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“Provision of information to water companies: landlords
Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.’.—(Thomas Docherty.)
I beg to move, That the clause be read a Second time.
Good afternoon, Mrs Riordan, it is a pleasure to serve under your chairmanship. We have just had an interesting, productive and useful debate. One thing that struck me in the Minister’s thoughtful remarks—the Christmas spirit is overtaking me—is that he cited the need for a proportionate and evidence-based response. New clauses 46 and 47 are a proportionate and evidence-based response to a problem in many areas of England and Wales: the problem of bad debt.
I think the Minister would concur with the following figures. On average, £15 is added to everyone’s bill as a result of other people not paying their water bills. Water supply differs from other utilities, in that someone cannot be cut off if they do not pay the bill—that recourse is not available. I think the Minister shares my view that we should not consider going down that path—I suspect that one or two members of the Committee do not share that view, based on previous Select Committee discussions. However, if we do not disconnect people, that will regrettably add a cost burden on to those who do pay their bills. As I have said, the average in England and Wales is £15, but it should be noted that in Scotland, as ever, it is significantly lower. We will perhaps come to that when we discuss new clause 47.
Thames Water representatives gave evidence to the Select Committee when it was examining the White Paper and the draft Bill. It will probably be easier for the Committee if I do not go through the whole process, but they said that those who can but do not pay their bills are, in effect, stealing from honest householders. This is not a new problem that has suddenly crept up on the coalition; it was recognised by the previous Government. In the Flood and Water Management Act 2010, provision was made to try to tackle it. The evidence from Ofwat is that 80%—four out of five—bad debtors are in the rented household sector. There are various reasons for that. One reason, of course, is that that is the group of people who move around most often and who tend not to make a long-term commitment to a property. There are obvious exceptions to that, particularly those in local authority and housing association properties, but private lets tend to have a much shorter occupancy period. It is much easier for such people to move on.
This is one of those genuinely bipartisan debates—there is nothing political about the issue, and I do not think we could get a wedge between the two sides. There is no clear blue water—pardon the pun—between the two sides of the House on this problem. The Labour Government at the time made provision in the 2010 Act such that landlords could be required to hand over a list of their tenants to the water companies, so that they could check whether a customer had moved, track them down and recover the non-payment. An unusual coalition of people supports that provision—I will come to that in a second. The trigger was not pulled in 2010, as the Minister will recall—I think he supported the decision at the time—because it was hoped that a voluntary scheme might encourage greater take-up. I will address that more thoroughly later in our proceedings, but although there has been some progress, it is fair to say that it has been unsatisfactory.
We now find an unlikely coalition of organisations and individuals calling for the implementation of new clause 46—it is unlikely in the sense that anyone who has listened to our deliberations over the past few days will be surprised by some of the names of those I am about to cite as being on our side on the issue. Some names will not surprise Government Members: the Consumer Council for Water, Ofwat, the Environment, Food and Rural Affairs Committee and the Opposition parties all support the implementation of new clause 46. However, it is also supported by a number of the water companies, not least Thames Water, as well as Water UK.
The Committee will probably be aware that I will not always go along with something just because Water UK has suggested it, but the Opposition feel that there is compelling evidence that, after three and a half years, insufficient progress has been made. That is not just our conclusion, but the conclusion of the Select Committee of which the Minister was a member, along with the hon. Member for Tiverton and Honiton, when it published both of the relevant reports.
The water White Paper from 20 June 2012 states:
“It is simply unacceptable that, at a time when so many are struggling to afford their water bills, customers face the additional burden of subsidising those who refuse to pay what they owe. Legislation already exists that would make it easier for water companies to recover bad debt and the Minister”— at that time—
“acknowledged that money recovered from debtors would be ‘money in the pocket’ for those who do pay their bills. We urge the Department to implement the relevant provisions of the Flood and Water Management Act without further delay.”
If we go forward about six or seven months from June 2012 to the start of this year—my, how has the year flown in—the Select Committee stated:
“We remain of the view that it is unacceptable for honest customers to be forced to subsidise those who refuse to pay their water bills. We reiterate our previous recommendation that Defra should implement the provisions of the Flood and Water Management Act 2010 on bad debt without further delay.”
We fully concur with the Select Committee. We agree with the industry, with the regulator and with consumer bodies: enough is enough. After three and a half years, we are not making enough progress. It is time to help those hard-pressed, honest customers.
I thank the hon. Gentleman for tabling his new clause. He is obviously aware that the provision to do what he set out already exists on the statute book. Having said that, following extensive consultation with the industry and landlords’ organisations, the Government took the decision that a voluntary approach is the most suitable one. More regulation is not always the answer, especially when that regulation has the greatest impact on small businesses that are not themselves the cause of the problem. Requiring landlords to provide information on request creates the same problems. The Government are always mindful of the burden that additional regulation could place on business. In this case, we have particular concerns about the imposition of additional costs on small businesses and micro-businesses, the category to which the vast majority of landlords belong.
We are strongly committed to driving change in the water industry so that companies improve their customer service and become much more sharply focused on the needs of their customers. Although there is some excellent debt collection practice among water companies, which the hon. Gentleman has already mentioned, that good practice is not applied consistently across the sector. That is demonstrated by the significant regional variations in performance on bad debt. We expect the industry to up its game and ensure that all companies match the performance of the best.
The Committee has had a number of discussions on affordability. We should remember that, as the hon. Gentleman said, debt problems can be linked to customers’ ability to pay. Support for struggling households, such as social tariffs, may help to reduce levels of bad debt. I welcome the tariffs that companies have introduced, in addition to the tariffs that are already in place. Ofwat has changed its methodology for the 2014 price review to place a much stronger emphasis on the companies’ responsibility to manage debt effectively. The price review sets a much more stringent benchmark against which the companies must demonstrate that bad debt has accrued for reasons “beyond their control” before seeking to increase the bills of paying customers.
We have decided not to regulate to require landlords to provide information to water companies. We remain committed, however, to the voluntary approach that is being advanced by Water UK, in partnership with a number of landlords’ organisations. Together, they have developed a new database that will make it easier for landlords to provide information about their tenants to water companies. In fact, the voluntary approach will go further than the new clause would, with landlords automatically updating the information on their tenants rather than waiting to be asked by the water company. The new database will launch in March 2014.
I can see that the Minister is approaching his final points. Before he closes, we have a genuine concern. He has mentioned the potential cost or burden, but will he provide the Department’s estimate of the cost to small businesses if they had to provide the information?
I am happy to share that information with the Committee, but I do not have it to hand. The Government made an assessment of the correct approach following the discussion with the industry. It is important to give the voluntary approach time to work. The database, which is being launched in March, has not even arrived yet, but the hon. Gentleman is saying that it has failed and that we must move to a different system.
I am sure that the Minister does not intentionally seek to misrepresent my position. This is a cross-party issue, but the Government have had three and a half years and we are not seeing progress. How long does he intend to give the voluntary approach? If it does not work, will he pull the trigger on a mandatory approach?
As the provision is already on the statute book, it is within the power of this Government, or a future Government, to introduce regulations to do so. However, we are still committed to the voluntary approach, and we want to give it time to work. Landlords and the water industry working together is a constructive example of how things can be done, and we want to give the voluntary approach time to work. For that reason, I urge the hon. Gentleman to withdraw his new clause.
I will not keep the Committee long. I am disappointed on one level, but I am not surprised that the Government are not listening to the evidence before them. The Minister seeks to suggest that we are trying to oppose a voluntary mechanism, but the reality is that the Government have had three and a half years. The Minister cannot give us any indication of how long he wants to allow. It could be another three and a half years, or it could be another five years. Heaven knows when we will next get a Water Bill.
We have to see whether the voluntary approach works, and we have to monitor the situation. We do not need to specify a time now for introducing the regulations. To do so artificially would prejudge the system before the database had even come into operation.
I am most disappointed. We have also asked for the figures this afternoon. I am genuinely surprised that the Minister could not get inspiration, having said that there was a bureaucratic cost. One would have expected inspiration to be forthcoming that would not just make an assertion, but be able to back it up. I regret having to seek a Division on this, and I probably need to advise the Minister that when the Bill goes to the other place, this is exactly the kind of issue that will require greater scrutiny. It is unfair on good, hard-working customers not to ask those who can pay, to pay.