that it prescribes that where usage increases, the customers’ bills will increase, but the profit taken by the water companies will remain static, at the historical level of usage. The surplus generated will then be earmarked for additional environmental measures.

The software required to make that sort of amendment to billing would be relatively easy to set up. It is a simple idea, and equally applicable to the energy sector. I have discussed it with both water and energy companies and have yet to meet one that objects to it. It is a simple and straightforward idea that would release market pressures to drive water efficiency. I commend it to the Committee.

New clause 3 is the simplest and most obvious of the three. Ofwat is still driven by the vision of people as customers, with no real regard to their wider interests as human beings within a wider natural environment. That has led to some strange concepts in the past. Although it has now retreated from using the term, which has fallen into disuse, for a long time they talked about the “economic level of leakage”, as if there were no reason to reduce the enormous levels of leakage in some water company areas except reasons of profit and the sustainability of the business, and as if there were no reason to work to reduce leakage at an absolute level. Given the critical challenges of climate change and the need for security of water supply as climate change progresses and we have to adapt to it, it is critical that Ofwat’s rather 20th century neocon remit is now fundamentally changed to take account of the new world in which we live.

New clause 3(2)(iii) specifically mentions the other important environmental issues of biodiversity and flood risk, which neatly connects the new clause to the rest of the Bill. After all our discussions over the past weeks, the inclusion of that alone would justify the amendment.

I commend all three new clauses to the Committee.

I support the hon. Gentleman’s principles from a number of perspectives. First, it would be strange if, having spent some time considering how we can deal with social tariffs for communities, we ignored individuals. My starting point is that we have to identify that as a problem.

Secondly, I have always worried about those who face water Bills and about how to disaggregate those who cannot pay and those who will not pay. It is a fairly open secret that there are people who use the Government’s policy, which is right, to persuade water companies to use every means possible to avoid withdrawing water supplies from a individual household. Sadly, however, there are some individuals who abuse that and blatantly refuse to pay their water bills. We need to look at a different way of assessing that. The social tariff for individuals is a sensible way to go forward.

Thirdly—I shall be careful how I say this—on the prompting of my hon. Friend the Member for Carlisle (Mr. Martlew), who has chaired some of these proceedings, we should look at what happens where those on water meters are subject to a flooding incident. There has been correspondence on that matter between my hon. Friend and the Secretary of State. There is a need to recognise that, as more people go on to water meters, if there is an incident that could result in people with water meters having to pay substantially more because of the way in which those meters are affected by problems of flooding—like anything else—we must ensure that they are not penalised in any way. I should be grateful if my hon. Friend mentioned something about that.

As a fundamental principle, we must have a social tariff and a way to charge people who find it difficult to pay their water bills appropriately, with cross-subsidisation. Let us be honest about this. We have heard about the figure of less than £1. That is the killer fact. We are not talking about major redistribution between customers, but about those of us who can afford to pay helping those who cannot. Let us crack down on those who will not pay for reasons that we all know about. When they talk to us, all water companies say that that has to be dealt with.

The timing is critical, because we were keen for the Bill to go through as soon as possible and we did not want to delay it for any reason. Those of us who followed the progress of the Walker report know that this is a complex subject into which considerable work has gone. We know about genuine cases where there seems to be a considerable mismatch between household income and the charges that are being faced, but we find that there are no ways round that, as there are with other things, such as by using housing benefit or some of the existing Fuel Poverty schemes. We have seen it with our own eyes.

It seems fortuitous that we now have the publication of that report and we are in a position to take the recommendations and make something of them within the context of the Bill. I would be sorry to see that  opportunity missed, and I hope that the Minister will, even at this late stage, find some way to include a social tariff to help those with the greatest need. As hon. Members have mentioned, the charges to the rest of us resulting from such a scheme would be minimal, if it was sensibly prepared and targeted at the households that need help. I therefore urge my hon. Friend to look carefully at how we can do that, while at the same time not closing the door to any improved ways of doing it that we may come to in the future.

There is a lot of work to be done on the Walker report in looking carefully at how measures might work in practice. An area of great concern for people in the south-west and in Wales is that there is a disproportionate amount of coastline compared with the number of subscribers. Therefore, as European directives for cleaner and cleaner waters arrive, we will be faced with more and more work to do.

There is a much wider debate to be had about whether there is any rationale for not leaving areas to look after themselves, and instead having a national infrastructure involving cross-payment between areas to cope with the fact that we have concentrations of population in some areas and a sparse population with large responsibilities for coastline in other areas. That is a wider debate and I do not want us to close the door on future discussions about charging. However, I feel that the social tariff idea should be included now that we have the Walker report.

We are straying into challenging areas, on which there are various views. The Select Committee considered them in a cursory way, and it is fair to say that they were in the draft Bill in some shape or form. We took the decision over the summer and autumn that we needed a Bill this side of a General Election that would implement the Pitt recommendations. Time has marched on since the summer floods of 2007, and we have had the Cumbrian floods of autumn 2009. We believe that there are issues of concern about bad debt, water affordability, water poverty, the concept of a social tariff and all the issues in the Cave and Walker reviews.

I like to think that the Conservative record on this matter is positive. The Conservatives came forward in the late ’80s with a white paper and proceeded to pass the Water Act 1989 that set the regime for the water industry over the past 20 years. The time is now right for those issues to receive further examination, as we stated in the autumn around the time of the party conferences.

It is incumbent on all parties to go away and discuss the contents of the Cave review, the Walker review and the Environment Agency’s publications from last year, and take stock. Tempting as it is to have a full discussion and debate on social tariffs, environmental tariffs, the role of Ofwat and others, we are minded to support new Clause 29. It seems a nonsense and unacceptable that tenants, or as the Government call them, “non-owner occupiers”—I do not know why we cannot call them tenants, perhaps that has a specific legal meaning—are able to walk away without paying their water rates. The bad debt runs into millions every year and probably now costs the water companies more than leakages. We would therefore like the Committee to consider new clause 29.

We have had discussions with Anna Walker, and believe that some detailed work needs to be done on competition, metering and the other aspects. Affordability is a particular concern to all customers, as the hon. Member for Llanelli has said. There is the acute problem of how we charge for implementing the EU directive, especially in an area such as the south-west of England. Wales may be in a similar position, but I think that the situation in the south-west is generally agreed to be particularly difficult. I think that there is an Adjournment Debate on that issue on the Order Paper, to which I am sure the Minister will find himself replying when many others have had the opportunity to contribute.

We have to grapple with some real issues, and we have concerns about tariffs being fair, and about poverty, water efficiency, water stress—which we have not begun to discuss—and the concept of paying for water in an affordable and fair way. Rightly though, the two main parties seem to agree that the debate has to take place in the context of a wider Bill. There are controversial debates to be had, and it would generally be welcome if the Minister took some of the ideas away and worked on them, and perhaps discussed them further with both the industry and other parties.

May I clarify whether if I chose, or felt it necessary, to press new Clause 1 to a vote, I would have Conservative support?

The issues are worthy of further debate, but we are not inclined to support the hon. Gentleman’s new clauses at this stage.

I hope that with this group of new clauses we can make some progress. I have heard what has been said, and many Members have spoken about social tariffs, but first let me explain new Clause 29. Curiously, in the light of the broader discussion that we have just had and of our previous discussion on the need to protect community groups and associations, new clause 29 is here for a similar reason, because we anticipate that there will be a broad consensus, both out there among stakeholders and among us, that we need to have the provision in the Bill. Rather than cherry-picking, these are things that are not only essential but that we can do. They will not delay the primary purpose of the Bill to implement Pitt’s recommendations. I give that as a backdrop to my comments for the moment.

New clause 29 seeks to tackle the problem of bad debt in the water industry. That is a real problem, which has been picked up by many commentators. The new clause was tabled following concerns raised on Second Reading, and following the publication of Anna Walker’s excellent final report on charging for household water and sewerage services.

Since privatisation of the water industry, water and sewerage Bills have increased significantly above the rate of inflation, by about 40 per cent. in real terms, but on the flip side they have also funded £85 billion of investment in the sector. That has led, however, to an increasing number of customers falling into arrears or struggling to pay their water bills. I can see a bit of an argument developing about that. At the same time, we have seen a disproportionate increase in bad debt in the water industry, three times that in the energy sector, despite average  water bills costing only a third of average energy bills, at a cost of £12 per year to other bill-paying customers. In addition, since the ban on disconnection in 2000—which was quite right—companies have started to be required to supply domestic properties with water, and therefore residents do not need to supply companies with contact details to secure a water supply.

Under current legislation, occupiers of properties are liable for water bills, but companies must rely upon them for the information needed for billing. Without customers’ details, water companies are unable to pursue residents of a property for payment, or to pursue them for payments once they have—pardon my French—buggered off. The water industry estimates that leaver debt accounts for approximately 44 per cent. of that debt. [Interruption.] I am not sure that was French, but my Dad told me that it was, Lady Winterton.

New clause 29 would require owners of residential rental properties to arrange for the provision to water and sewerage companies of prescribed details of the occupier of a property. Under the legislation, the occupier of a property remains the person liable for payment of water bills unless details of the occupier are not provided to the water and sewerage company within a set time scale, which will be set out in legislation. It has been a welcome Amendment, which was worked on in consultation with the water industry, consumer organisations and others. It helps to fix the problem of bad debt.

New clauses 1, 2 and 3 were tabled by the hon. Member for Cheltenham and there has been much debate about them. They relate to the water industry paying for water and to economic regulation. Those issues have been considered in Anna Walker’s independent review and we have already made it clear that we are fully committed—the hon. Member for Vale of York has said that is the Conservative position as well—to consult on the recommendations and carefully consider them before introducing proposals on them.

New clause 1 would require Ministers to bring forward regulations to introduce one or more social tariffs to assist customers who were in water poverty. Its intended effect is to reduce the bills of customers who spend more than a particular percentage of their income on water and sewerage. I assure the Committee that we take the issue of water affordability seriously, which is why we set up the Walker review to take it out of Government and look at it properly. Section 143A of the Water Industry Act empowers Ministers to make regulations to assist water customers with their bills. Assistance can be provided according to, inter alia, age, ill health or disability, or in relation to financial circumstances.

We have made use of that power through the Water Industry (Charges) (Vulnerable Groups) Regulations 1999, which cap water and sewerage bills for households that are metered and receiving a means-tested benefit, and where there is either someone with a prescribed medical condition that causes a huge increase in the use of water, or three or more dependent children under the age of 19. Many members of the Committee will know of schemes such as the WaterSure tariff, which provides tangible assistance to vulnerable, low-income metered households and avoids any risk that they might cut back on their essential use of water. That does not, however, extend to all low-income households.

Anna Walker looked at whether water spend as a percentage of income should be used as a trigger for assistance. In paragraph 8.1.4 of her interim report, she concluded that

“while water spend expressed as a percentage of income might be a useful indicator of the relationship between customer bills and incomes over time, it is not suitable to be used as a trigger for assistance.”

The reasons given were that any percentage figure would be set at an arbitrary level, unrelated to actual water consumption or need, and would not facilitate targeted help.

Anna Walker’s final report contained proposals for a new, more closely and effectively targeted package of support for some low-income customers. They included the possibility of offering all metered customers of certain means-tested benefits a 20 per cent. discount on their bills, or a concessionary scheme for low-income households with one or more children.

My consistent view, which the hon. Member for Cheltenham and I have debated on his previous amendments, has been that we need to consult on Anna Walker’s recommendations as a whole before taking decisions on whether a social tariff is needed, or whether the vulnerable groups tariff needs to be revised. That point was made by the CCW and Water UK during the evidence sittings. Philip Mills of Water UK said:

“It could be argued that introducing social tariffs at this moment may be premature, because it could pre-empt the recommendations, or any legislation that would enact the recommendations, from the recent Walker review”.——[Official Report, Flood and Water Management Public Bill Committee, 7 January 2010; c. 58, Q86.]

Tony Smith of CCWater said:

“As the Anna Walker review pointed out, there is a range of possibilities”— to which my hon. Friend the Member for Llanelli alluded—

“to address the problem. The crucial issues are what the right set of recommendations are and who should pay, because customers are concerned about potentially cross-subsidising other customers.”——[Official Report, Flood and Water Management Public Bill Committee, 2010; c. 60, Q93.]

However, I think that I have shown the Committee that I will listen to arguments, particularly if they seem to have support across the Chamber.

I am minded to give further consideration to social tariffs, but I need to clarify something. Amending the Bill along the lines suggested will not be easy for all the complex reasons in Anna’s report. In the short time available, we will need to work through some fairly complex issues pretty rapidly, such as exactly what we think is needed and how the provisions will work in practice.

I support the Minister’s line of thinking. Any of us could have tabled amendments, but we made a policy decision not to. I fear that this is a “pick and mix” approach and there is also a danger of that with new Clause 29. We should proceed with the Bill as it is and continue to work and consult to form a view on other, more far-reaching aspects.

I am coming on to my proposal, but that is a helpful Intervention and I agree.

I began my comments by saying that we know that we have broad agreement on new Clause 29 and the concessionary schemes for voluntary groups, churches and others. We have talked through those proposals in detail and can see that, even if it pulls in particular things are not to do with risk management, it is critical that we take this opportunity.

Let me outline my proposal for social tariffs. I do not want to derail the Bill. I say honestly to the hon. Member for Cheltenham that, if we were to take this forward, we would need to ensure that it would not bog us down in endless amendments or lead to our facing accusations here or in Another place of cherry-picking. Other hon. Members or their lordships could also choose to cherry-pick Anna Walker’s review and we would lose the Bill. I am willing to go away and look at social tariffs, but only on condition that we rapidly put our heads together on the back of the Committee and see if we have the good, effective cross-party support that would allow us work through the issues.

In the Minister’s earlier remarks, he said that the occupier of a property, who is not the owner, is responsible for meeting water charges. How is a tenant placed if they have a rental contract, which they believe includes water charges, and it transpires that the owner of the property who does not live there has not met the charges? To whom would the debt attach?

Would the hon. Lady mind if I returned to that point in a moment? I want to elaborate further on a way forward on principle on the other new clauses. She has raised a good point and I will come back to it.

I have heard from my hon. Friend the Member for Llanelli and the hon. Member for Cheltenham, and I think that the hon. Member for Upminster is also sympathetic. If we can establish a consensus on the back of our debate, there may be something that we can do, but I am determined that we do not either include something wrong in theBill or mess it up by others throwing in other cherry-picked parts of the Walker review or the Cave review on competition and innovation.

I will also need to discuss the matter with my colleague, Jane Davidson, in the Welsh Assembly Government—they are key to the proposal. It is worth pointing out that I have not discussed this at all with her. That does not apply to new Clause 29 on payment liability for water Bills, which was highlighted as a priority in the Walker review. I suggest that I carefully consider whether a provision to enable water companies to operate social tariffs should or could be included in the Bill in the time scale to which we are working. I shall return to that on Report, because I do not want to derail the Bill, but I do so with that proviso and on the basis of our understanding as a Committee, and as Front Benchers in Committee, first, that we want to get the issue right and, secondly, that it will not lead to additional debate here or in Another place.

On regulation, Ofwat’s current duties already require it to contribute to sustainable development, to ensure that water companies are able to finance their functions associated with security of supply and to consider the  interests of future as well as current customers. The sustainable development duty includes climate change, and Ofwat already has a dedicated team that leads on that. I am therefore clear that Ofwat’s current duties enable it to act on climate change issues. That conclusion was also reached by Anna Walker in her review.

DEFRA and the Welsh Assembly Government also issue statutory social and environmental guidance to Ofwat, which Ofwat is required to have regard to when carrying out its functions. The guidance was issued by DEFRA in December 2008 and by the WAG in February 2009; it included guidance on climate change mitigation and adaptation, which Ofwat had regard to during its 2009 review of water price limits.

Including a specific reference to climate change in primary legislation would have the effect of distorting the weight that Ofwat currently gives to the environmental, economic and social aspects of sustainable development. I believe that it is in the interests of Ofwat to follow a balanced approach to sustainable development as it fulfils its role as economic regulator. That said, the hon. Member for Cheltenham raised a valid point about what the role and responsibilities of Ofwat should be and whether they need to be revised.

When the water industry was privatised, the role of the economic regulator was, in essence, to ensure that companies fulfilled their functions and to extract efficiencies. However, social and environmental issues such as water affordability and climate change have become much more of an issue in the 20 years since. Ofwat is going to undertake an evaluation of its 2009 review of water price limits this year, and is beginning work on its approach to price setting in future, which will include having regard to the Government’s social and environmental guidance in its ongoing regulatory activity.

A fundamental review of Ofwat’s role was recommended by the EFRA Committee in its 2009 inquiry into PR09. My view is that a review of Ofwat in some form would indeed be justified, because time has gone by. I shall consider how best to take that forward, but it will need to look not just at climate change but at social, environmental and economic situations across the board.

We have given a commitment to consider a review of Ofwat and to address the issues raised by the hon. Member for Cheltenham, as well as wider ones. Furthermore, we have given a commitment, with the provisos that I mentioned, to consult on Anna Walker’s recommendations and to see whether we can bring something forward that would be fit for purpose and would not constrain us. I hope, therefore, that the hon. Gentleman will consider withdrawing his Amendment. I look forward to moving my own amendment formally.

That was one of the most positive responses by a Minister that I remember hearing in Committee. I share his urgent desire to see the Bill on the statute book before a General Election and not to derail the timetable. Given the generosity and considerable work involved in his commitment, it is only reasonable for us to respond in the spirit in which he has made the proposal. Knowing the noble Lord Greaves, I cannot entirely bind my noble Friends—especially that one—but, on behalf of myself and my colleagues in this place, I certainly commit. I also commit to urge my noble Friends in Another place not to unpick or overly complicate any proposal that should come forward. [Interruption.]

We have a suspension for a Division, for 15 minutes if there is one vote, and 25 minutes if there happen to be two votes.

On a point of order, Lady Winterton, there are six new clauses remaining after we finish the group and a whole host of new clauses, which we have already debated, that we need to vote on. The Committee is in your hands. Would you give us some guidance as to how we shall proceed?

My understanding is that I have no other option than to suspend, and the guillotine falls at 5 o’clock.

Sitting suspended for a Division in the House.

On resuming—

It being 5 o’clock, or a minute or two thereafter, I must now conclude our business.

Debate interrupted (Programme Order, 7 January).

The Chairman put forthwith the Question already proposed from the Chair (Standing Order No. 83D), That the clause be read a Second time.

Question agreed to.

New clause 29 read a Second time, and added to the Bill.

The Chairman then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).