Flooding

Lord Benyon Excerpts

Wednesday 26th February 2014 Commons Chamber

[Maria Eagle]

I acknowledge the truth of what my right hon. Friend said. Of course, it is the job of Her Majesty’s Opposition to try to make sure that the Government realise that need as much as we do. I am sure that we will seek to do that.

[Richard Benyon (Newbury) (Con)]

Will the hon. Lady acknowledge that her right hon. Friend the Member for Leeds Central (Hilary Benn), who is sitting next to her, instigated the Pitt review, from which came the Flood and Water Management Act 2010, which this Government have implemented in large measure? Surely, there should be a much more cohesive view across the House that we put in place the gold command structures that the review required and carried out Exercise Watermark precisely for this scenario. Many houses in constituencies such as mine were protected precisely because we followed through those recommendations.

[Maria Eagle]

I acknowledge that good work was done in the Pitt review to set out what the country needed to do. However, I am not convinced that the Pitt review has been fully implemented. Indeed, the Government laid before the House in, I think, January 2012 what they called a final progress report on the Pitt review, whereas it acknowledges that 46 recommendations––that is half of them––have not yet been implemented. One of the things that I would like the Minister to deal with is whether we can have further updates, so that we can be clear about the Government’s view on whether the Pitt review has now been fully implemented.

Farmland Bird Populations

Lord Benyon Excerpts

Wednesday 15th January 2014 Westminster Hall

[Sir John Randall]

Those organisations have a strong record on farmland birds. I am sometimes a little bit concerned about some of them regarding birds of prey on uplands, but that subject is for another day.

The farmland bird indicator, which is a scientific record of populations, shows that more than half of the UK’s skylarks, yellowhammers, linnets and lapwings have disappeared since the ’70s. Those birds are not the worst affected, because they can survive in other habitats, but species that live mainly on farmland, such as the grey partridge, turtledove, tree sparrow and corn bunting have declined by 85%.

To any hon. Member who wants to follow the changes in population and range of all those different species, I thoroughly recommend the British Trust for Ornithology’s new “Bird Atlas”, which maps out 40 years of data. It is a fantastic piece of science and a wonderful resource. Unfortunately, it paints a gloomy picture regarding farmland birds.

[Richard Benyon (Newbury) (Con)]

I congratulate my right hon. Friend on securing this debate. I have a particular fondness, as we all do for particular birds, for lapwings. Is he aware of the extraordinary work being done by people such as Philip Merricks? He has proved that, in order to get more than 0.7 chicks per pair fledged, one has to do a lot of intervention and work hard. He has managed to double the rate through good management of the Elmley reserve on the Isle of Sheppey. There are many lessons that we can learn from people like him. I agree with the gloomy reports of the current status of farmland birds that my right hon. Friend talks about, but we can turn that around over the next few years.

[Sir John Randall]

I was not aware of that piece of research, but I am aware of its general nature. I pay tribute to my hon. Friend for much of the work he did when he was the Minister responsible for biodiversity. It is not always easy, because one cannot always do the things one really wants to do. I know what he does privately as well for farmland birds and for wildlife in general.

We have an opportunity to turn things around in the coming months. We know what the problem is: the main reason for the decline—there are others—is the intensification of farming methods. Changes in cropping patterns have led to a loss of winter stubbles, so the main feeding habitats for many birds, such as finches and buntings, have disappeared or have been greatly reduced. Greater use of pesticides and herbicides has removed critical food resources, and the loss of hedges and other semi-natural habitats, of which we are all aware, has combined with intensive grassland management to take away vital habitats.

Flooding

Lord Benyon Excerpts

Monday 6th January 2014 Commons Chamber

[Mr Paterson]

I am grateful for some of the hon. Gentleman’s comments, but I honestly have to disagree. I have been to see people from the Environment Agency on the ground. Last week I was in Addington, where they were manning the control centre. Only this morning, I was near Maidenhead looking at the Jubilee river, in absolute pouring rain. Those guys have been working all over Christmas and their morale was absolutely tremendous. They are, quite rightly, really proud of what they have done. They have worked their guts out under very difficult conditions, and they have delivered. We estimate that approximately 1 million households are protected through the work of the Environment Agency and all those working in local councils. I am always struck by the real spirit among people in the Environment Agency and their determination to deliver, whatever the conditions. That also goes back to what happened at the beginning of January, when they were working overnight filling breaches on the east coast. I have the deepest respect for the hon. Gentleman, who has been in this House for a long time, and I do not like disagreeing with him, but on this occasion I honestly think he is wrong, and I am pleased to tell him so. I really do think that morale among people in the Environment Agency is tremendous—and of course they are buoyed up by the prospect of our very significant long-term programme for flood defences.

[Richard Benyon (Newbury) (Con)]

Twelve months ago I visited the Environment Agency to thank people for their work over last Christmas, and I visited many of the flooded homes, particularly those of farmers on the Somerset levels, who were mentioned by my hon. Friends the Member for Somerton and Frome (Mr Heath) and for Wells (Tessa Munt). We were able to do much to support them. However, we are left with the importance of remembering that the first two years of this Government were spent dealing with drought and the last two years have been spent dealing with really severe floods. It is right that we are encouraging investment in resilience in the water sector, and it has to be right that we continue to prioritise flood spending. Does my right hon. Friend agree that it is worth reminding the House that the previous Government’s so-called Darling plan would have made 50% cuts in capital spending across the Government, which would of course have had an impact on precisely the things that Opposition Members are complaining about today?

[Mr Paterson]

I am very grateful to my hon. Friend. I would like, on the record, to thank him, and my predecessor, for the tremendous work that they put in during their time working on these long-term programmes. What is fascinating about this statement is that it has flushed out the fact that the Labour party will not match our very ambitious long-term programme for flood defences.

Water Bill

Lord Benyon Excerpts

Monday 6th January 2014 Commons Chamber

The performance of the companies has not really matched the rise in payments. I looked at, for example, the issue of leakages. A great deal has been said about the investment in the infrastructure of the water industry since privatisation. I represent a constituency that is served by Thames Water, which continues to lose up to a third of its water in leakages every year. The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) wrote an article in the Evening Standard, which excoriated Thames Water for its failure to invest in tackling that particular problem. Not only do the companies fail to tackle the leakages, but they are some of the worst polluters of our rivers. I asked the House of Commons Library to provide some recent information on the companies. South West Water was fined £50,000 plus costs for sewage discharge into Salcombe bay in November 2013. It was fined a further £50,000 for sewage discharge into the Tamar estuary. Thames Water lost a final appeal against pollution fines in 2011, and the estimated final cost of those fines was £400,000.

[Richard Benyon (Newbury) (Con)]

The hon. Gentleman has been a consistent if sometimes lonely voice on this issue for a great many years. It is not for me or for anybody to defend individual water companies, but does he not concede that companies such as South West Water have spent an enormous amount of money cleaning up our beaches and rivers? Has he measured the trajectory of investment that was happening before privatisation and compared it with the £100 billion plus that has been spent since privatisation on improving our water sector and making it more environmentally-friendly and on keeping costs down for customers?

[John McDonnell]

I have heard the argument about infrastructure investment doubling since privatisation, but what is significant—

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[Richard Benyon]

I promise not to intervene again, but I cannot resist doing so now. Does the hon. Gentleman’s research go back prior to the privatisation of the water sector? In those years, were there any cases of pollution, of leakage or of poor infrastructure? The Minister will know that there were, because there were some appalling cases, one of which was in his constituency, and that the £100 billion we managed to gear into this sector has dramatically improved things. I entirely agree with the hon. Gentleman that there is much more work to be done, and we cannot have a system where the water industry sits outside—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Interventions are supposed to be brief. If the hon. Gentleman wants to make a defence of the water industry, he can stand up to make a speech—he may not do so in an intervention.

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[Dan Rogerson]

The hon. Gentleman is tempting me to get into the specifics of individual companies. The framework that the Government have set out and our policy statements are very clear, and Ofwat is responding to that. The companies will have to take account of that and satisfy the regulator that they are acting fairly and effectively.

[Richard Benyon]

Given that one of the key objectives of the Bill is to increase the resilience of the water sector across the country—or perhaps I should say countries—should we not welcome the fact that Severn Trent is trading bulk quantities of water with Anglian Water and say that we hope to see more water flowing from areas where it rains a lot to areas where it does not?

[Dan Rogerson]

My hon. Friend and predecessor is a great advocate of ensuring that we have a far more resilient water sector on environmental and sustainability grounds, as well as on economic and social grounds. It is important that we get that message across and I welcome his intervention.

New clauses 11 and 14 would place a duty on water companies to report information that is already freely available in the public domain. Both new clauses require reporting about company performance, investment, tax, corporate structure and dividends. Indeed, the hon. Member for Hayes and Harlington cited those figures in his speech, which shows that they are readily available.

New clause 14 would also require the Secretary of State to report on the cost of water, disconnections, water quality, leakage and the legal compliance of water companies. The cost of water to consumers is published every year in each company’s charges scheme. The Water Industry Act 1999 removed the power of any water company to disconnect homes because of the non-payment of bills. That prohibits the disconnection of the water supply to homes, schools and hospitals. The drinking water inspectorate is responsible for providing independent reassurance that water supplies are safe and that drinking water quality is acceptable to consumers. In England and Wales, 99.96% of drinking water supplies meet national and European standards. The tiny proportion that are failing to meet that standard—0.04%—are predominantly private supplies, rather than supplies from incumbent water companies. Since the mid-1990s under the current framework, there has been a 30% reduction in leakage, which is more than 2 billion litres per day. Companies are now operating at their sustainable economic level of leakage.

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[Thomas Docherty]

It is always a good thing to be a charitable and giving soul, so I do my best to try to accommodate the Minister.

I would like to speak to the new clauses that stand in my name. As I said earlier, much attention has been paid to households that faced a difficult Christmas and new year because of the climatic conditions that battered the United Kingdom. Much less, however, has been written on households that faced a stressful period because of the economic conditions that have battered the United Kingdom, not just in the past three weeks but in the past three years. Hundreds of thousands of households did not enjoy the Christmas that all of us here in the House of Commons did, in warm and secure homes with plenty to eat and with presents given and received. Too many families were left unable to enjoy the Christmas joys that we take for granted.

The cost of living crisis cannot be dismissed as a soundbite, as many Government Members try to do. The cases of hardship regularly brought to the attention of Members of Parliament cannot simply be batted away. At a time when household incomes are continuously being squeezed, it is not acceptable to Opposition Members for most water companies to continue to do so little to help their struggling customers.

The size of water bills may not have reached the obscene level of their gas and electricity counterparts, but there is no disputing their cumulative impact. Citizens Advice reported to MPs in November that it had received almost as many inquiries from people worried about their water bills as they had about the other two utilities. DEFRA’s own statistics state that some 2.5 million households now find themselves in what the Department itself defines as water poverty, while in the past year water companies reported pre-tax profits of £1.9 billion and paid out, in dividends, a staggering £1.8 billion to their shareholders.

You might have expected the water companies to rush forward with schemes to assist their hardest-pressed customers, Mr Deputy Speaker. After all, the previous Labour Government put in place legislation to allow each company to introduce a tailor-made scheme for its own region. The water companies told the then Government and Parliament that that was all that was needed: a voluntary system of social tariffs that each and every water company would then set and implement quickly. Four years later, what progress has been made? So far, only three water companies have got around to implementing social tariffs, helping a grand total of 25,000 households across the country. Even by the end of the price review period, more than a third of water companies will still have not bothered to lift a finger and introduce such a scheme. When the water companies gave evidence to the Bill Committee, did they acknowledge that they had let down their customers and Parliament? Did they acknowledge that the rate of progress was not good enough? Did they say sorry, even once? Of course not. They blamed everyone but themselves: they blamed the regulator, they blamed the Government and they blamed the customers.

What has been the response of the Secretary of State, and his Minister with responsibility for water, to the crisis facing households? The Secretary of State sent a letter to the companies in October begging them not to raise prices further. It was not, we note, an instruction or a warning that if they did not take heed, the Government would step in. It was not even a rebuke; it was just a weak letter. That is why the Opposition have tabled four new clauses that will each help hard-pressed households. Taken together, they would make a tangible difference to those struggling with the cost of living crisis. With your permission, Mr Deputy Speaker, I will briefly take each new clause in turn, explaining the existing problems and how our proposals would address them.

First, on bad debt, I will build on the excellent remarks by the Chair of the Select Committee. Ofwat estimates that on average bad debt adds £15 to every customer’s annual bill. Note, of course, that that is just the average amount; in some cases, it is significantly more than that. As the hon. Lady said, water companies are, rightly, not allowed to cut off those who cannot afford to pay their bills, but they are allowed to pass the cost of non-payment on to their other customers. In effect, the sector already has cross-subsidisation.

[Richard Benyon]

Average figures are exactly that—average. There are, of course, water companies that underperform and their debt is much higher than average, but the corollary is that other water companies perform considerably better. Does the hon. Gentleman not think that there is much work to be done to learn best practice from water companies such as Yorkshire Water, which serves the constituency of the Chair of the Select Committee, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) and is outperforming the others extremely well? We should learn from such companies about bad debt.

[Thomas Docherty]

I know that you are a fan of all things Yorkshire, Mr Deputy Speaker, and I will come on to Yorkshire Water in a moment, if the former Minister will bear with me.

As the hon. Lady said, among those who do not pay there are those who can pay. That is unfair on decent customers who meet their obligations and we believe the time has come for more robust action to be taken. Some 80% of those who do not pay are in rented accommodation. One of the challenges facing water companies is tracking down those who refuse to pay because they move homes far more often than the average person. The only way to track them down effectively is to require landlords to provide water companies with a list of tenants. Individuals moving property would not then disappear from the system and evade paying their debts.

The measure would be a simple step and it would not require a disproportionate amount of new bureaucracy to implement. It is estimated that approximately half of total bad debt falls into the category of “can pay, won’t pay”. The Select Committee, of which the Minister was previously a member, has unanimously backed the measure throughout this Parliament, so why the opposition from the Government?

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I ask the Minister in a positive spirit whether he has thought seriously about accepting the new clause. If there are good reasons for refusing to do so, I would accept them, but it seems to me to be a relatively simple measure that could make a significant difference.

[Richard Benyon]

I rise to speak briefly to new clause 5, but I also want to touch on the comments made by my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) about Flood Re. I was intrinsically involved in the tortuous and detailed negotiations with the industry to try to come up with something from zero when the coalition Government came into office. We had urgent and overdue discussions about what would replace the statement of principles. All hon. Members would agree that it is absolutely right that this needs to be scrutinised by the House, with ongoing scrutiny of how it works. I hope that the Minister will agree that flexibility should be built into it to enable it to be changed as circumstances change in years ahead.

However, on behalf of my constituents, who suffered some of the worst flooding in the south of England in 2007 and have continued to face flooding in certain areas since, I beg the House not to unpick the detailed negotiations that have resulted in the Flood Re proposal before the House. For example, if we started to introduce a wide range of businesses into the scheme, that would completely change the complex mathematical—probably algorithmic—calculations that will make it viable. I want as many properties to be included as possible, but if we start to say that we want it to include band H houses, different types of businesses, and houses built after a certain date, hon. Members have to understand that that would come at a cost. The cost might be that the industry walks away and that we have nothing, with constituents who live in areas at risk of flooding facing the really terrifying prospect, when we have the kind of weather we are currently experiencing, of not being able to get insurance. The affordability factor that we have managed to build in would be gone, so I just urge the House to have a little caution when—rightly—scrutinising this Bill, which I really believe is right and should become law as quickly as possible.

I want to speak about new clause 5, but I should have started by reminding hon. Members about my entry in the Register of Members’ Financial Interests. I have been accused of obsessing about over-abstraction, and I have been obsessed about it since long before I entered the House. More than 20 years ago, I set up an environmental body relating to a small river in my constituency, the River Pang, which is a chalk stream. It was one of the National River Authority’s ALF—alleviation of low flow—schemes. We managed to stop over-abstraction by a water company at the top of the aquifer and to restore the river. It is currently in desperate need of further restoration, as are others in my area, particularly the River Kennet. It seems strange to talk about over-abstraction when many of our rivers are overflowing at this time, but it is nevertheless a very serious issue. The River Kennet is a site of special scientific interest, and has overlaying European and national designations. It is an example of a river for which we have to find a better solution.

When I was in the Minister’s role, I would dearly have loved to bring meaningful abstraction reform before Parliament, but it would have been wrong to do so. As has already been said, we have been dealing with a regulatory system that dates back to the 1960s, when people did not mention the words “climate change” and we did not have the levels of population and demand that we now face, particularly in the south and east of England. When the consultation and all the work being done by the Department and the Environment Agency is over, I know that we will have about 30,000 abstractions that affect the livelihoods of our constituents and the ability of their businesses to perform and that have a huge impact on our environment. I hope that the House agrees that we must get the system right, and that we legislate in haste and repent—in opposition—at leisure. I hope that we get this right, and that the reassurance the Minister will be able to give us will set my mind, and those of other hon. Members, at rest.

I have said that the problem is complex. Organisations such as the WWF have been a fantastic help to the Government and hon. Members in our thinking about how we should deal with over-abstraction. I regret that the abstraction incentive mechanism originally hinted at in the water White Paper has been diminished in relation to its ability to address abstraction where it will cause real problems to the environment. I hope that it comes forward in the future as a very useful tool that values water differently where it is scarce and where it is plentiful.

There are technical measures in the Bill that will not be talked about in the Dog and Duck, but that are groundbreaking—perhaps game changing would be a better description. The change from using the environmental improvement unit charge method of assessing over-abstraction to putting it in the five yearly price review is a major one that will make a big difference to how we deal with the environmental damage that is caused by over-abstraction.

I looked closely at new clause 5, which was tabled by my hon. Friend the Member for Thirsk and Malton and other Members. I wondered whether it might be an elegant way forward. However, I think that it would face problems. There would be problems in getting the legislation through Parliament. It undoubtedly uses Henry VIII clauses and would give a dramatic power to the Committee Corridor, as opposed to the whole House. That would concern many Members of this House and would certainly concern Members in another place, where they do not like Henry VIII clauses. I hope that the Minister will address that in his remarks.

I then looked at how such secondary legislation would implement the abstraction reforms that we want to see and that will result from the current consultation and the implementation of a new scheme. If that could all be dealt with in the obscurity of the Committee Corridor to a level that satisfied my concerns and the concerns of the many organisations that are worried about over-abstraction now and in the future, that would be fine. However, the use of secondary legislation is a limiting factor. I regret that in my time as a Minister, I did not get my head around what an abstraction Bill in the next Parliament would look like. I suspect that it will be a relatively complicated document. That legislation would be diminished if it was dealt with as secondary legislation, as under new clause 5.

I hope that the Minister will give two assurances. First, I hope that he will address the concerns that were put eloquently by the Chair of the Select Committee, my hon. Friend the Member for Thirsk and Malton, and my concerns about whether such legislation would deliver what we want it to deliver. The second assurance is perhaps an impossible one for him to give, but I will ask him to give it anyway. I hope that he will give an assurance that the Government are as determined as they were when they put together the water White Paper—a document that was roundly welcomed by Members in all parts of the House, the industry, NGOs and every stakeholder I can think of—that abstraction reform will be followed up by his party and mine, and hopefully by other parties, and that it will race through the House in the early years of the next Parliament so that we can see meaningful abstraction reform that addresses the problems that blight so many rivers. This is not just an environmental problem; more fundamentally to many of our constituents, it is an economic one. Not only do we rely on rivers and aquifers for aesthetic reasons and leisure activities; they are fundamental to our economy. That is why it is so important that we get abstraction reform right. I hope that the Minister will give us those assurances this evening.

[Steve McCabe]

I will be extremely brief and confine my remarks to Flood Re. With all due respect to the hon. Member for Newbury (Richard Benyon), if this is the best that three and a half years of intense negotiations can produce, I am not sure that congratulations are in order. As I understand it, the scheme will cover only a fraction of the 6 million homes that are deemed to be at flood risk.

I want to ask the Minister three questions. First, if it is true that there is a 60% chance that the scheme will fall into deficit, and if, as Professor Diacon, who was asked to review it, said, it relies on luck in the first place, what are the contingency plans if the scheme falls apart? Secondly, what will be the trigger for the Government to intervene on the insurance companies if insurance premiums for everyone else, who will not be covered by the scheme, continue to rise to such a point that they cannot afford them?

Fishing Industry

Lord Benyon Excerpts

Thursday 12th December 2013 Commons Chamber

[Miss McIntosh]

Perhaps the hon. Gentleman will join me in tasting some of that to see whether it is edible, and we could look at creating a new market.

As the hon. Member for Aberdeen North said, the key points of the next stage of reform include a ban on the wasteful practice of discarding at sea perfectly edible fish for which there is no current market, a legally binding commitment to fishing at sustainable levels, and decentralised decision making that allows member states to agree measures appropriate to their fisheries.

One of the most exciting parts of this reform is that for once we are going to focus more on the science—I think we have gone wrong with previous reforms of the commons fisheries policy because we have not done that. I am an avid watcher of “Borgen”, the Danish television programme, and I will include in my remarks one or two references to Denmark. I am half Danish—I am very proud of that—and I studied in Denmark. As part of our report the Committee had the opportunity to visit Denmark and see practices that I hope will transform the regional control aspects. Science is particularly important there because Copenhagen is home to the headquarters of the International Council for the Exploration of the Sea—ICES—and if we followed more of the scientific base that it spends a long time producing, I believe we would all benefit.

The health of fish stocks is assessed every six months by ICES, and the EU published an overall assessment of its advice in October 2013. It stated—this is from a Library note so it must be true—

“that 39% of EU fish stocks are still over fished,”

but that is down from 86% in 2009. In spite of that reduction in overfished stocks, the assessment goes on to say that trends giving rise to concern include, for instance, the fact that

“the number of stocks under an advice to reduce captures to the lowest possible level… had increased.”

I am sure the Minister will wish to focus on that. Being optimistic, as the hon. Member for Aberdeen North concluded, Seafish, the industry body for the UK, has said:

“there is reason for cautious optimism in the industry as we continue to see iconic stocks such as cod in the North Sea move towards recovery.”

We must not rest on our laurels, and it is essential we follow the science. Where I would like the science to lead, and where I believe there is an example we can follow, is regional control, and I have a question for the Minister about that.

I also worked for a number of years in Brussels in legal practice, and we must understand how we can get round the problem of fisheries still being an exclusive competence of the EU. If that situation remains, how shall we achieve regional control in practice? I believe that is a legal problem and not insurmountable. Again, I will turn to Denmark, because Denmark and Sweden have established regional control around Danish and Swedish waters that works extremely well. That is down to the size of the nets and meshing they use, and how they fish particular fisheries—I will not go into too much detail because it is well established. I hope the Minister will confirm that that model will be used. I understand that the new common fisheries policy brings decision making closer to the fishing grounds, clarifies the roles and obligations of each of the players, and ends micro-management from Brussels, and that the Commission will agree with fishing nations in the region about the general framework, principles and standards, overall targets, performance indicators and time frames. Crucially, however, member states within that region will co-operate at a regional level to develop the actual implementing measures. If it can be established, and all member states in the region agree to the recommendations being transposed into rules that will apply to all fishermen in the region, it will be a real game changer.

[Richard Benyon (Newbury) (Con)]

My hon. Friend is making a superb speech. She mentioned two key elements to reform, but does she agree that there is a third? History might reveal that that third element—a legal requirement to fish sustainably, to fish to maximum sustainable yield—is even more of a game changer. Is that not a key reform that will get our fisheries back on an ecosystem management basis?

[Miss McIntosh]

I am grateful for that intervention, and it gives me the opportunity to record my thanks to my hon. Friend for the hours he spent on the groundwork to achieve an historic agreement. Sustainability is key, and sustainability will be proved by following the science. We went too far away from the science in the past; we need to hold to it in future.

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[Mr Campbell]

I agree entirely on both counts with the right hon. Gentleman. Anecdotally, I am told that salmon stocks are relatively healthy and that there are salmon in more and more rivers in Northumberland and—I would imagine—in south-east Scotland as well. The fishermen themselves contribute to the hatchery that puts fish in at Kielder to ensure that stocks are buoyant. I understand that there is some dispute over salmon stocks—

[Richard Benyon]

rose—

[Mr Campbell]

I am sure the former Minister is about to tell us the other side of the story.

[Richard Benyon]

As the person who took that decision, I would like to put it on the record that although I did get pressure from angling interests, they were as nothing compared with the concerns I had about the impression we were giving at the North Atlantic Salmon Conservation Organisation. These are mixed-stock fisheries, and we had given a commitment but we had not carried it out. The whole of the UK’s credibility for sustainable management of our fisheries was at question because of the stand we had been taking at NASCO. That was the primary reason for the decision I took.

[Mr Campbell]

I am sure that is the case from the former Minister’s perspective, but we are talking about 13 licences and a decision that, as far as I can understand, was largely one that we made. We presented this opportunity, his predecessors having withstood the pressure for a considerable period. Of course, as the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) said, we want anglers to have access to good stocks, but the former Minister knows as well as I do that there has always been concerted pressure, not from the anglers themselves who take their rods to the rivers, but from those who see this as an opportunity. Let me tell him this: it might be an opportunity for landowners to make some money, but it is also an opportunity for fishermen in some cases to survive on the back of these licences. This fishery is not an extra, but an important part of what they do.

While we are on the relative buoyancy of stocks, I understand that the Environment Agency takes the same view as fishermen in saying, like the right hon. Member for Berwick-upon-Tweed, that there is enough for both. I still do not understand fully why the decision was made to phase out the licences and the fishery—and made without a debate in Parliament using order-making powers. My point is simple: the drift net salmon fishery in the north-east is a traditional fishery—what some call a heritage fishery. It is, by all accounts, sustainable. It is local and organised so that catches are limited, yet somehow vested interests appear to have won out. If the Minister has some spare time when he returns from Brussels, will he revisit this issue? The fishermen who will lose their licences believe it could be revisited before we pass the point of no return.

Water Bill

Lord Benyon Excerpts

Monday 25th November 2013 Commons Chamber

[Ms Eagle]

The right hon. Gentleman clearly has great faith in Mr Cox, and we will see in due course whether he is correct in that respect. My point is that Ofwat’s powers—rather than the personality running it at any given time—are limited to acting when revenues are at least 10% higher than expected. That does not adequately address the high dividend payments, particularly relating to gearing, which happen across the industry. Last Thursday, the Secretary of State referred to Ofwat as “a vigorous independent regulator”. I have no doubt that, under its current leadership, it would wish to be so, but it needs to be strengthened to be more effective. The Government’s Bill is a wasted opportunity to strengthen Ofwat.

[Richard Benyon (Newbury) (Con)]

The hon. Lady has been on her feet for some time and I am looking forward to hearing her vision for the water sector for the years ahead. I hope she gives the House a view on how we can encourage more investment to tackle the problems described by hon. Members on both sides of the House. She is talking about the very important question of prices for our households, but will she extend that to talk about the great need for greater investment in our water sector?

[Maria Eagle]

If the hon. Gentleman is slightly more patient, he will hear what I have to say in the rest of my speech on those and other matters, but the Secretary of State was on his feet for 35-plus minutes, so the hon. Gentleman has not been waiting too long yet.

It is time for a wider review of whether we have the right balance between Ofwat’s regulatory role and the need for a powerful champion for consumers. The review should consider the future relationship between, and roles of, Ofwat and the Consumer Council for Water. I believe there is a need for a proper ombudsman role because adequate powers of redress for customers do not currently exist. The Bill should have established such an arrangement rather than simply arranging for it to be possible at some undefined point in the future.

The Government should also consider accepting the Consumer Council for Water proposal for it to be given enhanced rights to be consulted on each water company’s charging scheme and any changes to it, and a continual scrutiny role to “find and fix issues”, as it puts it, as they arise. I believe there is merit in those proposals and hope Ministers agree.

The second major change the Opposition want during the passage of the Bill is the introduction of a clear legal requirement on water companies to sign up to a new national affordability scheme. When I raised that with the Secretary of State last Thursday, he responded:

“The Government encourage water companies to introduce social tariffs for vulnerable consumers and to reduce bad debt.”—[Official Report, 21 November 2013; Vol. 570, c. 1350.]

However, it is absolutely clear that his encouragement is not enough. Just three companies have introduced social tariffs, with fewer than 25,000 customers receiving assistance. Considering that Ofwat estimates that 2.6 million households, or 11%, currently spend more than 5% of their income on water, it is clear that only a tiny fraction of those struggling are being helped.

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[Maria Eagle]

The hon. Gentleman is entitled to his opinions.

The three reviews built on the Flood and Water Management Act 2010, which we enacted before the last election. We support the measures to increase competition and enable non-household customers to choose their water supplier, and we want new entrants into the sector and so support measures to encourage that development. We also support the regulatory reforms designed to place a greater focus on the long-term resilience of water supplies and the measures to provide, at long last, the statutory basis for agreement on reinsurance.

We have concerns about several areas, however, many of which are shared by the Environment, Food and Rural Affairs Committee, chaired by the hon. Member for Thirsk and Malton. First, we agree with the Government’s decision to open up non-residential competition, as there is increasing evidence of a successful market emerging in Scotland. The introduction of competition for business customers is intended to provide choice, drive down costs and improve water efficiency, and we hope that it is successful, but the Government should listen to the Select Committee, which has said:

“We believe that protecting householders from subsidising competition in the non-household sector is a fundamental principle that should be enshrined in primary legislation.”

The Consumer Council for Water has rightly said:

“It is a vital principle that customers who are not eligible to switch retailer should not be disadvantaged. This should ideally be reflected in legislation.”

The statement in the recently published charging principles that household customers will not subsidise the development of competitive markets for business customers is a step forward, but not enough. We agree with the Select Committee and the Consumer Council for Water that it should be included in the Bill, and if Ministers refuse to reconsider their decision, we will seek to amend it.

Secondly, we do not understand why Ministers are being stubborn over enabling water companies to exit the retail market, which seems a perfectly non-contentious but important principle for the effectiveness of a market. The Select Committee is also clear on that point, and I think that the Government should rethink it. Thirdly, the Secretary of State should reconsider his decision not to require the separation of company wholesale and retail arms as part of his package of reforms. The Select Committee has called for a

“requirement for the functional separation of incumbent companies’ wholesale and retail arms. We further recommend that the principle of non-discrimination be included on the face of the Bill.”

We agree with the Select Committee.

Fourthly, we believe that the Government’s concerns about agreeing to the wide-ranging calls to elevate Ofwat’s sustainable development duty to a primary duty are misplaced. The Select Committee said:

“We are persuaded that the increasing pressures on our water resources, highlighted in the Water White Paper, justify such a change.”

The change is also supported by the 15 environmental non-governmental organisations that make up the Blueprint for Water coalition, including the WWF, the Royal Society for the Protection of Birds, the Wildlife Trusts and the Marine Conservation Society. Without the change, Ofwat could, for example, be forced to strike out investment to deliver demand management in over-abstracted areas by having to place significant financial implications for companies above the principles of sustainable development.

[Richard Benyon]

May I take the hon. Lady back to the question of exits? We looked carefully at this, and I believe that the kind of structure our water industry should have is a matter for this House and this Parliament. If she is saying that we should allow exits, she is effectively saying we should allow water companies no longer to be integrated, when it is the Government’s belief—and perhaps that of the Opposition—that they should be. If we were to allow exits, it would say that water companies could change their structure, but does she not agree that that should be a matter for Parliament, not for the water companies to decide on a whim?

[Maria Eagle]

I am of course interested to hear the views of the hon. Gentleman who was, until recently, a well-liked Minister in the Department. [Interruption.] Well, he is still well liked, but no longer a Minister. I am not wishing to rub it in, but he decided to return to the Back Benches. [Interruption.] I am trying to be nice to him, although I know that that is unusual. It is interesting to hear his point of view. Water companies have changed their structures since privatisation, and I view it as normal in a functioning market for organisations to be able to exit it. I am sure that this can be considered in greater detail in Committee. I do not know whether he will have the honour of serving on the Committee—we will wait to see—but we will have an opportunity, as I say, to debate the issue in more detail in Committee. It is odd to open up a market and then to prevent certain companies from leaving it.

I was moving on to my fifth point about the detail of the Bill. We have serious concerns about the Government’s disjointed and, frankly, botched plans to introduce upstream competition. We support the principle of upstream competition and acknowledge the benefits that it could bring, but even a slimmed-down version of the Government’s plans would not adequately address the potential consequences of not taking forward abstraction reform in parallel.

The Government’s White Paper “Water for Life” set out a strong case for abstraction reform, yet the target date for a new regime is now 2022. The fact is that, historically, we have seen the over-allocation of water resources. Competition in advance of abstraction reform risks increasing the total amount of water taken from the environment—not least as those with unused or part-used abstraction licences seek new ways to realise their value.

The Government are asking the House to support these reforms, although their sustainability is dependent on a further piece of legislation. The Secretary of State knows full well that this is a promise that he cannot guarantee to deliver. Regretfully, I have to say that, unless he is able to offer some very convincing remedies on this issue, our instinct will be to seek to remove this entire part of the legislation. It would be better for the Government to bring back a properly integrated set of reforms in the future.

We support the measures on flood reinsurance—however belated they may be. It was disappointing that the Government were adding clauses to the Bill at such a late stage, but they are welcome, and we will scrutinise them carefully in Committee. The Government’s climate change risk assessment states that floods are the greatest threat that climate change poses to our country. That is one of the reasons why the Secretary of State should take the issue far more seriously, and why it is, frankly, incredible that he has talked of the benefits that could come to the UK from climate change.

There are real risks and far-reaching consequences for the UK from climate change, yet the Secretary of State’s complacent approach, combined with severe cuts to investment in flood defences, is deeply worrying. I hope that he has seen the letter that he has been sent in the past week by Professor Lord Krebs, chairman of the adaptation sub-committee of the Committee on Climate Change. In that letter, Professor Krebs raises serious concerns about the failure of the Government’s proposals to strengthen incentives for the uptake of household flood protection measures. He warns that the consequences will be

“that Flood Re costs will be higher than they need to be, at the expense of householders funding the programme through the industry levy.”

The Committee on Climate Change has therefore made five proposals that it believes believe would reduce Flood Re costs and improve value for money, and I hope that the Secretary of State will consider those proposals carefully.

The Bill contains a number of important measures that the Opposition will support. On the back of three important reviews commissioned and published by the previous Government, it builds on the reforms and legislation that we introduced when in office. However, the weakness that lies at its heart is the Government’s inability to stand up to vested interests and their failure to take anything approaching a tough approach to the water companies.

Ministers continue to defend the need for a voluntary approach—a voluntary approach to whether help should be provided to those who struggle with their bills, and a voluntary approach to whether customers are offered relief from rising bills, even where companies are benefiting from financial circumstances beyond their control. Let me tell the Secretary of State that it is now 20 years since privatisation, and the voluntary approach has had more than enough time to be tried and tested. It has failed, so it is time not for more letters from him, but for action.

It is time for a new deal with the water companies: a new deal on the contribution that the water companies make through taxation and investment; a new deal on the steps that the water companies must take to tackle the affordability of water for households that are struggling; and a new deal on the extent to which the water companies are regulated. The Bill could and should have been an important step forward in delivering such a new deal. Instead, it is a wasted opportunity. I hope that the Secretary of State will work with us to improve the Bill, particularly in respect of the need to tackle the rising cost of water for struggling households. If he continues to refuse to act, I can assure him that the next Labour Government will act.

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[Richard Benyon (Newbury) (Con)]

I refer hon. Members to my entry in the Register of Member’s Financial Interests. It is a great pleasure to follow the hon. Member for Stoke-on-Trent North (Joan Walley), for whom I have the greatest respect. She will be a loss to the House when she stands down. I listened to her remarks with great interest, and I will comment on a number of them in due course.

I hope that the House will forgive me if I start by quoting from the water White Paper, about which I feel a sense of propriety. If I say so myself, it was a very good document. It is a rare occurrence in Parliament for such a document to be well received not only by those on both sides of the House but by green non-governmental organisations, by the water industry and by people throughout the sector who are involved in this important subject.

The White Paper asks:

“How do we protect the environment and take less water from our rivers, while meeting the demands of a growing population? How do we encourage innovation and dynamism in the water sector while ensuring it remains a low-risk choice for investors? How do we incentivise less wasteful use of water while keeping water affordable for everyone?”

That encompasses, in a short paragraph, what we are seeking to achieve, not only in tonight’s discussion of the Bill, but across the much wider platform of restoring sustainability in this sector. This is about the balance between the environment and the demands of a growing population; the need for innovation and a new type of investment, which the hon. Lady was right to talk about, without spooking the investor, whose money we need; and stopping waste yet keeping water affordable. The water White Paper was a call to action and a vision for the management of this sector and its theme will, I hope, run and not only through this Bill. As hon. Members on both sides of the House understand, the Bill is just a work in progress in respect of delivering that ambition; it delivers an element, and I particularly wish to discuss the importance of abstraction.

Let me make an obvious point: water comes from nature. It is vital that we understand that we are talking about not just an environmental factor, but a key economic matter. The hon. Lady talked about the Natural Capital Committee. When we discuss natural capital, we need to understand its importance for the economy. We need to consider how we manage water resources in parts of the country with a level of rainfall lower than that in some sub-Saharan African countries. When we talk about development and the needs of the economy in the years ahead, we must address that through the prism of natural capital. I am grateful to people such as Dieter Helm, who guided me in this relatively new—for me and for many other hon. Members—approach to economic thinking. I am proud that this Government have hard-wired natural capital into their economic thinking.

It is a shaming statistic for this country that only 27% of our rivers and lakes are fully functioning ecosystems. I am pleased that we have set about addressing that, through a catchment management approach and targeting our resources in as meaningful a way as possible. We are talking about not only an environmental imperative, but an economic one. We have to comply with the water framework directive. If by 2027 we have not got our house in order and our act together, we will get a slapped wrist and a stonking great fine from the European Union. If we are talking about improving the quality of our environment just so that we comply with a European directive, what a pathetic ambition that would be. We should want to restore the quality of our natural environment because we want to restore the quality of our natural environment and feel proud about this country’s natural systems.

We have what some would call the “God-given” advantage of having 80% of the world’s chalk streams in this country, but in many cases they are failing ecological systems. We have to set about putting that right and making sure that we do not just suck water out of the top of aquifers, such as those of the River Kennet, to provide water for excellent and much-needed households in places such as Swindon; we must set about getting reforms that can address that problem. I really welcome the Bill’s means of ending the very bureaucratic system involved in closing down unsustainable abstractions and of getting this into the five-yearly price review. That is a major step forward, which came about through a proper process of pre-legislative scrutiny. I congratulate everyone, including the Select Committee, on the work that was done in trying to draw that to our attention. Let us make it clear that our ambitions for getting our act together require a new piece of legislation in a new Parliament. It would be a great help if the Minister could assure us in his wind-up that we have a continuing and dynamic ambition to legislate in the next Parliament to make sure that the increase to about 30,000 abstraction licences in England will be properly managed in a fit-for-purpose system that recognises the demands of a growing population and the economic growth potential that that will bring.

On economic potential, let me relate to the House my last experience as a Minister, which was to take a trade mission of water companies and others in the environmental sector—the green growth sector—to Brazil. That BRIC country—the group made up of Brazil, Russia, India and China—is wrestling with the problems that make ours appear small fry. Sao Paulo, the largest conurbation in the southern hemisphere, is trying to address the demands for water and for dealing with waste, and it is desperate for new technologies. British companies from our supply chain sector have achieved great things in the delivery of the greenest Olympics ever and are ready to give work to other British companies and to create British jobs in that green technology sector. So the water sector has a lot to give, not just in this country, but around the world. Understanding that economic driver is as important as the environmental and social dimension to our policies.

[Jessica Lee (Erewash) (Con)]

I thank my hon. Friend for all the work he has done in this area and for his expertise. I hesitate to interrupt his flow—to use a water analogy—but he just mentioned the social aspect. Does he agree that volunteers play an important part in managing all this country’s waterways, particularly through the Canal & River Trust? In my constituency, where the waterways play a hugely important historical and heritage role, I have set up the Erewash rangers scheme to try to recruit more volunteers along the waterways.

[Richard Benyon]

I am grateful to my hon. Friend for her intervention. If I felt a degree of paternalism towards the water White Paper, I feel one even more towards the Canal & River Trust, which is one of the great successes. It has seen volunteer numbers rocket since it went from being a government organisation—as British Waterways —to being in the charitable sector, and Members on both sides of the House should take pleasure in its success. Will the Minister respond, if not tonight, at some point, to the real concerns that the CWT has about clause 12? I hope that we can allay its fears because, as the Secretary of State rightly said, the CWT will be an important player in delivering the kind of connectivity we want in our water sector. The CWT will also be a huge resource, in terms of the economic regeneration of our cities, the potential for tourism and the social dimension of volunteer numbers. So I hope that the Minister is able to address the CWT’s concerns, which have been eloquently voiced to hon. Members on both sides of the House.

A debate is rightly taking place about the affordability of water. That was of primary importance in the Government’s mind as we developed the vision in the water White Paper and in the Bill, and I know that it is a great concern of the Minister as he steers the Bill through. Those who believe in price caps can relax about water, because we have a price cap for water—the five-yearly price review. Ofwat provides a price cap for customers, albeit one that is done by negotiation. It has been an effective way of keeping water relatively affordable, although I know that some of my colleagues from the south-west have views on that—we have partly addressed those. Obviously, there are ongoing concerns about water prices, so it is also important to recognise what the Walker review said. It found that the rateable value of a property bears no relation to a customer’s ability to pay and it discovered that 40% of low-income households live in the top rateable value properties.

The concerns and fears that people have about increased metering do not necessarily correlate with the idea that we should leave as many households as we can paying for water through a rateable system. In the next price review period, possibly with the aid of some legislative stimulus, we could see a much higher rate of metering. Knowledge is power for households. We will not be having this debate in 20 years’ time, because we will all be managing our utilities on our laptops at work. We will be able to see that a rocketing in our water usage could be down to a leak in the system. We will be able to manage our household bills more effectively. The high level of metering in the south-west and the work that Southern Water and Thames Water are doing to increase the level of metering should be applauded and supported.

The WaterSure scheme and other social tariffs are important tools, but we should consider the whole question of affordability in a much more holistic way. The effect of a freeze in council tax, of getting more families on low incomes out of paying tax altogether and of other measures will have infinitely more impact on the total expenditure of those households than will tinkering around the schemes with some of these points.

My hon. Friend the Member for Thirsk and Malton (Miss McIntosh), the Chair of the Select Committee, made an important point about bad debt, but I refer her to her own local water company, Yorkshire Water, which is an exemplar in dealing with bad debt. The money we all pay on our bills for bad debt varies around the country. Some are paying £14 or £15 and some are paying a lot more, because our water companies might be bad at dealing with bad debt. I was impressed to hear that, at Yorkshire, a resolve scheme negotiates repayment terms for customers with arrears of more than £500. A couple years ago, some 5,000 customers paid back £650,000 of bad debt, and the water company wrote off £1 million of bad debt. It is that kind of partnership approach that is delivering a much lower figure of bad debt, which should be seen in the context of affordability. Ofwat estimates that the next year’s price review could reduce bills by between £120 million and £750 million, which seems an awfully wide difference.

Of course we all want to keep water bills low and as many people as possible out of water poverty, but we concentrate on that at the risk of reducing investment. I have spoken about that matter recently in the House and I will continue to do so. A high level of investment is better for customers. It is about stimulating innovation and resilience and reducing the impact on the quality of people’s lives and ultimately on the bills they pay.

The hon. Member for Stoke-on-Trent North mentioned my comments about the drought. In the spring of 2012, the Environment Agency said to me that there was a 3% chance of us having enough rain through that summer to refill the reservoirs and depleted aquifers. We were fortunate because it started to rain in May. It rained right through the jubilee and stopped just as the first athletes started arriving in the Olympic village. We all thought, “Thank goodness”, although we did have a number of flooding incidents in certain areas. That rainfall might have caused us a problem that summer, but we were planning very seriously for a third dry winter. I put to the House this question: are we really content to see people in the most economically active part of the UK, which is sixth largest economy in the world, reduced to collecting their water from standpipes in the street? That is the sort of image that brings down Governments and causes wholesale, serious and endemic problems in society, and we must use this Bill to avoid that.

[Guy Opperman]

I represent Northumberland—probably the wettest county in England—and we should probably have held the Olympics, as there would then have been no such fears. The Secretary of State referred to water supply earlier, when he called on business men, farmers and other people to get involved and create smaller reservoirs. As my hon. Friend drafted the White Paper on water and knows so much about the subject, can he say what assistance will come from DEFRA and the Bill to incentivise and assist such people to create those reservoirs?

[Richard Benyon]

There is provision in the Bill to establish an inset regime and allow new entrants to design innovative infrastructure, which can link into the water system. Moreover, under the capital allowance system, farmers can invest in new reservoirs and have the right to give the surplus of that water to their water companies. In dire circumstances, the Environment Agency can purchase that water to keep rivers flowing. Real opportunity exists for people. I am not saying that that will resolve our water resilience issues; many farmers will need to build many reservoirs for that to happen. None the less, there is a genuine opportunity.

I have one plea. Yes, we can get involved in lengthy debates about whether we should have a primary or a secondary sustainability duty, or whether the robust new resilience duty—I urge hon. Members to read about that—will provide an added incentive; but if the rivers do not flow, our reservoirs are empty and our economy suffers, we should be absolutely determined to concentrate on the outcomes. I appeal to Members in this Chamber and in the other place not to get stuck on the tokenism of any duty, but to consider the outcome that it can deliver. I am relatively agnostic about whether Ofwat should have a primary or secondary duty to deliver sustainability. I am much more concerned about the outcomes, and I have yet to be convinced that just changing the wording will make a huge amount of difference. A really important gain in all this is the resilience duty on Ofwat.

[Neil Parish]

Like other Members, I thank my hon. Friend for all the work that he did on the Bill when he was Minister. Does he not feel that the one thing we are missing in this country is the recycling of water? It would be good to use recycled water to grow crops, as it contains a huge amount of nutrients. When we get a wet year, we forget about all the dry years that we have had or may have in the future.

[Richard Benyon]

My hon. Friend is right. I see this in household terms: my simple view is that if a builder wants to build 1,000 houses in the Test valley—I do not know why I am picking on the Test valley; I could pick on any number of catchments in the south or east of England—for that to be considered sustainable development, he should have to prove to his local authority that he is hardwiring into his thinking recycling rain water, greywater systems and permeable membranes outside the houses. In fact, he should think of everything to ensure that the development’s water demands are as low as possible.

An important change is being made that will assist investment in our water sector, by cracking the problem with the investment cycle that we have faced for years. I am grateful to British Water—the organisation that represents supply chain companies—for drawing my attention to how investment fell off a cliff edge a year or so before the end of a price review period. That is a problem. Britain is losing jobs, losing skills to abroad and losing much-needed infrastructure investment. Three changes will make a difference in that regard. The first is the resilience duty, which I have already mentioned. The second is the requirement on water companies to invest for the long term, particularly through the 20-year reviews of their water needs. The third is the need for a six-year investment programme, which is a major step forward. Over time, the cycle of investment will level out rather than fall off that cliff.

We need to think beyond the Bill on sustainability. I am pleased, for example, that improvements to the building regulations include a standard daily usage of 125 litres per head. The code for sustainable homes refers to 105 litres per head. We use 155 litres per head in this country—a figure higher than almost anywhere in Europe. We must consider the demand side as well as the supply side.

I hope that that clause on flood insurance goes through with the support of all parties. All Members with constituents who live at risk of floods feel strongly that the statement of principles, worthy though it might have been when it was drawn up, was full of faults. There was no affordability element. Our constituents face excess charges that are at times more than £10,000—an impossible situation that cannot be allowed to continue.

I have the scars of the negotiations on Flood Re on my back—I pay full tribute to the ABI for the constructive way in which it negotiated—but I think we have reached a point at which we can address the needs of the 500,000 households that are at the highest risk. It will limit the cost, and as best it can, it will link that limit to people’s ability to pay. Linking the scheme to council tax banding is the right way to do that. Excess charges will be capped at somewhere between £250 and £500. That is a major win for those people who come to see us in our surgeries and tell us that every time it rains their stress levels rise considerably.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I am listening with interest to the hon. Gentleman’s comments, given his experience. Does he have any concerns at all that linking the scheme to council tax banding, which is based on property values from back in the 1990s, could still be problematic for some households, as those figures are skewed?

[Richard Benyon]

I understand the hon. Lady’s point, which is justifiable, but if she is involved further in the machinations on the Bill, I urge her not to try to unpick that one. The scheme is not perfect, and she is right to have concerns. Band H has been cut out, so millionaires are not covered. Only bands A to G are included, and I think that this is probably the best way to do things. Obviously, it can be reviewed in the future.

The key question is how we make the transition from a system under which a subsidy supports the change to a much more risk-reflective form of insurance, which reflects betterment, such as when a household spends money from the scheme to improve resilience to flooding in the future. For example, sockets would no longer be placed at the skirting board but a metre above it. Other household measures could be reflected. We should encourage households to see the process as a transition under which they will be rewarded when they take responsibility. If they take measures to reduce the flood risk to their property, they will benefit.

[Diana Johnson]

I pay tribute to the hon. Gentleman for the work that he did on the flood insurance scheme. Does he agree that in areas such as mine, Hull, where 90% of the city is below sea level, home owners and home builders can do all they can, but we will always be at risk of flooding? That must be taken into account in any scheme, and I hope that the scheme that we end up with will not just disappear after the 25 years planned for Flood Re.

[Richard Benyon]

I entirely accept that. It will be the job of future Governments to see where this all goes, but we need to think about it as a transition. I am pleased that, through the partnership funding scheme, we could ensure that the system was skewed in favour of those with the least ability to pay, including many of the hon. Lady’s constituents on low incomes. The Government can do their bit by ensuring that more flood defences are built, that those with the least capacity to contribute to such schemes are protected and supported through central funding and that an insurance scheme reflects the needs of those who are on the lowest incomes.

The Bill is an opportunity to change how we approach the management of water in a changing climate. We forget at our peril that a drought in 2012 was followed by floods in 2012. The words in the Water White Paper, which were written at a time when that was fresh in our minds, are as relevant today as they were yesterday and will be more relevant in the years to come, as floods such as those that happened in Cornwall and other places happen more frequently. Droughts such as those that we experienced in 2012 might possibly be followed by a third dry winter. I do not want to be part of a House of Commons or a society in this country that has not grasped the risk that we could face. The Bill is part of the process of facing up to that risk, creating more resilience in our water sector and incentivising new much-needed investment. I hope that my hon. Friend the Minister will show in his concluding speech how that is all just work in progress and that much more is needed to address the environmental, economic and social problems that will accrue if we do not address the problem for the long term.

[Several hon. Members]

rose—

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[Dan Rogerson]

I am sorry, but the hon. Lady has not been present for most of the debate and I need to make progress.

The Chair of the Environment, Food and Rural Affairs Committee raised the issue of state aid. We have made it clear that aspects of Flood Re will count as state aid, so under competition rules we will need to seek approval from the Commission. We have been in communication with it and will start, along with the ABI, the formal notification process in 2014.

As we have heard, the aspiration of all this is to move to a free market over the next 25 years. Part of that involves seeking to continue to invest in flood defences and their maintenance, which I have already talked about, and looking at property-level protection schemes to ensure that they can be insured.

Hon. Members have mentioned uninsurable properties. I want to make it clear that no property will be seen as uninsurable initially, but if a property is repeatedly flooded, issues may arise that the scheme will have to take into account as we move forward. Certainly, the expectation is that all properties will initially be covered.

In relation to the impact on bills, a crucial part of the agreement was to get a limit on the proposed industry levy of £10.50 for a combined policy. The ABI thinks that that reflects existing levels of cross-subsidy for high flood risk, but it can of course be set out far more transparently. As I have said, I hope to table the flood clauses as early as we can in Committee, but we have to make sure that they are ready for debate.

We have sought to be as helpful as we can on the issues raised by members of the all-party group. I hope that consensus on a solution that works for those under threat of flooding and that is affordable and deliverable for the industry means there will be support for the proposals as a whole.

[Richard Benyon]

Before the Bill goes into Committee, may we lay one myth to rest? We can probably all point to developments in our constituencies that should never have taken place, but the fact is that in 97% of the times that the Environment Agency has objected on flood risk grounds in recent years, developments have not gone ahead. If hon. Members are honestly saying that no developments should ever take place in flood risk areas, there would be no more developments in Hull, London and York. We have to make sure that such developments are the right ones.

Oral Answers to Questions

Lord Benyon Excerpts

Thursday 21st November 2013 Commons Chamber

[George Eustice]

I absolutely agree. We need other member states to comply with the regulations, and we will raise the matter with the European Commission if we have concerns that they are not doing so. I stress, however, that there is a legally binding commitment for member states to fish sustainably. Regionalisation will mean that for the first time, groups of member states with a shared interest in a shared fishery will come together and come up with better decision making.

[Richard Benyon (Newbury) (Con)]

I am grateful to my hon. Friend for his kind remarks. With a ban on discards, the roll-out of marine protected areas, a legally binding commitment to fish sustainably, the introduction of marine planning, and a whole range of other measures to ensure that our seas are sustainable, is this not a good time for those who are concerned about the health and sustainability of our seas?

[George Eustice]

My hon. Friend is right and I am delighted to continue the good work that he started in those areas. That shows the commitment of this Government to protecting and enhancing our marine environment.

Water Industry

Lord Benyon Excerpts

Tuesday 5th November 2013 Commons Chamber

[Charlie Elphicke]

My right hon. Friend makes an interesting point. The planning system obviously means that such things take time. It is certainly important to have more of a national planning framework, which has been discussed by some and is worth considering. The view of water professionals is that competition is important but, in terms of customer service, it does not necessarily reduce costs because the infrastructure represents about 90% of the cost base.

[Richard Benyon (Newbury) (Con)]

My hon. Friend will be aware that the Water Bill will make it easy for new entrants to do precisely what my right hon. Friend the Member for Wokingham (Mr Redwood) suggested, by giving them access to a market that is currently denied them so that they can provide these infrastructure assets.

[Charlie Elphicke]

Indeed. That will be an important reform.

Let me move on to the reforms that are worth considering. First, we must consider whether it is possible to tackle the excess profits and excess returns seen over the last period and return that money to hard-working families in the next period, and to drive a fair and equitable settlement whereby investors can get appropriate returns but customers can get a better deal.

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[Richard Benyon (Newbury) (Con)]

It is a great pleasure to take part in a debate from the Back Benches for the first time in a few years. This is an important subject and I apologise to those on both Front Benches for not being able to be here for the winding-up speeches, as I have a long-standing engagement that I have to attend.

I welcome the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for North Cornwall (Dan Rogerson), to his post. I told him in the Lobby the other night that I had three and a half years to get my head around the water industry. He has three and a half weeks before the Water Bill comes before the House, but he is a clever fellow and I am sure he will be more than a match for the job.

I hope this debate does not over-emphasise the negative and allows us to take a little pride, at least on the Conservative Benches, in what has been achieved in the water industry. I thought the only voice, upon deep consideration, really talking about renationalisation was dear old Len McCluskey—I sometimes wonder whether he is a stooge of Conservative central office—but I now see that there are others: it is a great pleasure to follow the right hon. Member for Holborn and St Pancras (Frank Dobson). I take great pride, however, in what was achieved by privatisation through good, strong political leadership. My right hon. Friend the Member for Wokingham (Mr Redwood) was part of the intellectual force behind privatisation. With people such as Nicholas Ridley and others, he led the debate—with, I have to say, the support of about 8% of the population. However, they drove though something that has delivered for customers. Twenty-two years down the road, I am the first to agree with my hon. Friends, and probably all Members, that the industry is long overdue a tweaking—in fact, more than a tweaking; a serious reform—but I shall explain later why I think the Government are getting it right and the part the House can play to protect the incomes of our householders, particularly those on low incomes.

Jonson Cox, the chairman of Ofwat, came into my office shortly after his appointment and said he was keen to ensure that the industry took more notice of customers’ needs. To summarise, I said: “Good. That is precisely what the Government hope you will do in this price review—more power to your elbow—but we want you to do much more. We want you not only to keep household bills down, but to keep investment up and ensure that water companies play their part in improving the environment.” We must accept, however, that sometimes those three things conflict.

[Frank Dobson]

When the hon. Gentleman was talking to the new boss of Ofwat, did he draw to his attention the marked reluctance of the water industry to pay the proper amount of tax, bearing it in mind that the aforesaid new boss of Ofwat, when he was at Anglian, made pretty sure it kept its tax liability to a minimum?

[Richard Benyon]

Like the right hon. Gentleman, I am keen that everybody pay the required tax, but I caution people who criticise capital allowances. If our water company were not exercising its rights under capital allowances, either investment would fall or our bills would rise, or both. There is sometimes a lack of basic economic understanding: tax deferred is not tax not paid; it has to be paid. In one respect, however, I entirely agree, and I am deeply uncomfortable with some practices in aspects of corporate Britain. Work needs to be done—and in fairness to the Government much has been done—to close loopholes.

We need to make the argument that investment in the industry keeps bills down. The right hon. Member for Holborn and St Pancras seems affronted by Chinese companies and sovereign wealth funds and investors from all parts of the world investing in our regulated sector. I am not affronted. I welcome it. It is the sign of a vibrant industry and one that we need to encourage. We need more investment if we are to deal with some of the Victorian—or at least Edwardian—infrastructure we are trying to replace. Under a nationalised industry, directors of water boards would sit outside the Treasury saying, “Please can we have some more money for investment?” Down the ages, Chancellors have said, “Certainly. Just get in the queue behind the NHS, pensioners and the welfare state, and if there are any scraps left, we will give them to you.”

We have seen an historic level of investment— £116 billion—and we want to see more. We also want to ensure that we keep the bills as low as possible. Supplying all the water that goes into households and treating all the sewage that comes out costs households an average of £1 a day, although I accept that there are wide discrepancies in price. As a percentage of our household expenditure, that might be quite small compared with energy costs and other items, but it is still a significant amount, and those in the lowest income decile in this country are, broadly speaking, in water poverty. We need to address that. There are huge challenges facing the industry, and I hope the Water Bill and the ongoing activities in the sector will tackle them.

The challenges include continuing to ensure investment to deal with leakage and other concerns, such as those expressed by my hon. Friend the Member for Broxbourne (Mr Walker), and to ensure that new infrastructure is built. We must also address the challenges of affordability and the credibility of the industry among its customers. An important matter for our constituents is that the companies address the question of resilience. They must be able to keep the water flowing from the taps in a time of changing climate.

In my short tenure as Minister with responsibility for these matters, I saw the worst drought for decades. We are the sixth largest economy in the world, but if we had had a third dry winter, towns in some of the most economically vibrant parts of the country would have faced the very real prospect of standpipes. That is unacceptable in this day and age. Large national events could have been affected. Indeed, the Olympics presented quite a worry at the time. We clearly need more investment to ensure that water continues to flow in areas that are prone to drought.

During that time, I also saw floods. We must not forget that the water companies’ role in managing sewerage systems is vital in protecting our constituents’ homes from flooding. There is also a need for continuing investment in that regard.

[Alec Shelbrooke]

I shall expand a little on my hon. Friend’s comments on the role of water companies in dealing with flooding when I speak later. Would he care to comment on how the water companies are often ignored when they tell developers that there is a flood risk in the area in which they are building? Does he agree that the water companies are often left to clear up the resulting mess, which puts pressure on their budgets?

[Richard Benyon]

My hon. Friend makes a good point. The Government are right to deal with the connection to private sewers, where many leakages have occurred. They, and the water companies, are also taking action in other areas to ensure that they are playing their part. Sometimes just a small investment can make a big difference to the flood risk in an entire street, for example. It is vital to ensure that the water companies are sitting down and talking to the flood forums and the local flood authorities to make sure that these issues are being addressed, but perhaps that is a wider issue for another debate.

The Water Bill will play a key part in addressing the challenges. The question of building new infrastructure and new reservoirs was raised earlier. The key reform to ensure that that happens, to secure the long-term sustainability of the industry and long-term benefits for our constituents, will involve enabling new entrants to come into the industry and provide new competition. The competition that will exist in the non-household sector must, in time, be introduced in the household sector as well, and I hope that that will be the long-term ambition in a forward-thinking political agenda. That would result in the kind of benefits for households that businesses will soon be able to achieve by switching supplier. The Bill should be seen only as work in progress, however.

One of this Government’s achievements of which I am most proud is the water White Paper. It might sound rather prosaic to say that I am proud of a document, but it set out some important provisions. It demonstrated that the Government were getting a grip on water policy. In the past, water policy had been created by all kinds of different organisations and bodies, not least the water companies themselves. In the White Paper, we demonstrated our determination that the Government should own the policy and that the regulators should regulate. We stated that, in a regulated sector, if the water companies functioned within meaningful regulation by the three regulators, we would have an industry of which we could be proud. The water White Paper was welcomed by customers’ groups, the industry, investors, green NGOs and all parts of the House, although I do not know whether that makes it a unique document, as the natural environment White Paper achieved much of the same.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I seem to recall that the Select Committee, of which the former water Minister was a member, criticised the Government for not being ambitious enough. Is that not a fair recollection?

[Richard Benyon]

The Select Committee produced many good things with which I agree. If that is what it said at the time—I am afraid that many of my memories of the last three and a half years merge into one—I would probably not agree, because there was bold ambition in the water White Paper, which was reflected in many of the comments made about it by many different people.

[Julian Smith]

I pay tribute to my hon. Friend’s work as a Minister. He is speaking passionately about the White Paper and the Water Bill, but does he agree that the financing of these companies still looks dodgy to many of our voters? I would appreciate it if he commented on that before he concludes.

[Richard Benyon]

I shall talk about debt and gearing shortly, and I think my hon. Friend will find me in agreement with him on those issues.

Let me explain why I believe the Water Bill is only a work in progress when it comes to delivering the ambitions of the water White Paper. In the next Parliament, I really hope we will see a Bill to address the needs of abstraction reform. It would be impossible to bring that forward as part of the Water Bill because there are tens of thousands of abstraction licences, on which many of our constituents and the businesses that employ them depend for their water supply. Trying to create a new abstraction regime from the one created back in the 1960s is a Herculean task that will require thoughtful legislation to make sure that the taps still flow and that we do not suck dry aquifers like the Kennet, which provides a very important water supply to the constituents of my hon. Friend the Member for South Swindon (Mr Buckland). That, however, has been the cheapest place from which to suck water, and it is only through the construction of good infrastructure and investment that we can do this in a sustainable way that keeps bills down, keeps water flowing and supports our economy. Further legislation, then, is needed.

Let me make a further point about investment before I reach my final point. If we want to see continued investment from pension funds—whether they be British or from overseas—sovereign wealth funds and other investors, we need to recognise that this is a relatively fragile and competitive market. I shall give the House an anecdote about the frequent visits I made to speak to the investor community to make sure that it saw that our ambitions in the water White Paper and the Water Bill were consistent with continued high levels of investment.

Some time ago, there was a hiatus concerning a rather technical issue that might well have gone over the heads of most people in this country. It related to the licence modifications that Ofwat wanted to create. This brought me in touch with a new breed in my life—City analysts, many of whom, in the words of my children, were “wusses”. They took an instant view that the regulated sector was not the place in which to invest, so the water sector saw quite a high risk of much needed investment being reduced. It took a Herculean effort—by me on the bottom echelons of the Government, right up to the higher levels—to make sure, first, that what Ofwat was trying to achieve was understood. In my opinion, it might have had a virtuous reason for what it did, but perhaps went about it in the wrong way. It reminded me that if we want to see continued levels of investment, we have to make sure that we explain what we are doing. Ultimately, the need to deal with infrastructure problems needs to feed through to bills, and we need to explain that we want to see a vibrant regulated sector in this country.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Richard Benyon]

Very briefly.

[Mr MacNeil]

I have been listening carefully to the arguments on both sides of the debate. Why does the hon. Gentleman think average water bills are lower in Scotland, where water is publicly owned, than in England, where it is privately owned?

[Richard Benyon]

We want to see in England the virtue of the competition from which the hon. Gentleman’s constituents benefit in Scotland, in the business sector and, indeed, the public sector. Schools and the health service in Scotland have the opportunity to switch their suppliers, and the Water Bill will enable businesses in England to do the same. I accept that this is still work in progress, but we want to see the benefits of competition flowing—

[Mr MacNeil]

rose—

[Richard Benyon]

I will not give way again because many other Members wish to speak and I want to say something about debt before I finish.

I took on the water brief with a background in small business, but I had never encountered, or been closely associated with, businesses that had the level of debt and gearing that I saw in the water industry. I observed that the credit rating agencies—for which I have great respect: some very good people work for organisations such as Moody’s and Standard & Poor’s—were giving the water companies very high ratings, awarding them As, A-minuses and high Bs. In fact, Ofwat operates the strict criterion that their ratings must remain at those levels. However, I could not come to terms with that in my own mind at times.

The companies may indeed be complying with Ofwat’s criterion by gaining high credit ratings as a result of their wealth, but I think many Members will feel, as I do, that gearing of that order confers a brittleness—an inflexibility—when it comes to those companies delivering what we want them to deliver to their customers. I hope there will be more understanding of the need for them to reflect the concern that is felt about gearing levels, not just in the House but among their customers.

It is important for us to view water bills in the context of total household expenditure. The Leader of the Opposition has decided that energy bills are an issue on which he wants to bang the drum, but we know that his plan will not work. He knows it will not work, and he knows that we know that he knows it will not work. What is ridiculous about his argument is that it treats one part of household expenditure, albeit an important part, as the sole issue of the moment. Rather than doing that, the Government must view water bills and energy costs in the context of overall household expenditure. They must keep bearing down on council tax, and preferably freeze it. They must continue to protect the most vulnerable by providing winter fuel payments, and to ensure that more of our constituents on low incomes do not pay any tax. It is in that context that the Government should develop policy on household bills.

Water bills are, of course, important. It is vital for us not only to understand but to reflect the concerns of our constituents, and to take advantage of every opportunity to protect those on low incomes. We can, for instance, provide social tariffs. We can also work on the problem of bad debt, which, as we know, adds an average of £15 to every household’s bills—although when that is broken down by company, it is clear that some companies are outperforming others dramatically, and that their bad debt is a fraction of the average. Some are doing magnificently, and others appallingly badly. We must learn from best practice. We must ensure that companies deal with bad debt, but we must also ensure that we address their relationships with their customers in general. We must bear in mind the win-wins that can help those who are having trouble paying their bills to deal with the problem.

I hope that we will not be defensive about the model, because it is a good model. It has created a huge benefit for this country in terms of investment. What it has delivered is relatively affordable for most people, but we need to work hard to make sure prices come down. The five-yearly price review, along with clear policy from the Government, who understand the situation, presents an opportunity. We can make sure the companies are bearing down on bills and there is none of that awful cyclical investment, with investment falling off a cliff two years before the price review period. We want to see continued investment because we know that is the way to have a sustainable water supply and a sustainable sewerage system—not just economically sustainable, but environmentally sustainable as well.

--- Later in debate ---

[Gavin Shuker]

What a fantastic set-up for the speech I am about to give, which is about the Government’s record in the past few years. I freely accept that the hon. Gentleman was not a member of the Government at that time, but he obviously voted on many of the issues that I want to talk about.

It is crucial that we in this House have a proper understanding of the impact that the Bill that is being sold to us will have on the consumer bills that are being levied on many of our constituents right now. Let us be clear: no one was talking about water affordability or Government action to reform the water industry to deliver for customers and not just for shareholders until the Leader of the Opposition gave his living standards speech in Brighton back in September.

[Richard Benyon]

rose—

[Gavin Shuker]

I am happy to take an intervention from the former water Minister.

[Richard Benyon]

I hesitate to rise, because I could just sit here and enjoy the hon. Gentleman’s speech. He and I had endless discussions about affordability when he was in his Front-Bench role, so he knows that he need only read the water White Paper to see that we were concerned about that issue, and he knows that the underlying truth of the Water Bill is that, in order to keep bills low, we need to make sure that we have an industry fit for the future, which is all about affordability and protecting our constituents. He also knows, therefore, that it is ridiculous to suggest that this issue has appeared just in the past few days.

[Gavin Shuker]

The hon. Gentleman makes a passionate defence of his own record in post.

Let us look at some of the specific measures on which this Government had the opportunity to work and legislate but deliberately chose not to do so. First, there is bad debt. I was interested to read a copy of the Secretary of State’s letter to the water companies—sent out today, curiously enough, purely coincidentally—which talked about bad debt. I thought, “Fantastic! At last this Government have adopted the right position on bad debt.” Each household has to pay £15 or so because some people cannot pay and will not pay, and that money is dumped on the bills of consumers who step up and do pay.

On energy bills, is it not interesting that there is a provision that requires landlords to give companies their tenants’ details so that they can reclaim the money? On reading the letter, I thought, “Fantastic. At last the Government have responded to the Opposition’s calls to make the water situation analogous with that of energy.” However, the letter only makes a firm threat to look at the issue in more detail if the companies themselves do not voluntarily make progress on the provision.

My position and that of my party is clear: bad debt as a result of those people who will not or cannot pay dumps an additional cost on every household, so it would make sense to implement the provision. The Government could have taken that action. We made the case for it, but they have had no interest in it until now.

That is not the only issue. Government Members and the press have today mentioned the social tariff. I was the lead Opposition Member on the Water Industry (Financial Assistance) Bill Committee. We sought to amend the Bill so that every water company operating in the UK had to do one simple thing, namely offer a social tariff to those people who find it hard to pay their bills or who find themselves in a situation where they cannot pay for the service provided. The Government chose to vote down that proposal and Government Members voted against it. Instead, they favoured a voluntary approach: if water companies wanted to introduce a social tariff, they could. It is amazing how few water companies have actually done so.

Marine Management Organisation

Lord Benyon Excerpts

Tuesday 10th September 2013 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

Today I am launching a triennial review of the Marine Management Organisation. The Marine Management Organisation was set up in 2010 to make a significant contribution to sustainable development in the marine area, and to promote the UK Government’s vision for clean, healthy, safe, productive and biologically diverse oceans and seas.

Triennial reviews of non-departmental public bodies are part of the Government’s commitment to ensuring accountability in public life.

This review will be conducted in accordance with Government guidance for reviewing non-departmental public bodies. The review will be carried out in an open and inclusive way and interested stakeholders will be given the opportunity to feed in their views. I will announce the findings of the review early in 2014.

Further information on the review is available on the Government website.

Water Bill (Flood Insurance Clauses)

Lord Benyon Excerpts

Friday 6th September 2013 Written Statements

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

The Water Bill was introduced on 27 June which, along with clauses on water sector reform, included a placeholder clause on flood insurance. The Government’s proposed approach to the future of flood insurance was also published and a six-week consultation launched.

Today, I am publishing the draft clauses on flood insurance to provide those interested with the opportunity to examine our proposed legislative approach. We had hoped to publish draft clauses during the formal consultation period that ran from 27 June to 8 August, but more time was needed to develop the detail of the proposed approach.

Along with the draft clauses and draft explanatory notes, I have provided a commentary on the policy intention for the clauses. This gives a fuller picture of what is intended and provides further insight into the Government’s proposals. This additional information should be read in conjunction with the material published in June. I have placed a copy of the draft clauses and commentary in the House Libraries.

I am grateful for the comments and evidence provided during the public consultation. We received a positive response and are considering the comments carefully. We will publish our response in parallel with drafting the clauses for inclusion in the Water Bill by Government amendment at Committee stage.