Water Industry (Financial Assistance) Bill

Mary Creagh Excerpts

Wednesday 14th March 2012 Commons Chamber

[Dan Rogerson]

My hon. Friend makes an excellent point. The water Bill will be a further opportunity for us to revisit these issues and I welcome the fact that hon. Members across the House are still considering this matter as one that needs further exploration.

[Mary Creagh (Wakefield) (Lab)]

I want to reply to the hon. Gentleman’s point about league tables. The idea came from Ofwat and is meant to ensure that there is transparent information for customers, shareholders and the Government so that they understand who is levelling the tariffs, where they are going and where the money is going. That was Ofwat’s idea and I cannot claim any credit for it, much as I would like to.

[Dan Rogerson]

The hon. Lady is very generous in ascribing the idea to Ofwat. I suspect that Ofwat could probably do that anyway and would not need legislation; if it wanted to publish a league table, it could get the information. Ofwat would have information from companies about where the money was coming from and where it was going and could publish it without that needing to be on the face of the Bill.

--- Later in debate ---

[Mary Creagh]

I agree that we have had a very good debate on the Bill. This week’s drought announcement illustrates the increase in weather volatility, however. If there are floods in Australia, it is likely that there will be droughts in other parts of the planet and we are going to have to plan for a lot more climate change disruptions.

As constituency MPs, we are all mindful of the fact that this April water bills will be rising by an average of 5.7%. At the same time as those bills drop on to customers’ doormats, 20 million people—about a third of our population—will be faced with a hosepipe ban across many parts of the country. The Bill puts in place assistance for the people in the south-west, however, and thereby corrects an historic injustice. It also gives powers to provide finance for infrastructure investment. We shall not oppose it on Third Reading, therefore.

I want to reflect on some of the Minister’s comments about our amendments. Amendments 1 and 2 would have introduced the principle of parliamentary scrutiny. He said Parliament does not examine spending decisions by Government, but, of course, Parliament does do that. Indeed, next week we will have the Budget and a lengthy Finance Bill that will examine Government decisions in detail.

The Water Industry Act 1991 stated that water companies could get money from the Government only if that was in the interests of national security, and that if they were ever to receive money from Government, that should be reported to Parliament. Under this Bill, that important principle of parliamentary oversight of the spending of considerable sums of taxpayers’ money is being broken.

We know that the assistance to the south-west will cost £400 million over the seven or eight years of the scheme. The Minister said it was “unimaginable” that any other water companies and customers would get public money. [Interruption.] I listened to the Minister’s remarks, and he used the word “unimaginable”. He said money would not be “sloshing” about and that the Government would not be “doling out” money to the water companies and their customers. However, in 1991 it was unimaginable to Ministers in the then Conservative Government that any water companies should ever receive money, which is why they stated that very important principle in the 1991 Act. We must not forget that the 22 water and sewerage companies are, of course, monopoly providers. At a time when bills are going up and hosepipe bans are being introduced in what is a monopoly industry, we now have to explain to our constituents why this money is being provided.

The right hon. Member for Bermondsey and Old Southwark (Simon Hughes) talked about the debt to equity ratio of Thames Water, as well as the structuring of the company and the packaging up of debt. Government infrastructure investment bonds might be useful in this regard. We heard this morning about the new 100-year bonds. They could be a prime candidate to be the long-term investment vehicles to finance large infrastructure projects such as the Thames Water tunnel.

This Bill’s title includes the phrase “Financial Assistance”, and we know that the groups that are most vulnerable to water poverty are single parents, pensioners and jobseekers. However, only a third of eligible households access the current WaterSure scheme. We want to see much more action from water companies to ensure that the most vulnerable access either national or company social tariffs. As my hon. Friend the Member for Bolton West (Julie Hilling) said, we should not expect water companies to be philanthropists, and so our new clause 1 was intended to be helpful. I am sorry that the Minister thought it an unacceptable regulatory burden on water companies.

When Labour was in government, we found league tables to be a very effective benchmarking tool in driving up performance in public services—schools and hospitals—allowing consumers, customers and taxpayers to understand where their money goes and where they are getting value for money. League tables provide transparency and equity, and in providing a public service—I cannot think of a more crucial infrastructure one than water—it is very important to end the postcode lottery on people’s eligibility for financial assistance.

Labour Members think that in future financing projects we need to be very careful about the burden we place on water customers, and we use the idea of league tables as a benchmarking tool. Many companies use benchmarking groups, which, on an anonymised basis, provide data to researchers, with the companies then getting the data back so that they can benchmark their performance. We do not see anything wrong, or any regulatory burden for the companies, if these companies are forced, by the regulator, to disclose what they are doing, so that we can bring the poor performers up to the level of the best and spur the best performers on to innovation on social tariffs.

We know that the Thames tunnel will add £70 to £80 to Londoners’ bills. Obviously, a number of questions have been raised about that, but I am concerned that the House may not have a large number of opportunities to debate this infrastructure project in the future, and so we need to make sure that proper consultation takes place. The House has debated the Crossrail Bill, which was a hybrid Bill—I made my comments clear on Second Reading as to why this was not a hybrid Bill. The Thames tunnel will create up to 4,000 direct jobs and our final amendment sought to ensure that the benefit of that £4 billion investment accrues to London and Londoners, as they will be paying for it.

Let me cite the example of what I found when I travelled to the Stade de France in Paris, in 1996, and met people from Bouygues, the big French construction company which was building the stadium. The French Government had taken the decision to build it in Paris Saint-Denis, a very poor suburb. This was about 16 years ago, a long time ago, but I was shown the number of apprenticeships at levels 4, 5 and 6—we are talking about master’s-level qualifications—that would accrue throughout that construction project. As my party perhaps did in government, this Government are potentially letting construction companies off the hook by saying that it is an unacceptable regulatory burden to ask them to do more on apprenticeships. Where does the 20% apprenticeships figure come from? Over a four-year project, why can we not get bright young undergraduates in, give them the on-the-job training and make sure that they then become the next generation of London’s civil engineers?

If I may, I shall leave the last word to my hon. Friend the Member for Hammersmith (Mr Slaughter). He talked about his young constituent rowing on the Thames, who said that we have a duty to protect our river in this great world city and that his generation is looking to our generation to build something amazing. We hope that that is what will result from today’s discussion, and that we will protect our great global capital city and one of the world’s great rivers for the next century.