§ 3.49 p.m.
§ Lord Whitty
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Whitty.)
§ On Question, Motion agreed to.1239
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.]
§ Clause 1 [Disconnection for non-payment of charges]:
§ Clause 1 agreed to.
§ Baroness Hamwee moved Amendment No. 1:
§ Page 12, line 23, leave out from ("applies") to end of line 25
§ The noble Baroness said: In moving Amendment No. 1 I wish to speak also to Amendments Nos. 2 and 3 with which it is grouped. I appreciate that it may seem a little odd to jump straight in with amendments to the first schedule to the Bill but that has occurred because there is such widespread acclaim for Clause 1, which will in future prevent disconnection for the non-payment of charges. Schedule 1 applies certain provisions in that regard.
Amendment No. 1 seeks to remove from the definition of "accommodation for the elderly" in paragraph 3(2) the words,
but which is not a dwelling within the meaning of paragraph 1 above or a house in multiple occupation".
I believe that residential accommodation for the elderly could constitute a dwelling. If it is not, what is each unit of that accommodation? I ask the Minister whether any harm is done by the deletion that I seek? I am curious to understand the reason for the qualification. That is a short point.
§ Amendment No. 2 seeks to reduce the age in subparagraph (3) from 60 to 55 with regard to the definition of residential accommodation for elderly people. This is not a personal application on my part; it simply reflects the realisation—which appalled me—that sheltered accommodation and accommodation for elderly people, particularly in the private sector, tends to accept people of 55 and over. Therefore I believe it may be more appropriate to include the age limit which now appears to be increasingly applied, particularly by firms such as McCarthy and Stone.
The most serious amendment in this group is a probing amendment. I have no doubt that it should be couched in far more technical terms. Will the Minister confirm that premises used by local authorities to house homeless people will be included in the premises which are protected by this schedule? In another place on 10th February the Minister addressed amendments which listed various premises to be protected. He mentioned children's homes. He referred to premises providing personal care and said that,
very strong arguments have been made for protecting children's homes".—[Official Report, Commons, 10/2/99; col. 404.]
He mentioned the importance the Government quite rightly attach to protecting children. He added, also at col. 404,
I am erring on the side of caution, but there are no absolute guarantees that the relevant local authority would become aware immediately that a home had had its water supply disconnected … On due reflection, we propose to extend protection to residential care homes".
He said that it was right to provide added reassurance in this regard.
§ The Committee will be aware that concern has been expressed about the standards of some bed-and-breakfast accommodation which, simply for lack of more appropriate accommodation, sometimes has to be used by local authorities to carry out their duties to house people who are homeless. Many of the people who find themselves in such accommodation are families with children. In order to be entirely sure that the kind of protection the Government clearly want to see provided is provided, this amendment seeks to include that kind of accommodation in the schedule. I shall be happy to be assured that this kind of establishment is already covered by the provisions of the schedule. I beg to move.
§ Lord Whitty
The amendments which the noble Baroness has discussed seek to extend the provisions with regard to protected premises. I understand the reasons behind the amendments but it is our contention that the Bill as drafted meets virtually all of the cases which she has mentioned.
Amendment No. 1 is a technical amendment, as the noble Baroness has said. It would not in fact add any protected premises to the list. The words that the amendment seeks to delete are there simply to prevent overlap between paragraphs 1, 2 and 3 in the schedule. All private dwelling houses are protected by paragraph 1, and all houses in multiple occupation are protected by paragraph 2. Therefore we do not need in paragraph 3 to protect accommodation for the elderly that is either a private dwelling house or a house in multiple occupation. The amendment is therefore unnecessary. This points to one of the problems we have had in drawing up Schedule 1; namely, that of ensuring that everyone who should be protected is protected, without duplication or overlap. In identifying as a separate category for protection "accommodation for the elderly", we responded to concern in the other place that there might be some such accommodation not otherwise protected although we expected the vast majority of sheltered accommodation to be protected under paragraphs 1 or 2 of the schedule. That is why we included paragraph 3 in the schedule for extra protection. Indeed, the Government met every single concern that was raised in another place about the scope of protection. However, the further this process of adding protection is carried, the more remote the circumstances and the more difficult it is to see that there is a gap in the protection. I do not think there is a gap in this regard.
As regards Amendment No. 2, I suppose I should declare approximately the same interest as the noble Baroness. I do not really believe that there is likely to be a category of sheltered accommodation for the over-55s which is not already protected against disconnection by reason of paragraph 3, or by another provision of this schedule. If there is a particular highly specialised form of such accommodation which is not included in the provision, perhaps the noble Baroness will discuss that with me and I can consider the matter. However, on the face of it, even if there is such accommodation, 1241 sheltered accommodation will not be excluded from protection simply because there are some occupiers under the age of 60. Under the wording of the paragraph it is the letting practice of the landlord that matters, and that is sufficiently elastic to permit a few younger inhabitants, or perhaps I should add, relatively young inhabitants. Of course, water companies will be well aware of the prohibition of disconnection set out in this Bill. In paragraph 3 there is full protection for sheltered accommodation for the elderly in the sense that the word "elderly" is generally understood. I ask the Committee to leave paragraph 3 as it stands.
Amendment No. 3 is slightly more complicated. It seeks to protect accommodation for the homeless. This is clearly another case of overlap with existing provisions. Rented dwellings, including council houses, are protected by paragraph 1. Houses in multiple occupation, (HMOs) are covered by paragraph 2. Between them, those two provisions must cover most if not all premises in which a local authority houses homeless people. In particular, the definition of houses in multiple occupation has been interpreted widely by the courts. For example, a hostel has been held to be an HMO, as has a hotel accommodating homeless persons.
However, we recognise the point behind this amendment; namely, that some accommodation provided for housing the homeless might not be protected. In our view most such accommodation is likely to be deemed an HMO and is therefore already clearly protected. There may be a residual problem in that, depending on the type of property, some hotels may not be classified as HMOs, although they may sometimes be used by local authorities to house the homeless. But some of those same hotels may also have other guests of all kinds on all terms and conditions. Water companies do not have the information to differentiate between the different status of different guests.
Unfortunately, if we extended protection in that way to all premises accommodating the homeless, the effect would be to prevent disconnection of all hotels. We do not believe that is appropriate. Indeed, taking that view, it would also be quite protective. Accommodation provided for the homeless must by law be suitable for the homeless. If disconnection were threatened the result would be the same as if the premises were threatened by closure for reasons of health and safety; in other words, the guests would immediately have to be moved and the local authority would have to find another place of accommodation. It is not realistic to specify hotels in general under this clause, which is the implication.
The welfare of homeless people is safeguarded by the existing clauses. Hotels are competitive commercial establishments and they should be subject to the same rules as regards their water supply as other such commercial premises. I believe that we have covered the concerns that lie behind the three amendments. I hope that the noble Baroness will feel able to withdraw Amendment No. 1.
§ 4 p.m.
§ Baroness Hamwee
I thank the Minister for that reassuring response. I take the point that the accommodation, the subject of Amendment No. 3, must be suitable, but there is a short period—one would hope very short—between a potential cut or disconnection and the authority discovering that the premises had been disconnected. That seems to underlie the Government's reasoning on children's homes and so on—it was referred to in another place—and is why I thought it was worth airing this matter.
I am reassured to know that most establishments of this type will be covered; it is the minority which are a cause for concern. Perhaps I should rely on the fact that an establishment which is so badly nut that disconnection might happen would not he likely to attract guests on a commercial basis. I thank the Minister for his comments on the other amendments. I beg leave to withdraw Amendment No. 1.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 2 and 3 not moved.]
§ Schedule 1 agreed to.
§ Clauses 2 to 4 agreed to.
§ Clause 5 [Regulations concerning charges schemes]:
§ Baroness Hamwee moved Amendment No. 4:
§ Page 3, line 16, after ("principles") insert ("(which shall include affordability)")
§ The noble Baroness said: In moving Amendment No. 4, which stands in my name and that of my noble friend, I shall speak also to Amendment No. 5 and to Amendment No. 6, standing in the name of the noble Baroness, Lady Miller of Hendon, which is in the same grouping.
§ Amendment No. 4 deals with the charges schemes' regulations. Clause 5 enables the Secretary of State to specify the principles to which undertakers must have regard when calculating charges to customers. But what those principles should be are not stated on the face of the Bill. No doubt many of your Lordships could produce a list of principles, and I may be told that that could cause difficulties because once one starts describing detailed principles one might be knocking out others with an equally good claim. However, it is worth airing the principle of affordability. It is something of a truism perhaps, but it is accepted that water is a human necessity. I am concerned that access to water will continue to depend to an extent on ability to pay.
§ Although it is not perhaps accepted that the objective of the Bill is extended metering, that will certainly be an outcome. It is the theme behind the Bill. That in itself imposes cost pressures on consumers. Those who argue for metering often say that it is the increased costs which will lead to some reduction in the volume of water used. I accept entirely the steps that the Government have taken to protect vulnerable groups. The protection is to limit the bills of vulnerable groups to the cost of the average measured bill. That is not the same as the bill being affordable. It could be that the average bill will be high in a particular area and still not be affordable, and poorer customers will still be under pressure to economise in their use of water. By bringing the 1243 amendment forward today I am hoping that the Minister will be able to give the Committee some assurances about the principles likely to be included by the Secretary of State and that we will not have a problem of water charges being in any way unaffordable.
§ Amendment No. 5 seeks to ensure that the regulations are practicable for the undertakers. Having looked in the first amendment at the position of certain consumers, I am now turning to the position of the undertakers. This clause and the previous clause allow charges to be modified by the regulator so that the bills of vulnerable customers will, in effect, be subsidised by other customers. That is a change to the way the industry is regulated. The noble Baroness, Lady Miller, will table an amendment later about consultation. I agree with her that it is vital that the Government consult very widely on regulations to ensure that they are practicable and reach the groups in greatest need.
§ I am told that the water industry is very keen to be involved in the debate on how best to implement the proposals. The regulations must be the subject of wide consultations with expert groups. They should also—this is the point of the amendment—reflect the categories of customers already recognised by the DSS. We should consider whether the system should be implemented by the Government. Admittedly, the water industry is very profitable, but we are loading new regulations upon it and we should pause to consider what the overall effect might be. I beg to move.
§ Baroness Miller of Hendon
I wish to speak to Amendment No. 6, grouped with Amendments Nos. 4 and 5 which have been spoken to by the noble Baroness, Lady Hamwee. The noble Lord, Lord Elliott of Morpeth, is in hospital at the moment and, although the amendment stands also in his name, he regrets that he is not able to speak to it today.
At this stage, this is a probing amendment, but one to which we feel it may be necessary to return at a later stage depending on the response from the Minister. My honourable friend the Member for Meriden raised a similar issue in the other place, but the Government's response was unconvincing, to say the least. I hope that they will either produce a more convincing reply today or, alternatively and preferably, having had longer to consider the matter, they will now concede the point.
The Secretary of State or, by delegation, the director general, has power to set the terms of an undertaker's appointment—in other words, his licence to do business—by virtue of Section 6 of the 1991 Act. This includes the general basis of an undertaker's charging scheme. Section 143 gives the undertaker wide rights to produce a charging scheme, but that is subject to the terms of his appointment by the Secretary of State or, by delegation, by the Director General of Water Services. There is a model instrument of appointment which includes a specific obligation to ensure that a charging scheme is in force, especially in relation to domestic supplies, drainage and infrastructure. All those existing powers should be entirely sufficient. No evidence has been proffered that the existing arrangements are not working satisfactorily.
1244 Clause 5 inserts a new section, Section 143A, in the Water Industry Act 1991, giving the Secretary of State power to make any regulations—I stress the word "any"—in relation to the provisions of charging schemes. No adequate reason has been given for that proposed shift of powers from the director back to the Secretary of State.
Subsection (1) of the new clause gives the Secretary of State absolutely unlimited power as to the regulations, subject to one small restriction in subsection (4) to which I shall refer. Subsections (2) and (3) add to the already unrestricted powers of the Secretary of State, specifying the matters in relation to which he may issue regulations. But I stress that that is in addition to the wide powers that the Secretary of State will already have under subsection (1). The small restriction in subsection (4) to which I referred is that the Secretary of State's regulatory powers may not be used to limit the total revenues of the water companies, fixed in accordance with approved charging schemes. In other words, the only restriction that the Secretary of State offers on the new, sweeping powers that he seeks is that the total income of water companies may not be reduced by him, but the sources of income can be shuffled around between different categories of consumer.
The water industry is supposed to be deregulated, industry, with the public interest being protected by a totally independent regulator. This clause, particularly subsection (1), gives the Secretary of State overriding powers that are so wide that one wonders what future function the regulator will perform, except to stand in the firing line when anything goes wrong with the day-to-day operations of the industry.
The short and simple amendment that I propose simply prevents the Secretary of State, in exercising the powers that he seeks under Clause 5, from interfering with any charging scheme validly approved by the director. The powers in the 1991 Act to impose conditions on the original licence or appointment of an undertaker are not affected.
As I said, a differently worded amendment, but one to similar effect, was proposed by my honourable friend the Member for Meriden in the other place. The amendment replaced the draconian power to make regulations in relation to charging schemes with one requiring an undertaker to have regard to guidance as regards the various elements of any charging scheme. In other words, the Secretary of State was not to be able to move the goal-posts, either in relation to existing schemes or for future schemes which it is deemed should be identical. I commend my amendment to the Committee.
§ 4.15 p.m.
§ Lord Whitty
It may be helpful if I outline the system of protection that is reflected in Clause 5. The protection will be aimed at two groups: large families on low incomes, and those with medical conditions requiring a high use of water. It will take the form of eligibility for a bill based on average measured use.
We propose that protection should be available for, in the first protected group, families with three or more children in receipt of specified benefits; in the second 1245 group, we propose that protection should be offered to those with particular medical conditions. We wish to ensure that the same protection applies right across England and within Wales, so that we do not end up with a patchwork of different entitlements. That has implications for the regulations, which will enable Ministers to ensure that the right arrangements are in place and that the same protection will indeed be available. It has implications also for the less prescriptive guidance.
Turning to the amendments, the requirement is for a director-general to have regard to such guidance in carrying out his responsibilities. In relation to the first amendment, I assure the Committee that the Government would not want to provide for a conflicting approach between regulations and guidance. And of course the Government will be working closely with the regulator, Ofwat, to ensure that the introduction and operation of the new arrangements spelt out in the Bill go as smoothly as possible and that that relationship will continue.
One effect of the amendment tabled by the noble Baroness, Lady Hamwee, would be to prevent the Secretary of State from issuing regulations to apply to a charges scheme that had already been approved. I understand the anxiety expressed, but I assure the Committee that we have no intention of making regulations which would, for example, come into force in the middle of a charging year. Such a course of action would clearly not be helpful. That may be the kind of situation that lies behind this amendment.
I also assure the Committee that we are concerned about the question of affordability. Since privatisation in 1989, customers have seen water bills in England and Wales rise by over a third. The House will no doubt be aware that we have recently told water companies and their regulators that an ambitious programme of environmental improvement needs to be accompanied by a significant reduction in average bills. We shall certainly wish to consider the principle of affordability in relation to customers' charges. Indeed, it is already an important principle behind our proposals for regulations. I assure noble Lords that we share their concerns about affordability. We have demonstrated that we have already gone further than merely expressing concern and are taking steps to make water bills affordable.
Nevertheless, we believe that it would be unduly prescriptive to make the change that is suggested in the amendment. It would unnecessarily narrow the scope of regulations that could be laid under the provision. While recognising the importance of affordability, other factors must always be taken into account in calculating and imposing charges. I refer, for example, to the effect of changes in the environment, the impact on sustainable development and other issues. I do not therefore believe that this amendment would be the best way of carrying forward the concerns that lie behind it.
The effect of Amendment No. 6 would clearly be to shift administration of the scheme to protect the vulnerable groups of which I have spoken and charge the costs to the Government. There is clearly a role for 1246 government in this area. I have already spoken about the need for uniformity. But water companies also have a major role to play. Companies reflect more closely their customers' concerns than the Government can. They send out information about charges and charging methods; they know who their customers are; they know the basis on which customers pay their bills.
The noble Baroness asked for an indication of how we envisage the system of protection working. We have explained previously whom we expect to be covered by the protection. We shall expect water companies to ensure that such groups are aware of the protection to be afforded under regulations. Water companies, with their closer contact with customers, are in a better position than the Government to ensure that customers are aware of all the charging options open to them. Customers having been made aware of the protection, we should then expect those who are eligible for it to apply to the water company. The checking procedures that are to be carried out by the companies will be set out in regulations that are under preparation.
It would be neither possible nor appropriate for the Government to identify all the various individuals who are eligible for protection. For example, there is no central record of all those suffering from particular medical conditions. Meeting the costs of protecting vulnerable customers must be an essential part of the new water charging system proposed under the Bill. It is not an optional extra, but a key measure to protect customers from severe hardship. It is therefore right that the costs of the scheme should be met by water companies. We are keen to keep to an absolute minimum the bureaucracy involved in the proposals; for example, by identifying pre-existing documentation, which should make eligibility easier to establish. Also, the proposed protection—a bill based on average measured use—is easy to administer.
We shall continue to work closely with the water industry and others to ensure that the arrangements for offering protection fit as effectively as possible with existing water charging administration and so minimise the costs to all concerned. But I do not think it would be right to pass the costs on to the taxpayer and away from the water charge payer.
I hope that that goes some way towards making clearer the intentions of the clause and the regulations that we would issue under it. I hope that, at least at this stage, the two noble Baronesses who moved and spoke to the amendments will feel able to withdraw them.
§ Baroness Miller of Hendon
I will read carefully what the noble Lord said in respect of Amendment No. 6. I am concerned because the powers that the Secretary of State seeks are rather wide, but at this stage I shall not move my amendment.
§ Baroness Hamwee
I urged the noble Baroness to speak before me so that I could withdraw my amendment, which is part of the group. Before I do that, I believe that the Minister referred to Amendment No. 5 as being Amendment No. 6. After he had been speaking for a moment, I realised that he was addressing Amendment No. 5.
1247 We could discuss at some length—but I shall not encourage the Committee to do so—who, at the end of the day, bears costs and whether customers and taxpayers are the same people.
I, too, will carefully read what the Minister said and perhaps return to the subject. The one point I wish to make is that the DSS has information about those on benefits, one of the two groups to which the Minister referred. I take the point that there may not be a central record of those with medical conditions, but as regards eligibility arising from benefits, central government, through the DSS and the various agencies, has those records.
As for Amendment No. 4, the Minister said that the Government do not wish to end up with a patchwork of regulations, but we have perhaps not a patchwork but a quilt, with rather large sections of undertakers. So it is not as though we were dealing with only one undertaker. There may be an argument for some slight flexibility of approach. However, I take the point about being careful not to restrict the principles by starting to list them. I shall carefully read what the Minister said on that. For the moment, I beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 5 and 6 not moved.]
§ Baroness Miller of Hendon moved Amendment No. 7:
Page 3, line 44, at end insert—
("() The power to make regulations under this section shall only be exercised after consultation with such persons and bodies as the Secretary of State considers it appropriate to consult in relation to the proposed regulations."").
§ The noble Baroness said: As we have already discussed, Clauses 4 and 5 of the Bill allow the Secretary of Sate to make regulations which must be taken into account by the director when companies' charging schemes are approved by him. As the Minister said, the regulations will protect vulnerable groups such as those on low incomes or those who use higher than average volumes of water for such reasons as age, ill-health or disability.
§ I remind the noble Lord that during the Second Reading he gave the noble Lord, Lord Ahmed, an undertaking to pass on to the appropriate quarter the question of possible special provisions for those who need to use large quantities of water for religious purposes, especially the Moslem community. We have already made it clear that we fully support the protection of vulnerable groups and I understand that the water companies also do so.
§ Clauses 4 and 5 alter the whole ethos of the regulation of the water industry. Since privatisation in 1989, the regulator has been entirely free of short-term political pressures. Under the two clauses, some authority over the industry is to be taken back into the hands of government. I am not making any political point here, but it is right to note that under these clauses the regulator will be compelled to take into account guidance from the Secretary of State. It is, I submit, important that the regulations should not erode the 1248 independence of the regulator; nor should they lead to undue and short-term political or populist interference in the regulatory system or in the operation of the industry. It is essential that any regulations will be acceptable to all parties concerned, especially the vulnerable groups and groups who wish to be considered as such. The Moslem community mentioned by the noble Lord, Lord Ahmed, is an example of a group which should be enabled to make representations, irrespective of whether its claim is ultimately accepted.
§ Obviously, to avoid total anarchy, claims and representations will mostly be made by the organisations representing the interests of such claimants. It is essential, especially when the first set of regulations is published, that we do not find that a certain group has been left out or that one group has been included but a similar but slightly different one has been overlooked. It is no less essential that the regulation should be correct from the first, rather than that the Secretary of State should have to revise his guidance.
§ Finally, it is equally essential that the implications of the regulations are fully understood by everyone affected by them, whether it be the water companies, their customers, or the special interest groups that have been given protection or refused it. I suspect that decisions made after detailed consultation will protect the Secretary of State from potential proceedings for judicial review. Like the noble Baroness, Lady Hamwee, I believe consultations of that kind are absolutely essential.
In the debate on Clause 5 in Committee in the other place, the Minister for the Environment said:
We shall, of course, consult on the regulations in the draft".—[Official Report, Commons, Standing Committee A. 12/1/99: co1.68.]
I unreservedly accept that the intention of the Government is that the regulations be practical, fair and agreed by all interested parties. The amendment I propose simply implements and goes no further than the promise made by the Minister which I have just quoted. I trust that the Government will accept it.
§ Amendment No. 8 is in the same group, and perhaps while I am on my feet I may speak to it. It is a short, simple amendment, to insert into this clause a common provision. But although it is short and simple, I must tell the noble Lord that it is absolutely necessary. Indeed, it is a type of provision which is recognised to be more and more necessary these days when so many of the statutes that we pass are simply enabling Acts which place increasing legislative power. in the form of secondary legislation, in the hands of Ministers—legislation which does not receive the full scrutiny of Parliament by passing through the three stages in both Houses.
The Committee knows well that there is a vast difference between statutory instruments subject to negative resolutions and those which require positive or affirmative resolutions, which at least ensure that there is an opportunity in each House to discuss the proposed order just once in place of the three times for a full Act of Parliament. To do them credit, in the last Bill with which I was extensively involved, the National
Minimum Wage Act 1998, the Government accepted the principle of positive resolution procedures for orders that were made under that Act. In this case, we simply ask for that same procedure to apply to the orders made by the Secretary of State under this vital, indeed key, clause of the Bill. When this point was discussed in Committee in the other place, the Minister for the Environment rejected the amendment on the grounds that,
the Water Industries Act 1991 contains a number of regulation-making powers that are subject to negative rather than affirmative resolution".—[Official Report, Commons, Standing Committee A; 12/1/99, col. 69.]
Indeed it does. But the regulations referred to relate to highly technical matters such as preventing contamination of water supplies and safeguarding the water supply itself. This section and the amendments to be made under it deal with the highly personalised matters of protecting the interests of vulnerable groups. To give an entirely fictitious example, perhaps persons with one type of skin complaint are treated no more or no less favourably than those with a different one and neither is treated differently from those undergoing dialysis at home. There will be Members of both Houses who will want to advocate or even oppose the case of one or other group or to question Ministers about the proposals. From a practical point of view, those are matters which should be subject to the scrutiny of Parliament and adequate debate, if necessary.
§ The Minister in the other place also claimed that the regulation-making power is already constrained by Clause 5(4). I invite the Committee to glance at that subsection. It merely prevents the Secretary of State limiting the total revenue of the water companies. That has nothing at all to do with deciding whether a person suffering from weeping skin diseases, incontinence or intestinal diseases, should receive special consideration. Restricting the power of the Secretary of State to limit the revenue of water undertakings has nothing to do with what protection should be given to large families or those in receipt of various benefits.
§ When the Secretary of State produces his draft regulations, it is right and proper that Parliament should scrutinise them in a positive way rather than letting them slip through more or less by default as a result of the negative procedure. There can be absolutely no reason why the Secretary of State should resist this requirement that regulations to be made under this clause, which will affect so many people in a highly personalised way, should not receive the benefit of proper debate on a proper resolution. I trust that he will now accept this request for open government. I beg to move.
§ 4.30 p.m.
§ Lord Whitty
As regards the first of this group of amendments proposed by the noble Baroness, we have, as she indicated, made a number of commitments to consultation on the regulations. We have made it clear that we would be prepared to consider proposals for targeted protection where there is a real risk of hardship and with regard to any other related issues. That is a clear indication of the Government's desire to engage in constructive dialogue with all those involved in the 1250 system of water charging. I can assure the Committee that we shall, of course, continue this consultative approach in preparing the regulations made under this Bill. We attach considerable importance to consultation so that those most in need of assistance can be properly identified and so that we can also identify the best means to deliver assistance and protection. That consultation will be a key part in ensuring that we get the regulations right.
However, we already have clear assurances from my colleague, Alan Meale, in the other place, to consult on any regulations made under this Bill. I do not believe that we add particularly to that commitment if we put consultation on the face of the Bill.
Amendment No. 8 deals with the affirmative or negative resolution. We have explained why the powers for the Secretary of State are needed and why they are perfectly proper in terms of the role of the Minister in the regulation of the water utilities. We have spelt out in some detail what we intend to put into the regulations and how we will consult on them.
The power referred to by the noble Baroness in Clause 5(4), which circumscribes the powers of the Secretary of State, relates to the distinction between the powers of the director general and those of the Secretary of State. The director general is the economic regulator. The limitation on the Secretary of State's power makes it quite clear that, in using regulations, he should not tread on the toes of the director general in his function as the economic regulator.
We have also given a clear indication that the scope of the use of the regulations will be within the Government's legitimate social and environmental concerns, including those for the protection of vulnerable groups. That seems to us to be a normal function of regulations. After their initial use, it is extremely unlikely that any subsequent changes would be more than minor and technical updatings of the scope and nature of the protection offered for which the use of the affirmative resolution would not normally be considered proportionate.
Before making the initial regulations and in making any subsequent ones, we have clearly undertaken to consult publicly. As the noble Baroness said, but did not seem to accept, the use of the negative procedure is very much in line with the other regulation-making powers covering the water industry and in particular Section 213 of the 1991 Act, which I believe the noble Baroness referred to as being mainly technical matters exercisable under a negative resolution. They include much wider issues than merely technical matters, such as measures to ensure the delivery of water quality and that there is no contamination of the supply. There are also some technical matters relating to water fittings and so forth. A whole range of regulatory—making powers in the water industry, introduced by the previous government, are dealt with by the negative procedure.
It is also worth noting that the Delegated Powers Scrutiny Committee of your Lordships' House has examined the proposals for delegated powers in this Bill. It has concluded that there is nothing in it which the Committee wishes to draw to the attention of the 1251 House. Therefore, there is no recommendation that we upgrade the regulatory-making powers under this clause so that they are taken by affirmative resolution. I do not believe that in this area the affirmative resolution procedure would be appropriate and I hope that the noble Baroness will withdraw her amendment.
§ Baroness Miller of Hendon
As I said previously, I shall look very carefully at what the Minister has said. However, I am disappointed by it. I commented on the fact that other regulations in the earlier Act are subject to the negative proposal, but here we are talking about vulnerable groups and possibly competing groups. I even mentioned to the noble Lord the problem that his noble friend Lord Ahmed had raised. I understand from the noble Lord that to date he has not received an answer on the matter. He believes that this matter should be considered. I shall not press the amendment at this stage. I believe that the Minister should consider the difference between this clause and those matters which are subject to the negative resolution procedure in the earlier Act. There is a distinction and it is a matter to which I shall return. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 8 not moved.]
§ Lord Addington moved Amendment No. 9:
Page 3, line 44, at end insert—
("Highway drainage charges.
143B. Without prejudice to the generality of section 143A (2)(a), regulations under that section shall ensure that items for which customers are not liable to pay a charge shall include highway drainage."").
§ The noble Lord said: This amendment is as straightforward as it appears on the Marshalled List. It merely states that a water company shall not be able to pass on costs for the drainage of roads to the consumers. If one has the privilege and the financial rewards of supplying water to a series of customers and something goes wrong, it is not unreasonable to ask the water companies to make sure that the highways of the nation stay clear of great deluges caused through a failure in the supply system. I beg to move.
§ Baroness Hamwee
I support my noble friend. In doing so, perhaps I may refer to the Government's paper on decisions following the consultations on water charging. I should like to place this on the record. I particularly welcome the comments made in paragraph 47 of that paper in which Government state that they believe it important to set out the charges in customers' bills in as transparent a manner as possible so that customers can see where their money has been spent and are aware of the individual elements which make up the sewerage charge. The Government expect water companies' bills to identify separately the foul drainage, surface water drainage and highway drainage elements.
That is not to say that I am not interested in hearing the response to the particular amendment. I am encouraged by the Government's keenness for transparency. If this amendment is not accepted, at least 1252 we shall know—I invite the Minister to confirm the words that I have just read—that the Government are keen that the individual elements of the bills are made entirely clear to the customers so that they know for what they are being charged.
§ Baroness Farrington of Ribbleton
This amendment would ensure that water consumers could not be charged for highways drainage as part of their water bill. As the noble Lord, Lord Addington, said, there are some interesting arguments for removing liability for payment of highway drainage charges from water consumers, but any such changes would involve considerable upheaval. Transferring the funding obligations to highway authorities would mean most of the expenditure moving to local authorities and to the local authority finance system.
The vast majority of water customers pay unmeasured charges, generally related to the rateable value of their property. While there is not an exact parallel between rates and council tax, there would be very little difference between paying a property-based charge to a water company and paying a property-based charge to a local authority. It is therefore far from clear that any significant benefits would be associated with the change proposed in the amendment. Of course, any such change would need careful consideration by all interested parties and would need to be an issue for the longer term. However, we will keep this matter under review.
I am pleased to be able to confirm to the noble Baroness, Lady Hamwee, that we believe it is important for customers' bills to set out charges as transparently as possible so that customers can see where their money is being spent and are aware of the different elements which make up their sewerage charge. We look to water companies to ensure that customers are aware of how much they pay for the separate elements of their sewerage bills. In the light of my response, I hope that the noble Lord, Lord Addington, will be happy to withdraw the amendment.
§ Lord Addington
I thank the noble Baroness for that reply. I shall want to study it carefully to see whether we have run this issue totally to ground. At the moment, I am quite prepared to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 5 agreed to.
§ Clause 6 [Right of consumer to elect for charging by reference to volume]:
§ 4.45 p.m.
§ Baroness Hamwee moved Amendment No. 10:
§ Page 4, line 15, after ("below,") insert ("on payment of the cost of the meter and of its installation")
§ The noble Baroness said: In moving this amendment I wish to speak also to Amendments Nos. 12, 14 and 21 standing in my name and that of my noble friend Lord Addington, which are grouped together.
§ Amendment No. 10 takes us into Clause 6 of the Bill which deals with the consumer's right to elect for charging by volume; in other words, paying for what is 1253 consumed rather than paying on the basis of the rateable value of the property. The first amendment raises the question of the cost of metering. The Bill provides for free meters. However, I suggest to the Committee that there is no such thing as a free meter. It will have to be paid for.
§ Meters cost money to buy and to install. Ofwat has said in the past that it costs up to £200 for a basic meter in an external box. That payment has to come from somewhere or from someone—the "someone" will be the remainder of the customers, the majority of whom will not be metered. Therefore, in moving the amendment, I am raising the issue of whether there is a justification for such a subsidy.
§ The cost of meters is simply hidden. Households which prefer to stay with the rateable value basis will be subsidising those which opt for meters. In the short term, unless the undertakers absorb the charges, the bills will be inflated by an element that is unrelated to consumers' consumption. Indeed, one might say that, however it is dealt with, either the cost will feed directly into the bills going to the unmetered customers or will feed indirectly to them because the amounts being absorbed by the undertakers would otherwise have been available to reduce bills. I am concerned about the possible skewing of customer choice that might result from this.
§ Amendment No. 12 raises the issue of what will happen if it is not practicable to fix charges by reference to volume or, if by doing so, an increase in charges to other customers would take place. The amendment seeks to promote fairness and rational choice in charging, which is the Government's declared aim, in the face of the dice being loaded against the unmeasured consumer in an attempt, I suggest, to speed conversion towards metering. The Government's logic is that metering saves the industry money by avoiding the need for investment in new resource development. If that were so, there would not be a need for a redistribution of revenue and there could not be an objection to the amendment. If the Government are opposed to it, that might go to support the argument that metering—at least voluntary metering—does not save money over all.
§ Amendment No. 14 seeks to deal with the period of time within which a customer who has opted to use the freebie to move to a measured basis has to evaluate whether or not to stay with metering or to revert to unmeasured charges. The amendment seeks to allow consumers who are giving a meter a trial to revert to unmeasured charging without such a limit. Two points arise: first, whether there should be any limit at all; and, secondly, whether, if there is a limit, it should be the 12-month limit.
§ I suggest that 12 months is insufficient. Consumption year on year can be affected by a number of factors, not least by climate. The reason advanced for introducing the option to change—fitting the charging method to a consumer's circumstances—seems to justify an arguably indefinite period because people's circumstances vary over the years. If there is to be real choice—during the proceedings on the Bill we have been talking about real choice for the consumer—it cannot be time-limited.1254
§ There is a more technical point. If the trial period is exactly a year, the customer will not have a full year's bills on which to make a judgment. I am seeking through the amendment to achieve a better balance between consumer protection and the other concerns that are raised in the Bill.
§ Finally, Amendment No. 21 seeks to amend Clause 7, which deals with the restriction on change in the basis of charging. The amendment seeks to allow consumers who use meters, by way of serving an unmeasured charges notice, to experiment with an unmeasured charge and find the tariff which best suits them and so enjoy the same protection as unmeasured consumers against an unsuitable tariff. At the Committee stage of the Bill noble Lords spoke of the difficulties for consumers who are already metered, perhaps because they live in a house which was built after 1990—since 1990 rateable values have not been available—or who will in future move into a house which is metered. Those customers are not given the same choice as the occupants, for instance, of houses built before 1990.
§ Again, I seek some equality. The argument has been advanced that the presence of a meter would be known to a purchaser of a house. Indeed that is so. But I cannot believe that that would be the factor which sways a decision about whether or not to buy a house. The known presence of a meter does not in itself make it appropriate to deny choice to that consumer. I beg to move.
§ Baroness Miller of Hendon
Before the Minister replies to the noble Baroness's points, I wish to make a brief remark on Amendment No. 10. Can the Minister comment on the practicality of having a meter in every flat, for example, in a terraced house? I am not sure how that would work. I shall be pleased to hear his comments.
§ Lord Whitty
As the noble Baroness, Lady Hamwee, said, we are now in the area of consumer choice. The intentions, although in some cases not the effects, of the noble Baroness's amendment is to extend that further. However, before I address the amendment I remind the Committee that the Bill already represents a substantial increase in consumer choice. At present consumers have few rights over the basis on which they are charged. As the law stands, there is no statutory choice. The basis of charging is up to the undertaker. The Bill presents a major step forward in consumer choice, albeit not unlimited. Increased consumer choice is one of the objectives of the Bill. It means that we give customers the option of a measured as well as an unmeasured charge where we can.
However, some of the implications of the noble Baroness's amendments would restrict consumer choice and the benefits of making metering more generally available. For example, dropping the free provision of a water meter would restrict many customers' choice. My department receives a significant amount of correspondence from many people who would like themselves to have a meter fitted. They believe that they would benefit from having a meter fitted. The environmental and water usage would benefit. But they 1255 cannot afford the upfront cost of perhaps £200 or £150. Single pensioners and many others cannot therefore gain the benefit of a meter being installed. Our analysis suggests that up to 54 per cent of all people on benefits would have lower water bills if they pay on a measured basis. Yet many of them are put off by the £150 or so charge.
It is true that meters are not the only way to reduce consumption, but they are important. One of the arguments used against the provision of free meters by the noble Baroness is the passing on of costs to other consumers. It is important to recognise that we do not regard these costs as unmanageable if spread across the range of consumers. Under the present regulations, around half of all water companies already offer a free meter option. There are the additional costs of ensuring that all customers, rather than just those who live in an area served by a water company which already provides a free meter option, have a real choice to pay on the basis of volume. The total numbers are not expected to be excessive. Therefore, spread across other water company users the cost is not enormous.
The director-general estimated in Prospects for Prices that the cost of all metering over the next five years would be £300 million. That is small in comparison with the total turnover of the water industry and its commitment on environmental and other fronts.
Water companies will not be expected to fit meters where it would be unreasonably expensive or impractical to do so. The example of a terraced house, broken up into several flats, could in certain circumstances mean that it would be unreasonable, too expensive, or too technically awkward to do so. In such cases, in order to meet some degree of consumer choice, companies will be able to offer customers an alternative basis of charging such as an assessed measured charge.
Amendment No. 12 again cuts across the desire of the noble Baroness to give greater customer choice. If one combines the effects, Amendments Nos. 10 and 12 make it more difficult and more expensive to choose metering. It is simplistic to say that a programme of metering should not be allowed unless the cost of switching to measured charging falls only on those customers who make the switch. It is a complex area. It is the responsibility of the regulator. I shall make a brief attempt to explain how the cost effects work so far as I understand them.
There are typically two adjustments in a balance between measured or metered charges and the unmetered charges so as to ensure that there is a fair distribution of charges between those groups. First, customers who choose to be metered tend to use less water than unmetered customers. The costs of metering are charged to those metered customers alone so that a customer with an average consumption will pay slightly more to be metered than to pay on an unmeasured basis. Companies make an adjustment to the unmeasured tariff to prevent that differential becoming so great that metered customers are in effect subsidising unmetered customers. Ofwat specified that it believes that the difference should be no more than £29 per customer with average consumption. That may mean an increase 1256 in average unmeasured bills to ensure an appropriate differential is maintained between measured and unmeasured charges.
The second and smaller adjustment is to take account of a change in the average rateable value of those properties remaining on an unmeasured charge. Where consumers in higher rateable value properties switch to a meter there will be a fall in the average rateable value for unmeasured properties. That requires some increase in tariff to ensure that the company receives the same average income. Therefore, an adjustment in the opposite direction is made in the circumstances where there is a preponderance of occupiers of smaller value properties.
The regulator is ensuring that the charge paid by those remaining on an unmeasured basis is reflecting more and more closely the average consumption characteristics of the group concerned.
Those adjustments are made on the basis of equity. These amendments are not an alternative to those adjustments. Quite apart from the new consumer rights under the Bill, switching to meters is already running at the rate of about 3 to 4 per cent annually. That is causing these rebalancing effects on the bill under the procedures outlined by the regulator. The precise distributional effects of the new customers' rights under the Bill, as well as the switch that is already taking place, will depend on how a director-general chooses to set the totality of a tariff basket. I am sure the director-general will want to work with the water companies to ensure that these new rights are introduced in a fair way.
It must be understood that every individual choice that allows a customer to minimise his or her charges, whether to go for measured charges or in the opposite direction and whether they benefit from a special tariff or a special charge for vulnerable groups, results in some loss of revenue to the water companies—revenue that must in some sense be recovered from the rest of its customers. It is no good saying that a customer saving should not fall on any other customer unless one denies everyone the chance to make any choice. That is why the Government have supported a balanced approach and why they believe that some of these adjustments have to be made.
I believe that in recognising that, this Bill delivers an important package of new consumer protection as well as greater consumer choice. I do not believe that Amendments Nos. 10 and 12 would improve that situation; indeed, there is a danger that they would do precisely the opposite in terms of consumer choice.
Amendment No. 14 proposes to go further than the choices offered in this Bill. It would allow customers to move in and out of measured charges at any time. I assume that that fits with the logic that they would have had to pay for that because there would be no free metering. We have made it clear that we want to increase customer choice. We have spoken about the importance of ensuring that the charging system provides enough water to everyone for their essential needs at a fair and affordable price.
1257 However, it is not just a question of customer needs. We also have to recognise the needs of the industry. In order to function efficiently, the industry has to have some revenue stability. That is important for the forward planning of the industry and for the environmental and capital investment which we are expecting to see from it.
It is not only the water company that needs that stability. It is also important that consumers know broadly what they will be expected to pay for their water. If large numbers of customers were allowed to revert to unmeasured charges at any time, a significant amount of stability would be removed. Presumably such customers would only do so if they were convinced that their bills would thereby fall, and that could mean charges rising very sharply for those customers who had not changed either the pattern of their use of water or their charging system. It does not seem sensible to allow a system of constant shifting of forms of charging which would cause that degree of instability to other customers.
Amendment No. 21 offers the prospect of continuing to opt in and out of measured and unmeasured charging from the same premises (theoretically, at least) over and over again for the indefinite future. I have already indicated the problems that could arise from a very high incidence of switching between measured and unmeasured charging. The noble Baroness and noble Lords will recognise that there has to be some restriction on the customer's right to choose where that would have a knock-on effect on the total pricing and charging system. Amendment No. 21 apparently invites us to open up even greater opportunities for customers to choose an unmeasured basis—in other words, to move in that direction. We believe that a responsible policy must strike a balance between consumer choice, stability of income for the water companies and stability which enables customers to understand the pricing.
I hope that the noble Baroness will see from what I have said that the amendments may well not achieve the intention that lies behind them, but in any case other considerations besides the simple maximisation of consumer choice must be taken into account. I underline the fact that this Bill greatly increases consumer choice, but there is a limit.
§ 5 p.m.
§ Lord Williams of Elvel
My noble friend did not seem to respond wholly adequately, if I may say so, to the point made by the noble Baroness, Lady Miller, from the Opposition Front Bench on the question of putting meters into premises in multiple occupation. I understand what he said in so far as he said that if it were unreasonable not to do so, it would not be done. Could he explain exactly who would decide what was reasonable or not reasonable and whether those in such premises would be consulted on any decision?
§ Lord Whitty
It depends in the first circumstance on who is requesting the metering. It could be the landlord; it could be individual customers; or it could be a group of customers, some of whom want a different system. Sometimes the landlord will be paying the bill, 1258 sometimes the individual tenants, so it is not quite as straightforward as all that. In the case of a terraced house—the noble Baroness raised this example—or a block of flats, it might not be practical from the company's point of view to fit meters in every flat even if the landlord or the tenants wanted that, particularly if they had a shared water supply. That is why, when faced with a request for a different system, we are giving the power to companies to offer customers in those circumstances an alternative to metered charging; that is, being charged on the basis of an assessed measured charge based, broadly speaking, on the average of metered charges for similar properties in the area.
As far as the potential for conflict is concerned—my noble friend envisaged such conflict in the circumstances, and I accept that it might well arise—there are provisions for disputes over whether metering is practical. If they cannot be settled, those disputes will have to be referred to the director general.
§ Baroness Hamwee
I wonder whether the Minister is prepared to comment further on Amendment No. 14. He dealt with it on the basis (which is entirely fair because that is the way the amendment is drawn) that the ability to give another notice would be entirely unlimited. I said that 12 months may be too short. The Minister will readily appreciate that I may be tempted, at Report stage, to suggest a period of two years. If it would be helpful to look at that now it might save us a little time. One of the points I made was that if the trial period were exactly a year, there would not be a full year's bills for the customer to compare and on which to base a judgment.
§ Lord Whitty
I did not comment on the particular provision because the clause as drafted obviously leaves it completely open-ended. We would not want a general provision which gave at any future time the ability to revert. Indeed, in new premises there is no other basis for charging than metering. As a general right, therefore, we could not accept such a provision, whatever the figure or date the noble Baroness suggested.
§ Baroness Hamwee
I am not quite sure that I understand that, but I shall read what the Minister has said, as indeed I shall with regard to Amendment No. 12 which he said was very detailed. He will readily understand that I was not wholly serious in Amendment No. 10, but that I wanted to flush out, if that is not an inappropriate expression, comments on the real cost of the exercise.
The Minister suggested that my amendments restrict choice. I do not agree with him on that. What I particularly do not accept is that one should necessarily read all amendments in a group together. We happily do not have a procedure which takes one amendment at one stage and another amendment at another stage so that by the time we have got through 25 amendments we have had 25 stages of the Bill. In order to raise a variety of aspects, one has to table a variety of amendments, so I do not think I want to let the Minister get away with that. Having made that point, I beg leave to withdraw Amendment No. 10.
§ Amendment, by leave, withdrawn.1259
§ Baroness Hamwee moved Amendment No. 11:
Page 4, line 18, at end insert—
("(2A) In determining the period within which effect must be given to a measured charges notice under its charges scheme in accordance with subsection (2) above, a water undertaker shall be entitled to take into account—
§ The noble Baroness said: Amendment No. 11 seeks to ensure that the installation of free meters is taken forward in a way which might be more sensible and cost-effective than could be the position under the Bill. I believe that metering will only have a positive environmental effect if the industry can take a strategic approach. It may well be sensible for it to target specific geographical areas and specific types of property which will best deliver water savings and which relate to the water resources which are most stretched. The point is similar to that made on Second Reading by the noble Baroness, Lady Young of Old Scone.
§ It cannot be sensible to have a scatter-gun approach with an instant or almost immediate response to each customer when requesting metering. That will not be in the interests of the industry and therefore of customers. Companies must have investment programmes with wider considerations. The Minister referred to environmental obligations and managing resources and I am concerned that there is an element of chance which will skew the different works programmes of the different undertakers. I beg to move.
§ Baroness Farrington of Ribbleton
The amendment would give companies considerable freedom in how long they can take to install meters when issued with a measured charges notice. I should like to start by assuring the Committee that we do not wish to be unduly restrictive on the timescales in which companies must install meters. To demand that a measured charges notice must be complied with within, say, a month in a large company would be in the best interests of neither water company nor consumer, since it would be unlikely to be the most cost-effective way of carrying out a meter fitting programme; and there may be particular environmental benefits to be gained from giving priority to metering customers in areas with fewer water resources.
However, as was explained earlier, one of the main aims of the Bill is to increase customer choice, providing those customers who wish to pay on a measured basis with a real choice on whether to do so. I am concerned that this right would be eroded with this amendment. Water companies would have scope—perhaps too much scope—to leave considerable gaps between the receipt of a measured charges notice and fitting a meter, perhaps even several years, provided that they could justify this with reference to water resources or costs. This could substantially erode the rights conferred under the Bill.
1260 Furthermore, the amendment does not address the needs of less well-off consumers, many of whom could make savings from having a water meter, and for whom the savings could be particularly important. In any meter fitting programme we would expect to see priority being given to such customers.
This, however, does not mean that we do not take seriously concerns about cost effectiveness and environmental benefits. We have no intention of enforcing a blanket requirement on water companies to fit all meters within exactly the same timescale. But, at the same time, consumers should not be expected to have to wait for very long periods of time for their meters to be fitted. There is scope for that guidance on the timescales for meter fitting to be included in the Secretary of State's guidance to the director general on his function of approving charges schemes. We would not envisage such guidance to be overly prescriptive and it would, of course, leave scope for local flexibility, with the director general approving the precise arrangements. We believe that this approach offers more protection to customers than allowing timescales to be decided solely by water companies, while allowing companies to ensure that their programmes are as effective as possible.
I should point out that water companies will not have to fit meters where to do so would be unduly impractical or expensive. In these cases, we propose that they will have to offer customers an alternative basis of charging; for instance, an assessed measured charge.
The noble Baroness raised the issue of costs. The Director General of Water Services has indicated in Prospects for Prices that in the five years from 2000 to 2005, £300 million would be allowed for the capital costs for optional and selected metering across England and Wales. This includes the metering which the companies were already programming in the absence of Government policy on this issue. At present, 3 per cent of customers across England and Wales are switching to meters each year, and that number is growing. The cost is small in comparison with the £8 to £8.5 billion environmental programme which we want to see delivered and which will still allow significant reductions in the average bill in 2000. We do not believe that the water companies will be faced with an unmanageable task.
I hope that I have now made clearer our intentions in this area and that the noble Baroness will feel able to withdraw the amendment.
§ Baroness Hamwee
There is not a great deal between us and the Minister and I shall read her reply carefully. We do not seriously suggest total freedom; we were seeking a common sense approach. I thank the Minister and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 12 not moved.]1261
§ 5.15 p.m.
§ Baroness Seccombe moved Amendment No. 13:
Page 4, line 25, at end insert—
("In either of those cases, the undertaker may instead fix charges in respect of those premises on the basis of average consumption of water in premises of comparable size.").
§ The noble Baroness said: This is a drafting amendment designed to clear up an omission from subsection (3). That subsection relieves the water suppliers from the obligation to install a meter at the request of a customer in two specific instances; if it is not reasonably practical to do so or if it would involve the supplier in unreasonable expense.
§ A practical example might be a block of flats in which only some of the tenants want meters, but the layout of the pipes means that all have to be fitted or none. Unreasonable expense might be when extensive infrastructure work was required to comply with a request for a meter.
§ It is not for us to have to discuss the theoretical instances when these two exemptions which we are giving to the water undertakers would operate. If a supplier wants to rely on either exemption in a given case, the onus of proof will be on him, with a right of appeal to the director general if the customer is aggrieved. However, the clause does not specify how the water should be charged under the new regime.
§ All parties agree that the old system based on rateable values is no longer viable and will become even more unsuitable as time goes by. In any case, it is the rateable value of charging from which the customer will be trying to escape by electing for a meter. The Government have accepted the fact that we ourselves would have introduced a Bill similar to this one and we, too, would have been faced with the problem of dealing with cases where rateable values were not an appropriate basis for charges, or where a figure for the rateable value was not available.
§ This amendment provides for the charges to be fixed by comparison with similar cases where an undisputed level of charges can be calculated. It will, of course, be up to the director general to instruct the suppliers as to how they are to make their comparisons and which factors are to be included and which are to be excluded. For example, it may be that different considerations apply between different areas. The customer who is aggrieved by the calculation will still have a right to appeal to the director general and the onus of proving that comparisons are fair, reasonable and relevant to the particular case will still rest on the supplier.
§ During the Second Reading in the other place, when discussing a different aspect of the Bill, the Minister of State for the Environment, Transport and the Regions stated that groups of vulnerable people should be given the option of a bill based on an average measured supply. During the Committee stage in the other place the Parliamentary Under-Secretary of State for the Environment, Transport and the Regions repeated that in certain hardship cases the charges should be based on average measured consumption.1262
§ If, in some instances, the Government agree that average and comparable consumption is a fair and reasonable way of charging the customer, then that is an established principle. That principle should be extended to cases where a customer wants to have a meter supplied but the water company establishes that it is not practical or economically possible to comply with his request.
§ It is not right that if either of the exemptions applies, the customer should be penalised. As I said, this amendment merely tidies up an omission from the Bill in its present form. I trust that following the precedent already established in the other place, the Minister will accept it. I beg to move.
§ Lord Whitty
We touched on those circumstances when discussing the previous two amendments. It is clearly the Government's intention that, where it is not practical or economic to set up a separate meter, there should be an alternative basis of charging.
We have indicated in another place and elsewhere that some concept of average, measured comparable usage would probably be appropriate. Nevertheless, the noble Baroness's amendment does not allow the water companies any flexibility in those circumstances. The protection that we have offered and which can be delivered through the mechanism which we propose by Clause 4 is that the director general will approve the companies' charging schemes and, therefore, he will be responsible for checking the fairness and equity of a charging scheme which provided an option in those circumstances. The flexibility would allow options to include charges based on average consumption across the board, an assessed consumption based on the number of occupants in the premises or, as the noble Baroness's amendment indicates, an assessed consumption based on the size of the property.
Different forms of charging may be appropriate in different circumstances and different types of premises and areas. Provided that the director general's responsibility for the equity of the charging scheme is preserved, as it would be under our measures, there would be no need to be prescriptive on the face of the Bill as to how the precise form of charging would be assessed. The noble Baroness can rest assured that it is our intention to avoid the inequity which has been identified in those circumstances. We intend to provide the alternative assessment option to the customer.
Therefore, I support the principle, but I do not believe that there is a need for us to be too prescriptive. Other mechanisms are in place to ensure that an alternative is available.
§ Baroness Seccombe
I should prefer to see a little more clarity on the face of the Bill. However, I shall read with care the Minister's reply and at this stage, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 14 not moved.]1263
§ Baroness Miller of Hendon moved Amendment No. 15:
Page 5, line 12, at end insert—
("(7A) In any case where—
§ The noble Baroness said: In moving Amendment No. 15, I shall speak also to Amendment No. 16. The latter amendment is entirely consequential on the main amendment which seeks to insert a new subsection. The main amendment is a non-controversial drafting amendment to clear up an anomaly to which I drew attention on Second Reading. I expressed the hope that the Government would correct it at this stage but they have not tabled their own amendment, hence this amendment.
§ Clause 6(5) provides that a consumer can, within 12 months, revoke the measured charge notice and revert to being charged on the basis of the rateable value. It emerged in debate in Committee in the other place that a new purchaser of a house with a volume-charging system which had been in operation for more than 12 months was stuck with that system, whether he liked it or not. Everyone agreed that that was fair enough on the basis of caveat emptor. A purchaser would be able to find out what the charging situation was before he signed a contract. If he did not like it, he would be able to withdraw from the negotiations. In the case of leasehold homes, Clause 11 expressly forbids a landlord from preventing his tenant choosing to have a metered supply if that suited him. As that would be in cases where the tenant was paying an exclusive rent and was responsible for the water bill, that too seems eminently reasonable.
§ We now come to the anomaly which I invite the Committee to correct with, it is hoped, the Government's co-operation. However, first, I remind the Committee of a declaration of a minor interest which I made on Second Reading. I am the part-owner of two rented residential properties. A family company, of which I am a shareholder, owns another two such properties. I take no part in their management and my adviser tells me that it is a matter of complete indifference whether the tenants do or do not decide whether to have water meters.
§ The anomaly arises if a tenant exercises his right, under Clause 11 to have a water meter and then 12 or more months later, the tenancy comes to an end. As the Bill now stands, the landlord must keep the meter even if it is not in his interest to do so. He may, for example, 1264 be an expatriate worker who is returning home after a couple of years abroad. The tenant may have enjoyed a tenancy which had continued for several years. The needs of the outgoing tenant may be quite different from those of the landlord or the successor tenant.
§ My amendment merely permits the landlord, under what is called a "short tenancy", which I have defined as being less than 21 years, to cancel the measured charge notice within 12 months of the premises reverting to him. Some Members of the Committee may find it strange for a lease originally for a term of up to 21 years to be described as "short". However, in the world of the law of landlord and tenant, particularly in the case of residential property, I understand that 21 years is regarded as a demarcation line.
§ In reality, I imagine that most purely residential leases, other than flats on very long leases at ground rents, are for very much shorter terms than that. The amendment does not apply where a landlord has expressly consented to a meter because it would clearly be unreasonable for a landlord to resile from it after the initial 12 months from when it was installed. It applies only when the meter is installed without his consent and when it has, in effect, been imposed upon him.
§ Quite rightly, the general law does not permit a tenant to prejudice his landlord's interest in the property by accepting some burden that extends beyond the terms of the lease. He cannot, for example, grant a sublease for longer than his own term. He cannot grant a right of way or a right of light. So there is no reason why a tenant should be able to saddle his landlord with an unwanted meter.
§ It may be argued that it would somehow be onerous on the supplier for the meter to be cancelled after the initial 12 months or if a landlord who had exercised that right then let the property to a new tenant who, again, elected to have a meter. That is an entirely specious argument. There is no question of the supplier having to rush back and forth, removing and then reinstalling a meter at the same premises. It would be simple commercial sense to leave the meter dormant and ignored on the premises rather than incurring the uneconomic expense of disconnecting and collecting it.
§ I believe that this uncomplicated amendment does not affect in any way the principles of the Bill. It does not prejudice the consumer; nor does it prejudice the supplier. It simply protects the landlord from having his long-term property rights being prejudiced permanently by the action of someone with only a short-term, transient interest in the property. That would be quite inequitable. I beg to move.
§ Lord Whitty
These amendments deal with a particular sector. Some of the general points which I made to the noble Baroness, Lady Hamwee, apply also in this regard. In this case, if we accepted these amendments, water companies would have to accept a notice of reversion from subsequent tenants or property owners into whose property a meter had been installed at the instigation of a tenant without the express permission of the landlord, even when that may have occurred more than 20 years before.
1265 I have remarked on the general provision of being able to revert at any time, but giving rights of reversion to subsequent tenants or to property owners who were not involved in the original request opens up the prospect of opting in and out of measured and unmeasured charging for the same premises over and over again, potentially for an indefinite period.
I made my views clear on how that would apply to the generality of consumers when debating the earlier group of amendments. Potentially, there would not only be administrative costs, but unconstrained switching could cause uncertainty for the industry and changes in prices for the generality of consumers who would normally expect to know what they would have to pay for their water.
To that extent, each successive tenant could exercise the right to minimise his or her own bill—in either direction, depending on water usage—so the diminished revenue would have to be made up from the general customer base and overall charges would have to rise. That would arise from any switching but, through unconstrained switching, would be dramatic.
For that reason, we consider that the provisions in the Bill provide a balanced approach, substantially extending consumer choice, but also maintaining some degree of certainty for both consumers and companies.
In a landlord/tenant relationship, it does not seem to me that the general point has any less validity. There is no reason for treating different forms of tenures in different ways. The right to demand a meter, or to change the basis of charging, accrues to the person who pays the bill, irrespective of any other status. When the landlord takes on the role of consumer and pays the bill, tenants do not have any direct responsibility for the water bill, although it may be included in their rent, but the landlord will decide whether or not to have a meter and the consequences that flow from that. However, if the tenant has direct liability for the water charges, subject to certain practicalities, it is a matter between the tenant and the water undertaker.
Therefore, we consider that the same regime should apply in tenanted premises as it does in owner-occupied premises. I hope that in relation to the general point—in relation to the effect that it would have on the charging structure in general and in relation to the lack of clear reason for treating tenanted premises differently—the noble Baroness will feel able to withdraw the amendment.
§ 5.30 p.m.
§ Lord Skelmersdale
I have been glued to this discussion on Clause 6, but, of course, silently. However, the Minister may not have considered one particular point: the change of use of a dwelling. My noble friend Lady Miller spoke about a property in which she has a partial interest, which I understand is divided into two maisonettes. It may be that the owner of the property—in her particular case I suppose that it would be the property company, but in other circumstances it may be a private owner of a property—may decide to amalgamate the two maisonettes into a single dwelling. What then is the position of the person who occupies that property, either as a tenant or, if the property is sold, as the new owner, in 1266 relation to what the noble Lord described as "switching"? He was talking about unrestrained switching, but I believe that in this case it would be rational switching. What is the attitude of the noble Lord to that particular situation?
§ Lord Whitty
If it is an unmeasured charge, of course, that will be a major change to the building and, therefore, that will be reflected in the charging system in any case. If one part of the building is metered and the other part is not, it would be a matter for the new landlord, if he is paying the bill, whether a measured charge is opted for or not. If a measured charge is already established in such premises, in normal circumstances the measured charge would prevail. There may be other circumstances in which there is a more dramatic change of use—what is technically a "change of use" as distinct from a merger of dwellings—and that may involve a change in the charging regime. However, in a straightforward case, when two flats are knocked into one, it would be a matter between the landlord, if he were paying the bill, and the water undertaker.
§ Baroness Miller of Hendon
The Minister is always extremely courteous. I shall certainly give him the courtesy of reading carefully what he has said. However, having listened to him, I feel that I do not agree with anything he has said. I want to be sure of my understanding of what he has said and to ensure that I do not find a different view when I read it.
With regard to the last line of the amendment, I believe that if the clause stands as it is, and my amendment is not accepted, the position would be still inequitable. The Minister has not addressed the position of the normal rules of landlord and tenant; that a tenant cannot change a property beyond the length of the lease. That has never been the case before in English law, but this clause would allow that.
If someone were to go abroad for 18 months for work and he let his apartment while he was away, the tenant would have the right to put in a meter—perhaps because he has only one child and it is convenient for him—but the landlord would have no say in it whatsoever. However, the landlord may have three or four children and would not want to have to pay his water bills on a volume charge when he returns. As the landlord has no say whatsoever—that is agreed; fair enough, in my view—it is inappropriate that this clause should extend the right of the tenant beyond the length of the tenancy against the wishes of the landlord. As I said, at this stage I shall do no more than read carefully what has been said. I ask the Minister to take another look at this. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 16 not moved.]
§ Lord Addington moved Amendment No. 17:
§ Page 5, line 28, leave out ("that")
§ The noble Lord said: The purpose of the amendment is to allow companies to install meters for measuring waste water discharges from premises where that is deemed to be appropriate. Water companies are concerned that where water is charged for on a measured basis, the effect 1267 of Clause 6 would be that the sewerage charges would have to be related to the amount of water consumed. Of course, charges schemes already contain provisions to that effect, but they also allow for the decoupling of the measured water charge and the measured sewerage charge where there is no relationship between the two—that is the crux of the matter—for example, where water is supplied from a private source but the foul water is discharged into public facilities. Water companies can, of course, separately meter sewage discharges. I beg to move.
§ Baroness Farrington of Ribbleton
The amendment moved by the noble Lord, Lord Addington, would remove the direct link that currently exists between the volume of water paid for by customers paying on a measured basis and their sewerage bill. I understand that the argument behind the amendment is that the undertakers may not wish to be tied, when charging with reference to volume, to the volume of water supplied to the householder. That may be because the householder has an alternative water supply, for example, a well.
Water companies' existing charges schemes provide that, where a consumer pays for their water on the basis of volume, their sewerage charge will be based on the volume of water consumed, usually less 5 or 10 per cent for personal consumption. The provision in the Bill is, therefore, consistent with current charges schemes. The Bill would give stability to customers, who would be clear about the method by which the foul water element of their sewerage charge would be calculated.
If there are a small number of properties—involving very small sums—in this situation, it is unlikely to be cost-effective for the water company to provide sewerage meters as an alternative way of assessing measured waste water charges. However, I would be prepared to look more closely at the proposition if the noble Lord were able to provide evidence that that was a significant problem which required such action. As I indicated earlier, based on companies' current charges schemes, we are unable to conclude that that is the case. I would, therefore, ask the noble Lord to withdraw his amendment.
§ Lord Addington
That answer raises the question of what is a significant number. That depends probably on where one is standing. If one happens to be one of the few people concerned, I am sure that it is a significant number. But having heard the Minister's reply and the fact that the Government are leaving the door slightly ajar, even though they are threatening to slam it, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 6 agreed to.
§ Clause 7 [Restriction on change in basis of charging]:
§ Baroness Miller of Hendon moved Amendment No. 18:
§ Page 6, line 4, leave out ("either")
§ The noble Baroness said: In moving Amendment No. 18 I shall speak also to Amendments Nos. 19 and 20. These amendments are in fact probing amendments. 1268 Amendment No. 18 is purely a paving amendment leading to Amendment No. 19, which is the insertion of a new paragraph (c) to Clause 7(2).
§ As at present drafted, subsection (2) prohibits an undertaker from installing a meter unless the consumer has requested it, or has consented to it, or unless there has been a change in the occupation of the premises and the new occupier has not yet received a bill based on a non-metered basis.
§ There is one other set of circumstances where the continuation of an unmetered charge would be inappropriate because a continuation of the use of the rateable value would itself be inappropriate. This is in cases where the premises have been so substantially altered that the rateable value should have and would have been increased but for the repeal of Part V of the General Rate Act 1967.
§ Since rateable values were last set in the late 1970s, many properties, especially houses, have been substantially modified. Extensions and garages have been built; attics have been converted into extra rooms, and so forth. In many cases—indeed most cases—the ever-vigilant district surveyor will have caught up with the owner of the property and the rateable value will have been increased, thereby triggering an increase in the water rates. But in cases where the rateable value has not yet been increased, and in future cases where there are substantial alterations to a property, the owner could be paying an unduly low water bill because the rateable value does not reflect the enhancement of the property.
§ The addition to subsection (2) removes that anomaly by allowing the supplier to switch to a metered supply. It is only logical that if a newly built property is automatically to have its supply metered under the terms of this Act, then what to all intents and purposes is a newly converted or substantially altered property should be dealt with in the same way. It is also consistent with the Government's acknowledgement that eventually all properties will be on a metered charge basis, as was made clear by the Minister for the Environment during the Committee stage in the other place when subsection 2(b) was debated at some length.
§ The purpose of this amendment is to ensure that persons whose properties have increased in value because of substantial alterations do not pay disproportionately low water charges because there is no longer any machinery to increase their rateable value. That casts an unfair burden on the other customers.
§ Amendment No. 20 provides for disputes under this clause to be referred to the director under the appeals procedure set up by Section 30A. Of course disputes can arise, especially when the water company may say that it has discovered that a substantial alteration has been made to the property which would have resulted in an increase in the rateable value, and doubtless the owner will want to argue that the alteration is so insignificant that there would have been no increase.
§ How big is "substantial"? I do not believe we have to trouble ourselves too much with trying to define how big substantial is; the director can puzzle that one out. That is part of his job. As I said earlier in my remarks, 1269 this amendment seeks to draw attention to that anomaly. If this group of amendments is not acceptable to the Government, perhaps the Minister will not only tell the Committee why not, but also tell us what alternative solution they have to resolve this specific problem. I beg to move.
§ 5.45 p.m.
§ Baroness Farrington of Ribbleton
As I have said before, we are concerned to give customers who currently pay an unmeasured charge the right to continue to pay on that basis except in certain circumstances to be set out in regulations under Section 144B (1)(c). We shall consult on the detail of the regulations in due course but it may be helpful if I repeat the indication we have given previously of the premises for which we consider water companies should be able to require measured charges. Those are premises which are used for commercial purposes; those where a garden sprinkler is used; those with a swimming pool; those where a power shower consuming more than 20 litres per minute is used, and those where a water softening unit is used which requires back washing.
This would be an enabling power. Nothing in the Bill places an obligation on water companies to impose meters in any cases. Where water companies want to identify customers using water for discretionary purposes, we look to them to do so without taking an approach which is unduly intrusive. A number of other circumstances where companies should be able to impose meters have been suggested to us, including those in the amendment tabled by the noble Baroness.
During the debate at Second Reading I explained the Government's aims for this Bill. One of the key aims is to promote greater customer choice in the basis of water charging. This amendment would be contrary to that spirit. It would be perfectly possible under this amendment impose a meter on someone whose home had been altered many years previously.
Many people would believe that that is unfair. Indeed, we have already received many letters supporting that view from people who are having meters imposed on them for making, in many cases, relatively minor changes to their home. They do not believe, and I agree with them, that simply because they added a garage to their house or a playroom for their children, that their water consumption will increase. From personal experience, if it is provision for young teenage sons over the garage, as they move further away from the bathroom the water consumption may go down.
Of course, there may be situations where altering a property does increase water use; for example, if extra bedrooms are added so that more people can live there. We do not wish water companies to be tied to outdated rateable values in those situations. We believe that the fairest system is to allow water companies to update their charges without taking away customer choice.
Under the Bill as it stands, water companies would be able to start charging people who had altered their property such that the original rateable value was significantly out of date on an alternative unmeasured 1270 basis of charging, provided it is set out in their charging scheme. Companies would be free to use licence fees or assessed rateable values, as indeed some companies do already. Companies would, of course, be able to require meters for extended properties where the household is using water for purposes prescribed in the regulations under Section 144B (1)(c), as I mentioned earlier, such as sprinklers.
We believe that this amendment would drive a coach and horses through the right for people to remain on an unmeasured charge in their current home and hope therefore that the noble Baroness will withdraw her amendment.
§ Baroness Miller of Hendon
I did say that these were probing amendments. I shall certainly take them away and think about the Minister's answer. I bog leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 19 to 21 not moved.]
§ Clause 7 agreed to.
§ Clause 8 [Charging by reference to rateable value]:
§ Baroness Hamwee moved Amendment No. 22:
§ Page 6, line 28, at end insert ("during the period beginning 1st April 2000 and ending 31st March 2005")
§ The noble Baroness said: In moving Amendment No. 22 I shall speak also to Amendments Nos. 23 and 24. These are amendments to Clause 8 of the Bill which, though it is buried in the middle of the Bill, is in a sense the most important provision in the Bill. It is the clause which prompts the bringing forward of the Bill at this time and indicates the urgency of the situation; that is, that under the 1991 Act reference to rateable value is not to have effect after March of next year.
§ Clause 8 provides that Section 145 of the 1991 Act shall cease to have effect altogether. The first amendment in this group proposes that the reference to the year 2000 be moved on for five years rather than being taken off the statute book. Although there is no alternative to extending the use of rateable values, which are based on notional rental values, they increasingly lack any basis in fact. No general revaluation has been carried out since the early 1970s and there is concern that those issued since then are out of step with those issued previously.
§ I do not seek to knock the system which was effective in its day, but I suggest that rateable values are obsolete and that, on grounds of logic and fairness, should not be allowed to be used indefinitely. As we have already discussed this afternoon, no rateable values have been issued at all by the Inland Revenue since 1990. Therefore, in this amendment I am seeking to encourage the development of an alternative basis for unmeasured charges within a period of five years. Of course, I am open to negotiation to extending that period a little, but I seek to put a period on the face of the Bill.
Amendment No. 23 proposes that district valuation offices of the Inland Revenue shall, when requested, give occupiers the rateable values for dwelling houses,
of which no value currently appears on the valuation list".
Occupiers of houses built since 1990 for which there is no rateable value have, as has been said, no choice as to how they pay for their water. This amendment seeks to extend fairness and equality to such occupiers and to apply choice. I take the point made by the Minister previously, that the Bill cannot be only about choice and that there are a number of other factors to be balanced.
§ However, I should like to repeat the view put forward earlier that if one is thinking of buying a house built since 1990 and discovers that it is metered, that is not likely to be the factor that determines the decision about whether or not to go ahead with the purchase. If one buys a house knowing that it is metered, I do not believe that it means that one should be denied the choice simply because, as the noble Baroness, Lady Miller, said, caveat emptor. I believe that a question of balance is involved.
§ Finally, I turn to Amendment No. 24, which refers to the possibility of charging by reference to council tax valuation bands. The amendment does not seek to introduce such a system but rather to introduce the possibility for it. It would enable undertakers to obtain information. Access to council tax bands could provide the industry with a comprehensive, readily available and quite cheap alternative method of charging. However, at present, council tax data is not available to companies that wish to have it. It is possible to find out the council tax for individual properties, but that means asking for such information property by property.
The report on the consultation to which I referred earlier says, at paragraph 23, that although,
the Government will continue to consider proposals that come forward [that] does not rule out the possibility of releasing Council Tax data in the future if proposals are refined to address the difficulties inherent in any change".
I understand that those difficulties include sensitivities about the use of information collected for taxation purposes. I also understand that there would be a burden on local authorities as regards providing the information. Nevertheless, I tabled this amendment because it will enable me to ask the Minister whether, without such a provision, it would be possible for the Secretary of State to ensure that undertakers have access to this sort of information so that they can make the judgments; and, indeed, so that the debate can go forward about an alternative system. In other words, can the Secretary of State do what I am seeking to allow him to do without my amendment appearing in the Bill? I beg to move.
§ Lord Whitty
These amendments deal with the consideration of rateable value. Amendment No. 22 would delete the deadline of the year 2000 as set out in the Bill, and replace it with the year 2005. By resisting this amendment the Government are not saying that we have a preference for the rateable value system for unmeasured charges, or indeed, any other system. By deleting the reference to the year 2000 we are not indicating that rateable value should be the only or the main way forward in the longer term.
1272 We are prepared for water companies to introduce other forms of charging, including as the noble Baroness would seem to prefer, charges based on council tax bands. However, we would not wish to rush into anything approaching a mandatory system or a requirement whereby such unmeasured charges would be based on council taxes. The effects of that on individual consumers would be differential and it would not necessarily be desirable either to customers or supplying companies.
We believe that we need to retain a range of measures for unmeasured charges, which would include rateable value, taking into account the problems that have been recognised. At present, it is still the case that the vast majority of households pay a charge which is based on the rateable value of the property. We have no objections to different forms of calculation; indeed, we are encouraging the water companies and others to come forward with such alternatives. However, to cast in stone a date by which time water companies must find a replacement system does not seem to us to be a sensible way forward. We want to retain as much flexibility as possible and a new arbitrary deadline would not help.
As I said, that does not mean that we are inherently hostile to the use of council tax bands as the basis for unmeasured charges. Clearly we want to explore, and encourage others to explore, the possibilities in that respect.
Amendment No. 24 relates to the information that water companies would use if they wanted to examine the possibility of going down the council tax-based road. The noble Baroness's amendment would provide a system which, in many ways, parallels what the Government are proposing in any event. We do not believe that we need the amendment to deliver our policy. Indeed, the information on council tax bands is already public. It is simply a question, as the amendment recognises, of it being available in computer-readable form. However, as well as being available through individual local authorities, information on council tax banding is also held centrally by the Valuation Office in an electronic form.
As I said earlier, we are open to proposals for the use of council tax banding as a basis of charging. The amendment also seems to envisage that the Secretary of State should be able to make regulations empowering undertakers to charge on the basis of bands. That is unnecessary. The way in which we propose to proceed is to encourage companies to devise such schemes. When satisfied with the proposal of a particular company the data on banding would be made available and arrangements for using it as a basis for charging could be included in the company's charges scheme, along with any changes. There is already a power to give guidance and make regulations as to what may or may not be in a charges scheme. That power could be used to govern what would be acceptable in a council tax band based charges scheme. Therefore, we do not consider that Amendment No. 24 is necessary.
Amendment No. 23 addresses the situation where a property currently has no rateable value available for measured charging. This amendment would allow a 1273 notional rateable value to be drawn up. Of course, most properties built since 1990 and some others whose characteristics have changed over recent years do not have current or available rateable values. In practice, that is not in fact as great a constraint as might appear to be the case. In particular, there is no justification for saying that companies are forced to meter new properties by the absence of rateable values. Most companies meter new properties because they choose to do so and they are free to devise and propose unmeasured alternatives if they prefer.
Under the Bill as it stands, existing occupiers using water for normal purposes in existing homes will have a right to remain on an unmeasured basis of charging once they are on one, without needing the amendment proposed by the noble Baroness, Lady Hamwee. But because water companies have been fitting meters to new houses, most properties that do not have a rateable value are in practice already metered. As I read it, this amendment does not propose to give the occupier of a property that is already metered any right to be charged on the basis of rateable value. That seems a little illogical because, without that right, obtaining a notional rateable value would be of limited use.
In the future, as regards properties built after this Bill comes into force, companies might continue to be attracted to metering. If a home buyer particularly objects to metering, it is up to him not to buy a particular property. There are circumstances where new properties are subject to a different form of unmeasured charge. As we explore other possibilities in this context, including council tax bands, that provision may be more widely available. At least one company, Welsh Water, widely uses an unmeasured charge which is not based on rateable value for those properties where no rateable value is available and in circumstances where neither the company nor the occupier wishes to meter.
We do not think that creating a new range of notional rateable values—as Amendment No. 23 seeks to do—would in reality create any new rights for consumers. Water companies can already devise and propose what unmeasured bases of charging they wish. I hope that I have addressed most of the points raised by the noble Baroness's amendments. I hope that she will consider they are either unnecessary or do not achieve the point she seeks to make. I therefore ask her to withdraw the amendments.
§ 6 p.m.
§ Baroness Hamwee
The Minister says that Amendment No. 23 would not create a new right for consumers. However, the amendment is designed precisely to create a new right for consumers. However, it is perhaps one of the less important amendments in this group.
As regards Amendment No. 22, the Government are being open about not being great fans of using rateable value as a basis for charging. However, the Committee is well aware of the pressures on legislative time. It is a quite human response of any government, to address other matters if no time limit is in place and a system shows no sign of breaking down and has been examined 1274 in the past two or three years. I understand that position. I said that I was open to negotiation with regard to the time period involved. However, I should like to see some framework established in which the programme could move forward. That is the point of Amendment No. 22.
Amendment No. 24 may seem a detailed provision which does not directly address the point of this Bill. I am concerned to ensure that we do not miss the opportunity to allow companies fully to explore what other methods may be available to them. The Minister said that the relevant information is already in the public domain. My concern is that although that is the case it takes a great deal of effort, and therefore cost, to extract that information as one has to ask questions on a property-by-property basis. I assume that applies to information held by the valuation offices as well as to information held by local authorities.
I shall read the Minister's comments in Hansard. However, as regards making the relevant information available in the way I propose, I am not sure that the Secretary of State can undertake to do that at present, or whether that requires some legislative provision to be introduced. If such a legislative provision is required, we should introduce it in this Bill. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 23 not moved.]
§ Clause 8 agreed to.
§ Clause 9 agreed to.
§ [Amendment No. 24 not moved.]
§ Lord Addington moved Amendment No. 25:
§ After Clause 9, insert the following new clause—
§ REQUIREMENTS FOR RESELLING WATER SUPPLIED BY UNDERTAKER
(" .After subsection (5) of section 150 of the Water Industry Act 1991 (charging for services provided with the help of an undertaker), there is inserted—
(6) An order under this section may—
§ The noble Lord said: This amendment seeks to provide certain information to people who live in rented accommodation or on a mobile home park and whose landlord has already purchased the water that they use. Ofwat wants more information to be supplied to such people to enable them to ensure that they are not being overcharged. Ofwat seeks the imposition of an order under Section 150 of the Water Industry Act 1991 to control the price charged for water supplied to customers of a water undertaker; that is, someone who resells the water to third parties. Although perhaps not common, this situation occurs, as I have already mentioned.
§ This kind of provision exists in other utilities regulation. Indeed, this entire formula has been lifted from Section 37 of the Gas Act 1986. All this 1275 amendment seeks to achieve is to ensure that the third party knows exactly how much his water initially cost. Thus he can take action if he is being overcharged for it. I hope that the Government will look favourably on this amendment. I beg to move.
§ Lord Graham of Edmonton
I rise to speak to Amendment No. 26 in my name which is grouped with the amendment we are discussing. I am grateful to the noble Lord, Lord Addington, for explaining our concerns. I declare a non-financial interest in that I am the honorary secretary of the All-Party Group on the Welfare of Park Home Owners. The Minister's department will be aware that people who live in mobile homes are sometimes taken for a ride in the context we are discussing. The all-party group includes in its membership David Rendel, the noble Baroness, Lady Maddock; Roger Gale and John Butterfill. We were delighted recently to persuade the Minister, Hilary Armstrong, to establish a ministerial group to examine the views of site owners, residents, local government officials and others who seek to improve the lot of the people we are discussing.
People consider mobile homes as being outwith the normal range of provision. However, there are more than 200,000 mobile homes throughout the country. At a modest estimate, that means half a million people. Often those people lose out in terms of the protection afforded to them in this regard. Most mobile home parks are well run and most of the residents are happy. But some site owners are very reluctant to play the game by their residents. I do not deny that it is a commercial business, but some owners take advantage.
When a water charge is to be met and, by agreement, it is shared by those who use the water, one would think that reasonable—it does not always happen—and one would think it reasonable that the site owner seeks to make a profit. However, it is not unreasonable that the individuals concerned should raise the issue. But it is a sad fact that many of the residents of mobile homes are elderly and vulnerable. They are disadvantaged in many ways. Sometimes they have difficulty in raising the issue with the owners of the sites. One solution would be for them to take the owners to court—of course they could, at a cost—but, with the increasing pressure on legal aid, they would have difficulty in finding the money to do so. I am talking about site owners who know that they are doing wrong—and persist in doing so—and the vulnerable individual is the one who suffers.
As my noble friend Lord Addington said, steps are being taken to remedy that. Ofwat is bringing in a remedy under Section 150 of the Water Industry Act and consultations are taking place. The gravamen of the amendment is to ask the Government whether they are aware of the problem and whether they have a better solution than the ones proposed. Is there a good reason why vulnerable, inarticulate and sometimes poor people should have to rely upon their own cash and the courts to seek redress? I do not believe that that is the case.
1276 Yesterday in the other place my good friend Hilton Dawson, the MP for Lancaster and Wyre, raised the issue of the need to address more seriously the problems of mobile home residents. The problem concerns others, but it particularly concerns those who buy mobile homes for retirement. They believe they have bought a piece of paradise—very often it is true—but sometimes it becomes a nightmare. I hope that the Minister recognises the problem and that the Government will try in any way they can to make it easier for people who live on mobile home sites to enjoy the same advantages as others. People who live in council flats and many other places are able to rely upon landlord and tenant legislation to protect them against harassment. A whole range of legislation protects them but it does not protect the mobile home owner.
I move this as a probing amendment. I am anxious to hear what the Minister has to say. If it is a sympathetic answer I am prepared to consider not putting the amendment to the vote.
§ 6.15 p.m.
§ Baroness Farrington of Ribbleton
Amendment No. 25 proposes an addition to the powers of the Director General of Water Services when making a water resale order. The amendment would allow the order to force the disclosure of information by the person reselling water to the purchaser. This is a subject slightly outside the scope of the Government's water charging review and the other measures in the Bill, in which we have concentrated on the charges paid to water undertakers.
The use of the powers in Section 150 is, so far, untried. The director has recently proposed to make an order to limit resale prices and that has been widely welcomed. I welcome this proposal too. But my immediate reaction to the amendment is that it is surely premature to ask for an extension of powers to make an order before the existing power has been used even once. The Government would prefer first of all to take stock of how the order works within the present available powers. These already enable the director, as he is proposing, to limit water resale prices to the fair recovery of the sums paid by the reseller to the water undertaker. Once the order is in operation, if we were confronted with evidence that it was not entirely effective, then we would consider legislation or some other measure. But we would prefer not to accept an amendment that assumes that the presently proposed order will not be effective in forcing water resellers to charge only reasonable prices.
I turn to Amendment No. 26, which was spoken to by my noble friend Lord Graham of Edmonton. I pay tribute to the work which he and those to whom he referred have done in support of the interests of those living in mobile homes. I am certainly aware that my honourable friend Hilton Dawson, with great justification, has taken up the matter. However, Amendment No. 26 would go even further in creating a criminal offence to enforce the terms of the resale order. This seems to be out of proportion to a problem that we do not yet know we have. I would point 1277 out that the director general's regulation of the water undertakers, including the setting of price limits, is not supported by criminal offences. I do not think it appropriate that criminal sanctions should apply to water resale either.
At the moment the Government are not persuaded that either amendment is necessary. I hope that the noble Lord, Lord Addington, will feel able to withdraw his amendment.
§ Lord Graham of Edmonton
I accept with appreciation the Minister's sympathy for what we are seeking. I acknowledge that there has been no case history in the matter. We know the nature of some of the owners of mobile homes sites. We support the amendment because we fear that when the Bill comes into force it will lead to the kind of anomaly, misuse and disgrace we have spoken about. As my noble friend will know from her wide experience of local government, there are many people who remain silent rather than, as it were, cause trouble. If you have a bad site owner who does not care tuppence about upsetting people, then the situation I envisage will arise. I accept that this may not be the right occasion to pursue the matter. I think the Minister is saying that we need hard evidence in front of us. If the all party group provides evidence of wrongdoing, I am satisfied that that will be looked at.
§ Lord Addington
I have a question for the noble Baroness. How will the Government acquire the information? The amendment I propose—I accept it may not be exactly right—allows the ultimate consumers of the water to know what the intermediary is charged and what they are being charged. It is a way of gathering information. If people are being swindled they tend to talk about it and will report it. Even if they do not all report it, some will. If we do not have that means of information gathering, ultimately no form of legislation will ever be effective.
§ Baroness Farrington of Ribbleton
It will be effective through the power of the director to limit the resale prices.
§ Lord Addington
I do not think that has answered my question at all. I do not propose to take the amendment to a vote at this point. It is something we will have to come back to. The noble Lord, Lord Graham, made a very powerful speech. If that was a gentle probe, I shudder to think what a thrust from him is like. The noble Lord is definitely my friend, although I think he made a mistake by referring to me as his noble friend. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 26 not moved.]1278
§ Clause 10 [Extension of power to carry out works in connection with metering]:
§ Baroness Miller of Hendon moved Amendment No. 27:
Page 7, line 28, at end insert—
("() After subsection (9) there is inserted—
(10) In this section, to "premises", "building" or "house" shall be taken as also being refereners to—
§ The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 35 and 36 to Schedule 3. They are all minor technical amendments to the same effect and for similar purposes and can be simply explained.
§ The amendments all cover the situation of what may be described as "mixed" premises; that is to say, a building that is used both as someone's principal or only home and for business premises. Particular examples are: living accommodation forming part of a public house, a flat over a shop, or even the caretaker's flat in a commercial building.
§ Amendment No. 27 to Clause 10 is to ensure that in such mixed premises the water company will be able to provide a metered supply for the part of the building used for business purposes, irrespective of whether or not the occupier of the residential part opts for a meter. It also means that once the business premises are separately metered, the waiter supplier will not be prevented from disconnecting the business premises because the residential part of the building forms a kind of shield.
§ I need not take much of the Committee's time in explaining Amendments Nos. 35 and 36. They simply cover the technical problem of premises which have a mixed use—partly residential and partly business. We are all agreed that the residential part should have protection against disconnection. What needs to be avoided is a situation whereby the fact that part of the premises is residential prevents appropriate remedies being taken against the business premises. If, for example, the building were a public house or a restaurant with living accommodation over it, there could be a very substantial use of water for commercial purposes.
§ Amendment No. 35 is intended to ensure that in mixed premises the water company can require separate service pipes for the parts that are used for private purposes and those that are used for business purposes.
§ Amendment No. 36 follows from that. It seeks to make clear that the ban on disconnections which is provided for in the Bill, and which we support, does not extend to premises that are used both for business purposes and as a dwelling house, and where the water supply is used for business purposes. That would ensure that, for example, a public house could be cut off, even though the landlord lived on the premises. It does not cover the situation whereby someone lives over the shop 1279 and the water supply is used only for the residential accommodation and not for the business. That would still be protected from disconnection. I beg to move.
§ Baroness Farrington of Ribbleton
Amendments Nos. 27 and 35 appear to be intended to extend the powers that water companies already have to carry out work on customers' supply pipes, although the amendments as drafted actually add very little. At present, companies have the power to separate out supply pipes where they have given notice that they intend to install a meter in the relevant property. Under Clause 10, we are extending those powers to enable companies to carry out the necessary works to fit a meter.
The amendments, if the intention behind them is as I have outlined, would mean that water companies could go into anyone's home, whether or not the householder had requested that a meter be installed, and carry out works to separate supply pipes. They could even charge the householder for the work involved. That extension of powers is neither desirable nor necessary. We can see no reason why companies should be able to enter people's homes in order to carry out work that the customer neither wants nor needs doing.
Neither do we agree that the companies need such powers. They will already have sufficient powers to separate out supply pipes in order to fit meters, either where they are imposing a meter on someone who is using water—for instance, for filling a swimming-pool—where they may be entitled to charge according to volume in the future, or where the customer requests a meter.
We cannot accept that it is right to allow companies freedom to impose on their customers in that way, and then to charge for doing so; nor do we accept that companies need that power for the legitimate carrying out of their business. I therefore ask the noble Baroness to withdraw her amendment.
Turning to Amendment No. 36 tabled by the noble Baroness, I spoke at Second Reading about the importance of the protection included in the Bill against disconnection for non-payment of bills. Our approach to protecting premises against disconnection has been to target it as far as possible, while ensuring that those whom we wish to protect are covered. I believe that the end result is a balanced approach, which protects potentially vulnerable people, and premises which play a vital role in the community, while not unnecessarily impeding water companies in the day-to-day carrying out of their business.
We therefore cannot agree with this amendment, which would seem to reduce the extent of protection currently included in the Bill. Perhaps I may explain why. The term, "private dwelling house" is not currently defined in the Bill because we believe that the use of the term alone suffices in describing those premises that are to be protected. It is our view that a private dwelling house cannot be one that is used predominantly for the carrying on of a business. However, we believe that it does cover people's homes where they may carry out 1280 some activity that is not purely private. For instance, it would cover homes where people work occasionally, as an alternative to their offices.
This amendment would remove the protection against disconnection for such premises. It would mean, for example, that a Minister taking home the Ministerial Box would not be covered, simply because the home was not being used solely for private purposes. Simply because someone is working at home in that way does not mean that that person is using water for purposes, or in amounts, that are any different from a home where the occupants do not take their work home with them or where they go out to work. I do not believe that that is within the spirit of the provisions to protect against disconnection to reduce protection in this way. I hope that I have convinced the noble Baroness sufficiently for her to withdraw her amendment.
§ Baroness Miller of Hendon
I am by no means sure that the Minister has convinced me. I shall not divide the Committee now, but I shall certainly take the matter away for consideration.
The Minister will know that I have withdrawn Amendment No. 28 to Clause 11 because I was advised that Clause 11 covers the situation to which my amendment related. However, the legal officer of the water company concerned does not consider that it is covered. In exactly the same way, the Minister feels that Clause 10 of the Bill already covers the situation, for example, of a public house; the legal officer does not consider that to be the case. I shall need to examine this matter carefully and take further advice as to whether the matter is or is not covered.
§ Baroness Farrington of Ribbleton
If it would help the noble Baroness to write to the department on that point and to receive an answer in writing for consideration, that can be arranged.
§ Baroness Miller of Hendon
I thank the noble Baroness. I shall accept her offer of a letter. There has been great concern about the position of public houses and so on. I shall make sure that a letter is drafted and sent to the noble Baroness. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 10 agreed to.
§ Clause 11 [Rights of tenants in relation to metering]:
§ [Amendment No. 28 had been withdrawn from the Marshalled List.]
§ Clause 12 [Water Industry Commissioner for Scotland]:
§ Lord Mackay of Ardbrecknish moved Amendment No. 29:
§ Page 8, line 21, leave out ("Consultative") and insert ("Consumer")
§ The noble Lord said: I am surprised to be standing at this Dispatch Box discussing a clause relating to water in Scotland. I say that because, in exactly a fortnight's time, the people of Scotland will elect a Parliament, which, from 1st July, will be entirely and totally 1281 responsible for these matters. I therefore find it as surprising in relation to this issue as I did in relation to health that the Government are choosing to put legislation through this Parliament which may not even come into force until after the Scottish Parliament has been elected or takes over these powers on 1st July. I should have thought that this matter could comfortably have been left to the Scottish Parliament for consideration. The water industry will be one of the important issues over which it will preside. I suspect that most people in Scotland have now made the assumption that all these matters will be dealt with in Edinburgh and that they are not paying much attention to legislation that is being tacked on to English Bills that are presently passing through both Houses of this Parliament.
§ I am grateful to the Scottish Consumers' Council for drawing to my attention some defects which it considers are in the Bill and to which it has asked me to speak. I am happy to do so because the council makes some good points. I know that the Minister has had notice of all of them, I make no complaint about that because even though I do not think we should be dealing with this, it is still incumbent on us to try to get it right. Then, when the Scottish Parliament takes over on 1st July it will take over issues which are in as good order as we can make them.
§ I shall therefore speak to Amendment No. 29 as well as Amendments Nos. 30 to 33 which are grouped with it. They are all to do with the consultative committees which the Government propose to set up to replace the current system in order to deal with consumer-related problems and issues, and to allow the consumer to have a voice. That is the first amendment.
§ The new structures are here supposedly to strengthen consumer representation. It is a little odd, therefore, that the title of each local committee is to be the "Water Industry Consultative Committee". I do not believe "consultative committee" sounds nearly as good as "consumer committee". "Consumer committee" sounds positive and proactive, whereas "consultative committee" gives a more negative message; that it only deals with any issues on which it is consulted by, I presume, the water authority or water industry commissioner. It will not be a body which represents the interests of the consumers and makes their points known to the water industry commissioner.
§ Amendment No. 30 refers to Schedule 2 and Part II of the Bill. It is an important amendment, probably the most important one. The current proposal is that for each of the consultative committees (which in my view should be called "consumer committees") the water industry commissioner for Scotland—I must get my tongue round that so that it trips off the tongue; at the moment I find it a rather heavy title—is to be the chairman of the body. Yet it is to the commissioner that the body will wish to make comments. Occasionally, the body may not agree with what the commissioner is doing, yet the commissioner is to be the chairman. Amendment No. 30 suggests that an independent chairman should be appointed by the Secretary of State.1282
§ I believe that consumer representation needs to be strengthened in the proposed structure. Frankly, I believe it should be no different from the independent consumer representations proposed for the privatised utilities. Economic regulation and consumer representation should be kept distinct. Experience in the privatised utilities has shown that there is a need for a strong independent consumer voice, and that would be difficult for a regulator to provide.
The Government seem to agree because in their response to A Fair Deal for Consumers, published in July 1998, the Government confirm that they intend,
to establish consumer representative bodies on an independent statutory basis, responsible for pro-actively promoting and advocating the interests of all consumers … and will have an important role in representing the interests of disadvantaged consumers".
§ In the absence of a national consumer body on the subject of water, the local committees—the Government call them consultative, I should like to call there consumer—will have a central role in the articulation of consumer concerns. Appointing the commissioner as the chairman of all three committees in Scotland is likely to send out the wrong message as to the function of the committees. They will be perceived not to be genuinely independent, whereas an independent chairman with no connection to the regulatory body will be less likely to inhibit the development of a genuinely independent consumer voice.
§ The functions of the commissioner as the economic regulator will involve him or her in striking a balance between the interests of the consumers, on the one hand, and those of the service providers in setting charges. There would be greater transparency in the process if it could be clearly seen what the interests are. The commissioner will find it easier to reach a balanced decision if each party is able to articulate its own interests strongly and clearly.
§ The role of the committees is to advise the commissioner on the promotion of the interests of the customers of that authority. To do that effectively, they need to be able to explore those interests independently and in the light of the circumstances in that area of Scotland. There is a danger that if they are chaired by the commissioner they would feel constrained as to what they could do and say, especially when it came to the position of the commissioner. I suspect, as these things happen, he would feel obliged in the committee to defend his position. Therefore, I believe the committee would not be able to send to the commissioner, as the regulator, its independent views on behalf of consumers.
§ Amendments Nos. 31 and 32 are much less significant than Amendment No. 30, but they basically come from the same position. Currently, the Bill as it stands suggests not fewer than six and not more than nine members of the committee. Amendments Nos. 31 and 32 make modest increases so that that subsection would read "not fewer than 7"and "not more than 11" members.
By reducing the size of local committees—which is what the Government propose to do—when we compare them with the existing size of the three area committees of the Scottish Water and Sewerage Customers'
Council, it will be increasingly difficult for the committees to represent the wide range of interests of consumers; for example, those from rural areas and those with disabilities. The three water authorities cover large areas—the whole of Scotland. Dividing Scotland into three makes pretty wide areas and I suspect that with as few as six members it would not be possible for the Government to ensure that they represented the wide interests of consumers in a widely dispersed geographical area. They would probably need much nearer 11 members. It may not need to be 11 in all three areas; but, for example, in the north of Scotland, which delivers water services to consumers over a wide area, they would need about 11 members to bring in proper representation from the islands as well as the mainland areas. I quote the Government's document, A Fair Deal for Consumers, which said, in March 1998:
The government believe that consumers should have an effective and powerful voice within the regulatory system, charged exclusively with representing the consumer interest".
§ I believe that a reduction in the number of people on the committees is not a good sign as regards representing the consumer interest.
§ My last amendment echoes something currently in the Local Government etc. (Scotland) Act 1994. That Act requires the local area committees of the Scottish Water and Sewerage Customers' Council to hold at least one of its meetings in a year in public. It is not clear to me why the provision has not been carried forward into the new Bill. Mine is largely a probing amendment to establish why the Government have not brought forward that provision from the 1994 Act into the new Bill. It seems to me to be important that public meetings of the bodies should be encouraged so that consumers can see that their interests are being properly and openly represented.
§ I am sorry if I have gone on a little, but the amendments were bundled together and that suited me because they all relate to the same point. I hope that the Minister, who is with me at the Dispatch Box for the second time today, will be able to give me the kind of assurances and answer that might satisfy those of us who are interested in such issues in Scotland. If not, he might consider bringing forward his own amendments to deal with at least some, if not all the points I made. I beg to move.
§ Baroness Hamwee
I support these amendments. If my noble friend Lord Mar and Kellie were here, I know that he would speak to them. He is involved in other activities in Scotland. He has asked me to give his support and I give mine as well. Like the noble Lord, I was surprised when I read the Bill and saw the provisions for Scotland. I believe I said at Second Reading that it seemed somewhat impertinent and patronising for this Parliament to be seeking to legislate for the new Parliament so close to its formation. I understand that the Government's stance is that they are not imposing on the new Scottish Parliament, but merely making legislation available should it wish to use it. Nevertheless, I find it a rather odd situation.
1284 My noble friend has asked me to say that he believes that the new committees must be beefed up to give them the role of an advocate for the consumer. As regards Amendment No. 30, he makes the interesting point not simply that there is a conflict of interest as regards the chairman if he or she is to chair meetings, but that the commissioner will be in a better position in not having to chair a meeting because he or she would be able to speak more extensively from the floor. That is not a point which would have immediately have occurred to me, but I believe that he is right. Generally, we support this group of amendments.
§ 6.45 p.m.
§ Lord Macdonald of Tradeston
The noble Lord, Lord Mackay of Ardbrecknish, and the noble Baroness, Lady Hamwee, asked why we have not waited until there is a Scottish Parliament in existence to legislate. But the consensus in Scotland is that the existing regulatory regime is unsatisfactory. Therefore, the Government want to provide the Scottish executive with a chance to introduce a better regime as quickly as possible. Waiting until the Parliament and the executive are in place might, given other priorities, have meant a year's unnecessary delay. I believe that the proposals will not pre-empt the Scottish Parliament. I do not believe that they are in any way patronising. The legislation will provide the Scottish executive with the option to introduce the new system, but it will not be bound to do so.
The proposed changes to the arrangements for the consultative committees contained in Amendments Nos. 29 to 33 appear to be motivated by concern that customer representation in the new regulatory system needs to be strengthened. I shall try to demonstrate that this concern is misplaced and that consequently the amendments are unnecessary and run the risk of undermining what we believe is a coherent system.
I shall preface my remarks on individual amendments with a few general comments about the new system and how customers are already at its heart. Concern about the strength of customer representation appears to be based on the assumption that the commissioner will be required to strike a balance between the interests of water consumers on the one hand and those of the water authorities on the other. However, there is no question of the commissioner having to perform any such balancing act. Clause 12 places on the commissioner the general function of promoting the interests of the water authorities' customers. That function is not qualified by a requirement to balance the customers' interests against those of the authorities. That reflects the fact that the Scottish water authorities remain in public ownership and control. As such they do not, and should not, have any interests of their own that might be at odds with those of their customers, the public. Unlike privately owned companies, they have no shareholders' interests to be considered. So in such circumstances the commissioner's only concern is to ensure that the customer gets the best possible deal, quality of service and price.
1285 I now turn to the individual amendments. Changing the name of the consultative committee, which is what will happen under Amendment No. 29, if that is accepted, could have the effect of undermining the integrity of the approach adopted in the Bill.
The Bill is quite clear that it is the commissioner who has the function of promoting the interests of customers. The role of the committees is to support the commissioner in that task. The committees are not intended to be separate consumer bodies posing as independent voices of the customer. Therefore, the title given to them in the Bill is an accurate description of their intended role.
The alternative title suggested by the noble Lord, Lord Mackay, would not be helpful in that it could lead to confusion about the role of the committees and could even result in the commissioner's role being undermined. We do not believe that would be in the interests of customers. Moreover, it would be misleading and unhelpful if the committees were to be given a title which suggested a role for them, which in fact does not exist.
I trust that the Committee will accept that the title given to the committees is suitable to their role and function as contained in this Bill.
As regards Amendment No. 30 and the proposal for independent chairmen, the Bill deliberately provides for the commissioner to chair each of the three consultative committees. There are several reasons for this. First, the committees need to have a good working relationship with the commissioner if their views are to carry proper weight with him or her. Making the commissioner chairman will help to achieve that. Secondly, it will ensure that the commissioner gets direct exposure to the issues that come before the committees. Finally, given the commissioner's central role in the system, the committees' standing and authority are likely to be greater under his or her chairmanship. Those benefits would be lost were the amendment to be carried. Perhaps more significantly, however, the amendment would pose a risk to the effectiveness of the new system. Let me repeat: the commissioner is the central figure in the system. We do not intend that the committees should act independently of the commissioner.
Separate chairmen would run the risk of the committees attempting to expand their role beyond that provided for in the Bill. Were they to do so, the clarity of the system would be lost and the commissioner's position within it undermined. That would not be in the customers' interest.
The Bill defines clear roles for the commissioner and the committees in the interests of the customers. It is important for these roles that the relationship of the committees to the commissioner is clear. We believe that having the commissioner as chairman will help to achieve that.
The noble Lord, Lord Mackay, argued for an increase in the membership of the consultative committees. Setting the size of bodies such as the consultative committees is a matter of striking the right balance. A body whose membership is too small is unlikely to contain the necessary experience or spread of interests 1286 to be able to speak for the whole range of customers. A relatively large membership can be unwieldy and lack the focus of a smaller group. In settling for a membership of between six and nine in this case, the Government believe that they have got the balance right.
There is a further point. The committees are there to form a view on the interests of all the water authorities' customers—that is to say, non-domestic customers, large and small, as well as domestic customers. It would not be feasible for every category of customer to have its own representation on the committees. Thai would need a much larger membership than is being proposed in the amendment. Instead, the Government's intention is that the members should try to take a view of the interests of the whole range of customers. What we are keen to avoid is the position where, for example, a committee member from a rural area sees his or her duty as simply advising on the interests of other rural customers.
I do not believe that increasing the membership of the committees by two or three is likely to result in more effective expression of customers' views. It is, however, likely to make the committees more unwieldy.
Finally, I am grateful for the opportunity which this amendment gives me to explain the position of the consultative committees holding meetings in public. This is an issue on which Scottish Ministers may wish to give guidance to the commissioner. We fully expect that they will wish to be consistent with the present Government's position on meetings held by public bodies. Broadly speaking, this means that we would expect most, if not all, meetings to be held in public. Clearly, there are occasions when sensitive matters, for example, relating to named individuals or commercial confidences, need to be considered in private. But these should be relatively rare occurrences, particularly in bodies whose purpose is to determine and then advise on issues that concern the public.
In conclusion, I hope that I have demonstrated to the satisfaction of the Committee that the arrangements for the consultative committees contained in the Bill provide a coherent and consistent means of protecting the customers' interests. Further, I hope that I have persuaded the Committee that the amendments of the noble Lord, Lord Mackay of Ardbrecknish, might weaken these arrangements to the detriment of the customer. Accordingly, I hope that the Committee and the noble Lord, Lord Mackay, will be content for this amendment to be withdrawn.
§ Baroness Hamwee
Before the noble Lord responds, perhaps I may press the Minister for a moment on his comments that a committee of 11 plus a chairman is unwieldy. I am sure that the Minister has far more experience than I of chairing committees. Twelve committee members does not strike one as an unmanageably large number, particularly when one must assume that occasionally one or two people will be absent. I agree that it is important to have the right size of committee so that there can be a wide-ranging debate but a conclusion can be reached, and ensuring that a large group does not spend all day expressing a great many individual views. While I entirely take that 1287 point, this is a very modest amendment. I would be very surprised if any noble Lord on the Government Front Bench and Back Benches could not handle a committee of 12.
§ Lord Macdonald of Tradeston
I take the general point just raised by the noble Baroness. During some of the more dejected periods of my life I have chaired bodies for a living. It depends very much on the individual circumstances of the particular committee. There are times when one will want larger representation. But it is the judgment of the people close to the industry that in this case they have the right size of committee and they will be able to achieve what they want effectively. Therefore, I defer to the professionals involved in the water industry and the officials whose advice they take.
§ Lord Mackay of Ardbrecknish
That reply was a bit like the curate's egg: good in parts. I shall deal first with the good bit and get it out of the way. I was grateful to the Minister for his assurance that most if not all of the meetings would be held in public. Knowing how ministerial assurances are examined, that will probably tie down firmly not only the new Scottish executive but the commissioner and consultative committees and they will hold most of their meetings in public. I welcome that assurance, but that is about as far as it goes.
When the Minister described what these bodies would do I began to wonder whether it would be worth anybody's while being a member, let alone any member of the public going along to listen. I am as amazed as the noble Baroness, Lady Hamwee, by the argument against going from a membership of between six and nine to one of between seven and 11. I find it hard to believe that a committee of seven to 11 people is unwieldy when one from six to nine is not. I have chaired meetings of more than 11 members. I accept that as the number approaches 20 it becomes unwieldy. For three years I chaired the board of the Sea Fish Industry Authority, which had 12 members. I would not have described it as unwieldy. Although the board reflected the whole of the United Kingdom it was concerned solely with the fishing industry. One of the greatest difficulties was to achieve, even within 12 members, a board properly representative of both the various parts of the industry and its geographical spread. I am not entirely convinced by that argument.
But it almost does not seem to matter when I hear the description of what the Consultative Committees will be asked to do. At the end of the Minister's remarks on the first four amendments I was left wondering whether the whole intention was that the committees should be the lapdogs of the commissioner. Therefore, "consultative" seems to me to be too strong a word for what the Government envisage. It also appears to be perfectly proper to allow the Commissioner to be the chairman. Presumably, he would control the agenda and everything else. I was not convinced by it. The Minister's remarks indicated that I was wrong to assume that they would be consumer bodies. I shall study the Minister's words in detail to see whether my impression is justified by the text.
1288 I find it odd that the Minister should say that there will not be any conflict at any time between the water authorities' position and that of the consumer. Even though the water authorities are public bodies they will have problems to resolve which consumers believe should have been dealt with differently or better. There will be conflicts. If not, why bother to have these committees at all? For example, one can argue that because local authorities are public bodies none of us has any complaints about council tax or the delivery of services. Members of the Committee are aware that I live in the people's republic of Glasgow where the council tax rate quietly goes through the roof year on year, except in those years when the comrades have to face the electorate. Then, for some strange reason, they manage to keep down the council tax. I believe it is time that parts of the council face the electorate every year. In that way I have little doubt that the council tax will be hugely lower. The idea that because the City Council is a public body we have no problems or complaints as consumers, let alone payers, is rubbish. Water users are in exactly the same boat.
I did not intend to make the following point but I feel that I must now do so. Recently at Question Time I mentioned additional costs to be imposed on rural abattoirs and agricultural markets as a result of the new meat inspection regulations by the North of Scotland Water Authority. Over the next four years that authority intends to increase its charge to Stornoway abattoir from £10,000 to £51,000 a year. The same authority intends to increase its charges to Perth Auction Mart from about £24,000 to £150,000 a year. Frankly, those consumers are not best pleased and the regulator will have his ear bent by them. No doubt the water authority will tell the regulator why it intends to do that.
The idea that there will not be a conflict between the water authority and consultative committee is just cloud-cuckoo-land. That is why it is important that the chairman should be independent. If I were a member of any of the organisations that I have mentioned I would not look at this body with any great hope that it would represent my views, because it appears that the chairman is not there to represent consumers' views.
I am not very pleased with the answers. I found it odd that the Minister began by saying that there was a consensus that the present regime was unsatisfactory. That may or may not be so. From my discussions with the Scottish Consumers' Council, there is not a consensus that what the Government are doing is satisfactory. Together with the Scottish Consumers' Council I shall take away what the Minister has said and examine it. I hope that the Minister will take away what I have said and think about it and perhaps return to this matter at Report. With that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 12 agreed to.
§ [Amendments Nos. 30 to 33 not moved.]1289
§ Schedule 2 agreed to.
§ Clause 13 [Commissioner's advice on charges]:
§ Lord Mackay of Ardbrecknish moved Amendment No. 34:
Page 9, line 29, at end insert (", and
(f) the impact of charges on consumers, and especially on vulnerable and disadvantaged consumers.")
The noble Lord said: I rise to move Amendment No. 34. In Clause 13 one sees a list of items under the general rubric "Commissioner's advice on charges". Subsection (3) lists a number of items:
In preparing his advice the Commissioner shall have regard to—
§ To return to the previous point, inevitably that will mean that the commissioner must balance the complaints of the consumer on price against the needs of the water authority to raise money. The subsection continues:
- "(c) the likely borrowing capacity of each authority for the period of the advice,
- "(d) any guidance issued to authorities by the Secretary of State, and
- "(e) any directions issued under section 116 or 117 of this Act".
§ My amendment seeks to add another item: the impact of charges on consumers, especially on vulnerable and disadvantaged consumers. The Water Industry Commissioner is to be given the general function of promoting the interests of customers of the new water and sewerage authorities. That is what we have been discussing. It should be explicitly stated in this clause that he or she must have regard to the interests of consumers in giving the Secretary of State advice on charges. In particular, he should be required to have regard to the interests of vulnerable groups of customers; for example, those on low incomes, or those with a medical condition who require access to a plentiful supply of water. He should have regard to the impact on non-domestic consumers whose business may be adversely affected by the huge hikes in water charges which I mentioned in the last round of amendments.
§ I can see no reason why such words should not be added to the Bill to make clear the commissioner's duty to consumers in general, and to the vulnerable and disadvantaged in particular. I beg to move.
§ Lord Macdonald of Tradeston
In addressing this amendment, I am afraid that I shall have to repeat much of what I said a few moments ago. Let me take the opportunity of replying to the jibes of the noble Lord about my Glaswegian origins and the behaviour of my party in my home town. If members of the party have any complaints about the council tax, they are not nearly as strong as the complaints they had about his poll tax!
Much of what he said may have baffled others listening who were not aware of the fact that in a month's time there will be a Scottish Parliament with 129 MSPs who will no doubt give very detailed scrutiny to many of the important issues in what is a huge industry planning a £1.5 billion capital investment.
1290 I think that he both underestimates the scale of the challenge that will be there for the committees, and the public-spirited nature of his fellow Scots.
When framing advice for Ministers on charges, the commissioner's only concern will be the interests of the customers as a whole, as it will be in all aspects of his or her work. Clause 13, in dealing with charges, establishes the framework within which the commissioner will formulate advice for Ministers. That framework will enable the commissioner to deliver an objective assessment of the minimum charge levels needed by the authorities.
Clause 13(3) specifies a number of factors the commissioner must consider in framing the advice. Thus the commissioner is required to take account of the duties placed on the authorities, of the various standards they must meet, and the costs of doing all that. Crucially, he or she must also have regard to the economy, efficiency and effectiveness of the authorities and the way in which they are managed.
The purpose of these provisions is to ensure that the customers as a whole pay no more than is necessary for the service they receive. More particularly, they will give the commissioner the power to stop the cost of any inefficiency on the part of the water authorities being passed on to the customers.
Against that background, I do not believe that the amendment could add anything to the way in which the commissioner serves the customer in this area. As the Bill stands, everything that he or she will do in relation to preparing advice will be with a view to minimising the impact of charges.
Requiring the commissioner to consider the impact of charges on particular groups of customers would fundamentally alter the commissioner's remit. The commissioner's task is to come to an objective view on the income requirements of the authorities. Expanding the remit, as the noble Lord suggests, would involve the commissioner in matters not directly related to the efficient operation of the water and sewerage industry.
In such circumstances, the commissioner would be expected to reach judgments on whether customers, or particular categories of customers, were able to afford particular levels of charges. That would draw the commissioner into an area of wider social policy which is for the Government to address.
The Government believe that by concentrating efforts on keeping prices as low as is consistent with a high quality service, the commissioner will be able to serve the interests of all customers.
This amendment, rather than advancing the interests of customers or groups of customers, is likely to blur the commissioner's role and make the commissioner less effective in promoting the interests of customers. Accordingly, I hope that the noble Lord, Lord Mackay, will agree to withdraw it.
§ Lord Mackay of Ardbrecknish
I am grateful to the Minister for that reply. Perhaps he has more confidence in the various bodies he mentioned than I have. I am not entirely sure whether he is still a resident of the city of Glasgow. In that regard, he is unlike some of his noble 1291 friends who have taken the precaution of living outside it where the council tax is lower. I am surprised that he is not complaining about the size of the council tax, as I am. I realise his salary nowadays is modest compared with what it used to be. My salary is much more modest than it used to be, and the hourly rate must fall well below the minimum wage!
We have had a good run on this issue. I shall reflect on what the Minister said. I remember having often to make similar answers from the Dispatch Box to his noble friends on this side of the Chamber who wanted this, that or the other group taken into account. I find it interesting today that, as regards amendments mentioning the disabled and disadvantaged, the usual suspects are not present to add their voices to mine. I suppose that has something to do with the change of government. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clauses 13 to 15 agreed to.
§ Schedule 3 [Minor and consequential amendments]:
§ [Amendments Nos. 35 and 36 not moved.]
§ Schedule 3 agreed to.
§ Remaining schedule and clauses agreed to.
§ House resumed: Bill reported without amendment.