It is a pleasure to serve under your chairmanship this morning, Mr Crausby, and I am very grateful for the opportunity to cover this particular topic. It will not be for the first time, I must say. Those who have sat in your position over the years have seen many debates secured by Members from our part of the world on this huge issue for our constituents: very high water bills.
We have moved on a little since we last met. I recall being here in March for a debate secured my hon. Friend Mr Sanders, at which point we were still looking at how the responses to the Walker review of 2009 would come forward. We now have a concrete response from the coalition Government, about which I am delighted. Politicians are always looking out for our constituents, so there are one or two things I want to ask the Minister later, particularly about social tariffs and WaterSure, but I would like to start off the debate by congratulating the Department and the Minister’s colleagues across Government for the contributions they have made.
It bears repeating why we are in this situation and what the experience of our constituents has been in Devon, Cornwall and the west of Somerset and Dorset over the past couple of decades since privatisation. At the time of privatisation, there was an aspiration on the part of the Conservative Government to see private investment coming in to develop infrastructure that had been neglected. There is no doubt that it had been neglected for decades, but there was huge concern at the time from those who could not see how competition could work in a sector where there was one main supplier and one main company dealing with waste. That has been an issue, in that no sort of market emerged, unlike in other privatised industries.
The key question for us in the South West Water area was one of infrastructure. The company was able to do a huge amount, both to deal with the environmental legacy that it was left and to meet the requirements set by the Government and the European Union. We welcome that, of course. Organisations such as Surfers Against Sewage, which has been around and done fantastic environmental work over the years, were at the forefront of holding Government and industry to account to deliver on their commitments and obligations. While we have seen progress, investment can only be secured against an income stream. The company had to seek that investment—get investment from shareholders and go to the markets for money—on the basis of an income stream.
In Cornwall and south-west England, we have seen a huge legacy of environmental works that need to be carried out, to a far greater degree than any other part of the country. I refer to the fact that the population of Cornwall accounts for 3% of the population of England, but we have 30% of the coastline. That is an easy way to illustrate the scale of the problem; we have a large amount of work to do, but a relatively small population to pay for it, despite the fact that the coastline is a national treasure, if you like. It is enjoyed by people from across the country who come to take advantage of it. We have the south-west coast path and all sorts of attractions for people to come to enjoy the beaches and countryside of Cornwall and Devon, but we have not had a way to capture a contribution from those people towards the maintenance of infrastructure. It falls to people living closer to that national asset to pay for the whole lot.
There has been some concern in the press recently about the policy of contribution outlined in the Budget and referred to in the autumn statement, and the money set aside to help in this regard. There was an article in The Times last week, in which there were rumblings from other parts of the country about how unfair this was. I do not think that that unfairness exists; this is a much fairer solution to a problem that people in my constituency and those neighbouring it have experienced for a couple of decades. There is still, however, a lack of understanding. We have perhaps not made a big enough effort at national level to get across to those who are concerned in other parts of the country just why there is a desperate need.
First, I congratulate my hon. Friend on having secured this important debate. I would like to congratulate the Government and welcome the announcement in the autumn statement yesterday, although I have to say that it was a 20-year ask. My hon. Friend referred to WaterSure and the social tariff. Does he agree that the statement yesterday does not mean that we should not also make a strong case for an equitable outcome with regard to the future statement on WaterSure and the social tariff when the water White Paper comes out next week?
My hon. Friend is absolutely right. Earlier, I hinted that I would return to that, and of course he understands that further questions remain, which, if settled fairly and equitably, could ensure that the contribution set aside in the Budget has the maximum impact, and that none of its benefits are lost through unintended consequences with regard to tariff schemes.
I am grateful to the hon. Gentleman for giving way and would like to add my thanks to the Government for what is undoubtedly a great contribution to our household bills. Is my hon. Friend expressing concern that, while that is a good first step, we want to ensure that the benefit is not eroded by future changes? There is the prospect of further EU directives impacting on the cost of preserving our beaches.
We must always have an eye on those sorts of costs and look at any other measures that the Government introduce to deal with the emerging issue of water poverty, which is unfortunately catching up in other parts of England and Wales. Any measures to tackle that should not undermine the good done in the recent announcement.
The time of privatisation in the late 1980s was particularly fraught in my constituency, because it coincided with a water poisoning incident at the Lowermoor treatment works, which is still controversial today. A link was drawn between the fact that there was no inquiry into the incident at the time and the fact that privatisation was under way. I must say that that feeling still exists in the minds of many who feel that they may have been affected by that incident. There is an ongoing inquest in Taunton that is finally getting to the bottom of some of those questions. I pay tribute to Doug Cross for all the work that he and his fellow campaigners have done on that issue over the years.
We then moved into the period when it became apparent that all of this work needed to be done. It was done, and there have been huge improvements in water quality, with benefits to the local community and people from further afield who can come and enjoy our wonderful environment. After the departure of the last Conservative Government, we moved into the period of the Labour Government. I pay tribute to Linda Gilroy, a former Member who campaigned a lot on this issue. It was very helpful to have one Member on the Labour side—they were few and far between, and it is even further between in the south-west now—and she very much engaged with this, and was seeking a response.
Right at the end of the previous Government we had the Walker review. At the last gasp of their term in office, they finally had that review. I must say, however, that we had the feeling at the time that there was not going to be the kind of response that we wanted to hear, in terms of national recognition of this problem. We wanted the recognition that it needed to be handled at that level rather than by the relatively small population in the area. I was frustrated by the attitude of Ofwat in all of this. They could have played a much stronger role in advocating to the Government on the issue of unfairness and the problems it causes for bill payers and the industry in the south-west.
We move on, however, and we now have a coalition Government who put their determination to do something about this in the coalition agreement. I pay tribute to the Chief Secretary to the Treasury on the Liberal Democrat side, and to Mr Letwin on the Conservative side. I know that both of them are determined to work with DEFRA to deliver on this and ensure that that commitment is met. However, with the very welcome £50 contribution towards each household’s domestic bills in the South West Water area, there are further decisions to be taken around WaterSure, which is a scheme that helps people who are in the most need with their bills. It is funded by a form of cross-subsidy from bill-payers. The crucial question is whether that subsidy is a within-region subsidy, or whether it is a national one.
I have heard the view that it should just be within the water company’s area. However, that is a dangerous road to go down, for the following reasons. First, I believe that it should be about meeting need, wherever that need may be. Even after this £50 contribution to high water bills per household in the south-west, we will still have the highest water bills in the country, by some way. If we compare the average £517 annual charge in the south-west—and that is the average, of course; those who are unmetered will have a much higher charge—with the Thames Water figure of £319, we see that there is a £219 difference. The £50 will close that gap a bit, but it will still be considerable.
I accept that that is as far as the Government could go with that measure of financial support in the Budget. However, for customers still struggling with those high water charges, WaterSure is a lifeline. For those who are just above that threshold, as always, we have this issue. It would be unjust, having at last secured recognition and support from the Government, to see some of that £50 clawed back in a significant way to fund WaterSure, and also further in regional social tariffs, which is something that water companies are exploring.
South West Water have really engaged in this process. As a private company, it is a tricky thing for it to do; confronting the fact that it has the highest bills is perhaps something it does not want to talk about. However, I pay tribute to Chris Loughlin and the management of the company, who have been absolutely straightforward about the fact that this is the problem they are facing. They want a solution, and they want to play their part in driving forward efficiencies in the business. They were honest about the situation that we face.
South West Water also want to do more with social tariffs. However, the issue for the company is that if we were to have WaterSure funded only within the South West Water area, that would mean that every bill payer who is not on WaterSure would be paying approximately £3.41 towards those who are, whereas across the country the average funding for WaterSure on bills—I am sure the Minister will correct me if I get this wrong—is 30p to 40p. That is a far fairer way of dealing with the issue. Just because someone happens to live in the south-west, they should not be affected by these social tariffs to a greater degree than people elsewhere. The need for people to be on social tariffs in the South West Water area is much higher than in other parts of the country, because the bills are higher, but also because, despite what some might feel about the leafy south-west, it is an area of great poverty. My own region of Cornwall is in receipt of convergence money from the European Union in recognition of the fact that, sadly, our economy still has some way to go to catch up with the wider UK economy.
Another parallel that could be drawn is the issue of additionality. It was always a battle under the previous regional development agency regime to say that, just because we are getting the convergence money, we should not miss out on our fair share of the regional development agency’s money as well. It is supposed to be additional, to help us get to parity with everybody else. This £50, welcome though it is and a tribute to how the coalition Government is tackling these problems, should be in addition to WaterSure and social tariffs that come along. It is not a replacement for them. While the Minister’s Department is looking further at how these social tariffs could play a role in meeting that need, my key point today, in thanking the Minister and the Government for what they have done for our constituents with this £50 assistance, is to ask that when we return to the issue of WaterSure and social tariffs, we should, as far as possible, make them fair and focused on individuals, no matter where they are in the country, rather than being in some kind of fortress south-west, because we would then be taking a step back, having made a step forward. I would hate the Government to be doing that when they are at last making great progress on an issue which has been a huge problem for us over the past two decades.
First, may I congratulate my hon. Friend Dan Rogerson on introducing this debate in an extremely timely manner. Perhaps if it was this time yesterday he would have been extolling the Government to take yet more action, and I am very glad that we were able to deliver. It has been a feature of Parliamentary life that when two or more south-west MPs are gathered together, the issue of water charges is raised, and as the Minister responsible, I am well aware of its importance to a huge number of his and other hon. Friends’ constituents in various constituencies across the south-west.
This is a really important issue for those people, and I recognise the important point that my hon. Friend made at the end: welcome as the measure is, he and other Members from all parts of the House will continue to push on this issue until they feel that greater parity has been achieved in water charges. As he knows, the average water and sewerage bill for household customers across England and Wales is £356, but the average for South West Water, before we implement these changes, is £517. He and other hon. Members will have dealt with cases of constituents, many of them in extremely straitened circumstances, whose bills are considerably higher. I recognise that this is an ongoing discussion and one that I am keen to continue to have with hon. Members across the south-west.
I am delighted that the Government were able to announce details of support for customers of South West Water in the autumn statement yesterday. Every South West Water household bill, as my hon. Friend says, will be reduced by £50 a year. That follows the commitment made in the Budget earlier this year to use public expenditure to support households facing high bills. The Government had to act. In her review, Anna Walker identified the fact that households in the south-west of England faced the highest water bills in the country, because at the time of privatisation, South West Water had the lowest levels of infrastructure required to protect drinking water quality and safeguard the wonderful environment that my hon. Friend so accurately described. This was the biggest challenge facing any water company at privatisation and in the 20 years that have elapsed since then, South West Water has invested around £2 billion to raise sewerage standards to the same level as elsewhere.
Local people have benefited though improved water quality, reduced leakage, cleaner beaches and bathing water, but—and it is a very big but—the cost has been met by those customers. The Government recognise that circumstances faced by customers of South West Water are exceptional and unfair. We are now addressing this historic issue and will contribute to the cost of reducing bills. We looked very closely at Anna Walker’s recommendations, and that was a feature of the debate that my hon. Friend secured some months ago in this Chamber. We decided that each household customer should receive an annual discount on their water bill. I am very grateful to all the south-west MPs who have doggedly raised this issue and demanded action. It is in the hon. Gentleman’s character to be big enough to recognise the input from Members of all parties and, of course, to Linda Gilroy, who raised this question in her time in the House.
This is a fairness measure: a payment to all South West Water household customers to redress an historic unfairness. This debate comes just ahead of the water White Paper, of which a key theme is affordability. South-west MPs have often raised with me and my predecessors individual cases of people in their constituencies who really struggle to afford their bills. Thankfully, even before yesterday’s announcement, South West Water had taken action to address the region’s particular set of circumstances and to tackle affordability problems. The company has a free debt helpline that helps customers to set up payment plans, it offers water metering and water conservation advice, and it recognises that many people are able to reduce their bills and to use water more efficiently by having a water meter.
I echo the words of my hon. Friend the Member for North Cornwall about Chris Loughlin and his team. I have worked closely with them, and they have an absolute and genuine determination to address the issues. South West Water works with local citizens advice bureaux and other experts, and it has introduced a range of initiatives to help those who find it difficult to pay their bills. It has established an advice gateway with south-west citizens advice bureaux and it trains and sponsors CAB debt advisers. Advice agencies such as the CAB can refer struggling customers to the company’s water care scheme and can obtain benefit entitlement checks, tariff checks, water efficiency advice and free efficiency devices.
South West Water also has a scheme for customers who are in debt, and I am very impressed by that work. I have been into households with advisers and seen the impact that they can have on the bills paid by people on low incomes just by installing a very few items or by changing those people’s behaviour, including what they do and how they use water throughout the day. That can have an enormous effect on household bills, but I recognise that, in this context, it might still be only a relatively small proportion of bills. In doing that, South West Water and companies with similar schemes have recognised the benefits to customers, and also to the company. I applaud such schemes, which are designed by water companies to tackle local problems in their region. Many companies in other Members’ constituencies have similar excellent schemes.
Water affordability problems are not confined to the south-west. Across England and Wales, 23% of households spend more than 3% of their disposable income on water and sewerage charges. Some 2.5 million households are spending more than 5% of their disposable income on water. That is a very important issue and one that the Government take very seriously. That is why water affordability will be a key theme in the upcoming water White Paper. We will commit ourselves to a long-term and a short-term set of actions to ensure that water bills are affordable.
WaterSure, to which my hon. Friend the Member for North Cornwall referred, will continue. It will be supported by social tariffs, which will enable water companies to design locally appropriate schemes. We believe WaterSure is really important, but we recognise that its criteria mean that it deals only with families who have a relatively large number of children—three or more—or with elderly or infirm people who require more water because of their circumstances. I have been persuaded by the many moving cases that have been put to me by colleagues about the circumstances of particular constituents.
I recognise the importance of WaterSure in addressing the concerns of those individuals, but I also recognise that about 50,000 people are currently claiming. WaterSure can therefore only ever help a small group of people in water need. That is why company social tariffs, on which we are consulting, are so important. When the consultation ends in January, we will quickly announce the guidelines for those enormously important tariffs.
The Minister is being very helpful. On the groups who are covered by WaterSure, the south-west not only has many people on low incomes, but it has an ageing demographic because of the huge inward migration of older people and the outward migration of younger people. If WaterSure could be established with a national coverage, it would ensure that when people spend their active working life in another water region of the country and then end up in the south-west—I hope, to live a happy and long life in retirement—we had a fairer distribution of the cost. Otherwise, that will all have to be funded within the region.
My hon. Friend makes a very good point. However, the other important point to note is that the fact that the south-west has a much higher percentage of households on meters is good for those particular people, because they very often use much less water than larger families or households in multiple occupancy. That offers a really effective way not only of paying proportionally lower bills, but of managing problems—for example, they will know much sooner, if they are on a meter, if there is a leak. I applaud the work done by the company. We want to see such work developed not only in the south-west but elsewhere, and we will encourage that.
The Minister is speaking about the crux of what will no doubt appear in the water White Paper next year. The impact of the flat £50 per household reduction is welcome. It will apply irrespective of whether households are wealthy second home owners on water meters who therefore have relatively low bills or the large number of local families in straitened circumstances. It is those families for whom a nationally equitable solution is required because, despite the £50 reduction, they will still face considerable bills.
First, I can say to my hon. Friend that he will not have to wait until next year for the water White Paper, which is much more imminent. I cannot tell him precisely when, but it will be very soon. Secondly, the White Paper will examine the whole range of affordability issues and solutions. I hope that the package we introduce will make a real difference.
My hon. Friend and all Members who represent the south-west will recognise that that will require legislation, which is why I cannot promise that it will be delivered before April 2013. I wish it could, but we are convinced that primary legislation is required, although we hope to deliver it in time for the start of the financial year in April 2013.
Company social tariffs will allow water companies everywhere to reduce the bills of those who would otherwise be unable to afford them in full. In conjunction with the excellent existing support schemes and advice, companies will be able to design the right tariffs for their region. We want all companies to introduce social tariffs as part of a package of advice and support for customers about affordability and efficiency. I hope that hon. Members, advice organisations and environmental organisations will work with water companies to design the best schemes for their regions.
Before I conclude, I just want to express again my appreciation to hon. Members across the south-west for their efforts in bringing forward this matter, and my determination to continue this discussion in the future.