Water Bill

Baroness Byford Excerpts

Tuesday 25th March 2014 Lords Chamber

[The Earl of Selborne]

My Lords, I am sure that we are all sympathetic to the proposal of the noble Lord, Lord Whitty, to protect vulnerable consumers from the escalating costs of water. Clearly, it is difficult for some people to budget for something that accounts for 5% of their income.

However, before we look at setting up another national scheme, we need to understand why water can account for such a large proportion of people’s budgets. The first thing we have to do is recognise that as well as the “can’t pays” there are the “won’t pays”. The “won’t pays” are those who recognise that it is impossible for them to be deprived of water. People have a right to water whether or not they pay their bill. The expense incurred by water companies chasing those who will not pay but are perfectly capable of doing so in the small claims courts often leads to a long, inefficient drag on resources. It would be interesting to know the national figure for those who fail to pay when their income level is deemed perfectly reasonable. Perhaps the Minister has that figure available.

When the Science and Technology Select Committee looked at this issue some six years ago, it was not unusual to find that 10% of consumers from high-income streams did not pay their bills, which shocked me. We came up with a proposal which was accepted by all the members of the committee but not by the Government of the day, or subsequent Governments—namely, that we should follow the Australian practice of reducing to a trickle the water supply of those who could perfectly well pay their bills but did not do so and therefore unloaded costs on to those who were less able to pay their bills. The technology exists to do this but I am afraid that this practice is not considered acceptable. Rather rude remarks were made about their Lordships contributing to the great unwashed. I thought that that was a rather unfair observation. Nevertheless, we need to give the water companies every encouragement to chase those who will not pay. That would help those who cannot pay, who this amendment seeks to help.

[Baroness Byford (Con)]

My Lords, my noble friend has beaten me to the point that I wish to raise. Over the years, during consideration of whichever water Bill, we have had this debate on how you cope with those who are well able to pay but who choose not to do so. My noble friend is quite right: for various reasons, water is never cut off while, unfortunately, electricity can be. It is an unusual situation in that the water industry is the only one in which that position still exists.

I have some questions for the noble Lord, Lord Whitty, on his amendments. First, how would he balance that situation with what he is proposing? Secondly, does he have his own definition of what minimum standards might be, because he has clearly said that it would be for the Government of the day or officials to come up with them? It would be a good idea if the Official Opposition had some direct input themselves into that. Thirdly, the noble Lord said, “We can refer the matter to secondary legislation”. I have sat here on many occasions when we have all said, “Secondary legislation is all right but we do not have any control of it”. We have control of the Bill at this stage and it is essential to deal with this matter in the Bill rather than leave it to secondary legislation, if that were possible.

This is an important issue. When we were considering the Water Bill many years ago, it was difficult to decide who would qualify for being a special case and the circumstances that would be taken into account. I hope that the noble Lord, Lord Whitty, will put a little more meat on the bone, other than what he has done so far in these two amendments.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I fully support affordability schemes but regret that I do not believe that they should be a statutory requirement.

The new social tariff guidance from Defra is to be welcomed, as this means that from this year more companies can introduce social tariffs. It is, however, disappointing—as has been pointed out—that so few companies have so far introduced social tariffs or seem to be preparing to do so. It is right that water companies are best placed to come up with the most suitable scheme for their customers, given their own regional circumstances. Any government regulations could end up being overly prescriptive, instead of allowing sufficient flexibility.

I am lucky enough to come from the West Country where Wessex Water is a major supplier and a forward-thinking company. Over the past 10 years, it has developed its own affordability scheme called Tap. Wessex Water recognises that every household is unique and has adapted Tap to ensure that its services are right for each individual’s situation. Through Tap, Wessex Water offers customers an extensive range of schemes and low-rate tariffs to enable them to afford their ongoing water charges and repay any debts they have accumulated. This runs in conjunction with practical help to reduce water and energy use. Wessex Water delivers this help through successful partnerships with the debt advice sector and other organisations supporting vulnerable customers. Customers are signposted so that they can receive holistic debt advice and income maximisation, as well as make proposals for a sustainable offer of payment, however small.

Wessex Water currently has around 14,000 customers benefiting from one or more of its schemes, with around 8,000 on its very low-rate tariff, Assist. The company is doing a lot of work out in communities to raise awareness and promote Tap, particularly the Assist tariff. It is a scheme for those unable to afford ongoing water bills. Working with debt advice agencies, the customer’s personal finances are assessed and a lower bill than normal is agreed, based on their ability to pay. The range of services covered by Tap, as well as Assist, includes Water Direct, which is for people on benefits, who are able to have payments for water taken from their benefits before they receive them.

A second scheme is WaterSure Plus for those who are on one of the main social benefits and who have either a medical need for extra water or three or more children under the age of 19 living at home. In this case, the annual bill is limited to the average annual bill for metered customers in that region, so they pay less than the bill would have been for the amount of water used. Lastly, the scheme includes Restart and Restart Plus for those who are already in debt with their water bill payments. This allows a payment plan to be agreed and, if the plan is kept to for the first year, the debt is reduced by an equivalent amount in year two. If in year two the payment plan is adhered to, the remaining debt is cleared and the customer has a fresh start.

There will be similar schemes—but not many, I agree—run by other water companies in the country, each developed with knowledge of their customers and their customers’ needs. To ignore all this hard work and impose a statutory affordability scheme is to stifle innovation and enterprise.

Therefore, although I accept that affordability schemes are essential, I believe it is far better for each water company to develop its own scheme rather than have the possible straitjacket of a national scheme imposed on it. However, a government review of the situation in 2015 would identify just how many water companies had failed to implement a scheme. Government encouragement to water companies to enter discussions with the Consumer Council for Water to come up with affordability schemes is essential. They would not have to do the hard work; the evidence is out there for them to utilise and access. Just as essential is clear communication of just how much paying customers are subsidising those who refuse to pay. The subsidy for low-income families struggling and willing to pay is very small compared with that for wilful bad debt. Wessex Water is a shining example of best practice which others would do well to emulate. I regret that I will not be supporting Amendment 55.

--- Later in debate ---

I hope that the Minister can perhaps tell me why the Government have not been prepared to do that. At that point, I will have to consider my amendment somewhere down the line. I do not want to sound as if I am negative towards the government amendments before us, because they are good, but I think that they could have gone at least one step further.

[Baroness Byford]

My Lords, I apologise that I was not able to play a large enough part in Committee. However, I wonder whether the noble Lord, Lord Whitty, can tell me what Ofwat does not have. My understanding, having had earlier briefings from Ofwat, was that it already had a sustainable development plan duty, which the Bill will further introduce and strengthen. What is missing from the responsibilities that Ofwat already has? I am a little confused.

[Lord Whitty]

Did the noble Baroness mean to say, “Before the noble Lord sits down”?

[Baroness Byford]

I am sorry; I did not think that that was necessary at this stage—I hope I am correct. That is my question for the noble Lord, Lord Whitty. I am slightly confused about what is expected of Ofwat in terms of its sustainability duties. I thought that that was written in and already exists. Hence I am not sure where the amendment of the noble Lord, Lord Whitty, would take us.

[Lord Whitty]

I am not sure of the procedure at this point, so I will not reply now.